California/National Economic Forecasts for 2011: Pessimist #2

This post was displayed on American Thinker around New Year’s and is perhaps the most pessimistic I have found.

The author’s argument is simple: We have extended and over–extended our debt to an unsustainable point and the only thing averting immediate disaster is “Quantative Easing.”

According to this theory all of the signs of “recovery” are due to government spending with printed and borrowed money. Pelerin isn’t the only person to see the potential for a crackup. Karl Denninger argues along similar lines. ‘

A simple analogy may be this: You are maxed out on your credit card, what do you do? You can increase your monthly payments (to a point) borrow money from friends  and family (to a point). Or you can  get a better job to earn more money. Of course the easy way out is to  get a credit card with a bigger balance transfer the debt, negotiate the interest rate and keep spending.  If an individual does it, eventually they hit a wall and go bankrupt. What happens now that personal and private debt has been assumed by the government, which has done the equivalent of getting a bigger balance card and continuing to spend. Disaster eventually occurs. It seems inevitable. Or at least the pessimists say.

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