"Seriously, we are in very deep trouble."
ZIRP (zero interest rate policy) has arrived in the US. The Federal Reserve and the US Treasury are now in desperate straights to stabilize the US economic system (and by extension, the global economic system). From a systems perspective, it's also a formal indication that the US and the global economy is now operating far from equilibrium and the Fed/Treasury is using every control input they have to return the system to its previous equilibrium.
Unfortunately, from a systems standpoint, that's VERY unlikely to happen. What will happen is either a monstrous overshoot (overcorrection) or a control system failure that plunges the entire system deeply into turbulence/non-linearity. While the establishment of a new equilibrium point at our current position, where the forces of correction and positive feedback loops are balanced, is possible, it's also unlikely since there isn't an external reference environment available to fix the system to.
In econo-speak, this translates into:
- Hyper-inflation (overshoot) and potentially a dollar collapse/run.
- Depression (control system failure).
- Stagnation (new equilibrium point).
Best bet? Option 2, due to the long running secular trend (30 years of data) towards wealth concentration. This concentration has led the US middle class/consumers into a solvency crisis (in short, we can't correct the impact of that feedback loop with cosmetic policy initiatives).