really amazing stuff considering that is based on a book that was written in 1932 ...
(snip)"Using the experiences described by Garrett in 1931, we can SPECULATE about some of the things that may be coming within the next couple of years:
* In 1931, America was the creditor and Germany was the debtor; today, China is the most important creditor (although Japan is currently larger), and America is the debtor.
* A stock market crash, banking crisis, or other major financial crisis might begin anywhere in the world, with Wall Street or China (Hong Kong or Shanghai) considered most likely.
* The crisis will probably spread faster than the 1½ years it took for the 1929 crash to spread to Europe, since the global financial system is much more highly interlocked and interdependent than it was in 1929. A period of 3-12 months is a reasonable estimate range.
* Once a financial crisis begins to seriously affect the US, creditor nations, led by China, will try to "save" the United States economy. In some scenarios, China and Japan may be competing with one another to provide the most help.
* Americans will demand that other countries bail us out, saying that the only way to save the world economy is to save the American economy.
* Other countries will probably forgive, at least temporarily, the enormous public debt that America owes to them in the form of long-term Treasury bills. (I had previously assumed that when things got bad enough, the US Treasury itself would delay redemption of long-term Treasuries; Garrett's book raises the possibility that the creditor nations will be the ones to suggest that route.)
* Americans will become increasingly resentful and xenophobic toward the Chinese. This has already begun, especially in Congress. This will be a factor pushing us toward war with China.
* At some point, when the American financial crisis becomes extremely serious, and Americans are convinced that there'll be no more easy credit from China, Americans will immediately change from "spenders" to "savers." This will signal a massive change in behaviors and attitudes of the American people, and will also signal a return American self-dependence.
* If America follows the example of Germany in the 1920s and 1930s, then the American dollar will become worthless. I've had many e-mail queries about this, but I'm still extremely doubtful about it. There's a very big difference between America today and 1920s Germany: America owes no war debts or war reparations, and the latter was the primary motivation for the German devaluations. I still expect the CPI to fall 30% (which would imply dollar strength within the American economy internally), and I can imagine scenarios where the dollar can remain OK internationally, or can become very weak internationally. I don't know how to predict this now.
* Other factors pushing us toward war with China are the same as before -- the political and social instability within China itself, the volatility of the Taiwan issue, and long-standing disagreements between China and Japan.
Of course, there's no guarantee that what happened in 1931, after the 1929 crash, is going to happen again, or is going to happen again in the same way. However, it's worth starting by noticing that many of those things have ALREADY happened -- the existence of an uncontrolled creditor / debtor nation relationship, the securitization of credit through CDOs and other credit derivatives, and the huge asset bubbles around the world. These are the things that ALWAYS recur, from the point of view of Generational Dynamics. "(snip)





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