Paul Krugman post: Recession plus inflation

[Jon Freise]

I thought this post was very interesting, which shows data on the rising US interest rate and a falling dollar.

https://open.substack.com/pub/paulkrugman/p/we-are-no-longer-a-serious-country?r=4hsz2&utm_campaign=post&utm_medium=email

So what happens when the US then borrows trillions more dollars and gives them away as tax cuts to the very rich?  Those trillions now earn interest for the very rich.  The US goes into a downward debt spiral like Greece.  It cuts services to pay for the interest, which cuts productivity, which cuts the ability to pay interest, which forces more service cuts and increasing debt.  Next thing you know it is bankruptcy and an IMF bailout. :/

This is how the billionaires cash out the trust the world has built up in the US.  Specifically in the US dollar as the main reserve currency.  (I have a conjecture that Musk and Theil's real goal is replacing the US dollar with a Pay Pal like crypto currency payment system running on the orbiting Star Link satellite network.  Essentially setting up a corporate state that no national government can regulate.  But that conjecture is a post for another day.)

Remember the Titanic?  How the lower classes were locked below decks while the crew and the wealthy half filled the lifeboats and escaped?  This is what the modern day version of that looks like.  We are being locked into a ship that they are actively steering into sinking.

But unlike the Titanic, this is not being caused by a unified ruling class.  Nor are they being "unserious".  This is a coalition of elite who are working, with great seriousness, together to seize power.  They do not have the interest of the nation as a whole at heart.  That is why they work outside government crypto channels.  This is tribalism destroying the productive capacity of the nation as a whole.  I wish Dr. Krugman could meet and talk with Dr. Jack Goldstone.  Because what is happening today has a lot in common with the breaking apart and infighting among many other ruling coalitions.

What to do as one of the "lower class" steerage passengers?  How to escape the locked cage?  I have not done the research and do not know.  But many other modern nations have gone through this.  Basically there is a huge recession and inflation at the same time.  Savings become worthless.  Businesses fail.  Those who can borrow money cheaply (maybe even in another country) buy up distressed assets.  Saudi Arabia perhaps purchases something other than golf tours and fighter jets.  Like the whole Boeing company or similar.  I am not giving financial advice.  Everyone needs to seek professional advice (if you can find anyone with expertise in these kinds of times.  Maybe someone with experience in Greece or Latin America?)  Personally, I would not stretch my income to take a loan right now.  I would plan on a substantial income cut.  But that is just a personal perspective.  

On a household level, things purchased abroad, like olive oil or electronics, are likely to see a sharp price rise.  Sunflower oil is one possible replacement.  Gasoline is likely to see a rise in price as the US must actually import oil to refine into gasoline and diesel.

If the US dollar does collapse as the worlds reserve currency, then the US government will be forced to operate on taxes.  That will be a huge cut.  Goodbye social security, medicare, highways, suburbs, and the military.  Hello Flint Michigan and a failing toxic water system, fire and police departments that are chronically under funded, and roads with so many pot holes they max out at 10 mph.  No zombies.  No mad max.  No lone hero wandering through empty cities.  Just a whole lot of people packed together without safe water or good paying jobs.  All trying to make do.

Other super powers have collapsed.  We know what it looks like.  Russia just lost a bunch of Soviet Era strategic bombers.  They cannot replace them.  They no longer have the capacity to manufacture them.  The Soviet Union is long gone.  The US may find itself in the same place. A carrier fleet that marked the "high water" point of US global income.  And that the future US, much reduced, cannot afford to replace or even operate.