There has been quite a bit of discussion about how the various economic problems we face will contribute to the debasement of the dollar and eventual economic collapse. I must admit that this is my biggest concern for the future - I see little possibility that we can avoid slipping into a depression.

However, while I may be among a large number of people on this site who believe this, it is still far from a mainstream point of view. That means the majority of people think the economy is going to chug right along without major problems for the foreseeable future.

So, I'm interested to see if I have really overlooked reasons to be more hopeful about the economy. Setting the consequences of peak oil aside, if you believe we will find a way to avoid a major depression in the US, how will we do that? How will we deal with inflation, the housing bubble, excess foreign holdings of our debt, and decreasing value of the dollar?

The whole economy may tank, but you don't necessarily have to go down with the ship. Pay off your debts asap. Shrink your car or move closer to work. Get a bicycle. Make you life so simple that the bigger economy doesn't matter to you. Gardens aren't going to stop growing. Sun keeps shining on the earth. 1000 watts per square meter. Capture it. Use it. Kick the fossil fuel habit and it doesn't matter so much what the bigger economy does. You are living in a different economy.

I don't know if you can get to the point where you are "living in a different economy" but you can certainly make sure your ass is a lot more covered than the next guy.

If, for instance, you are debt free you don't have to worry about interest rates and debt repayments. If you walk or bike to work, you don't have to worry DIRECTLY about gas prices. and so on . . .

Best

Matt

I appreciate the responses, but these don't really answer the question I am trying to ask. I rank among the doomers and have been preparing for a major economic downturn. I am a prepper by nature and have arranged my finances conservatively, which should give me an edge in bad times. But, I am not asking how to prepare for bad times.

My question is: If the US economy is to survive just the non-PO problems we currently face (such as the consumer debt bubble, inflation, and the national debt) what will it take? What do all the people who believe that the US economy will survive in its current form think will happen? After all, most people who are not aware of peak oil are, at least to some degree, aware of our economic woes. Yet, most people don't see a crash coming. Therefore, there must at least be common arguments for how the US economy will survive these problems. What are they?

Inflation comes from printing money.

We won't know how inflation is coming along now.

M3 is not reported anymore.

dude youa the man, I posted two post before I read yours.

you got the truth dude, right on.
get outa debt NOW friend and I mean NOW even if you have to sell the house and rent.
If you can sell a few things, to pay off the house that is way better than renting, but don't stay with a loan.

This is how the big boys god filthy rich in the depression, they gave loans for property so people could play the market and "get rich" the the crash came (yes, some say planned) and they mopped up so much land housing and property and immediately gained millions of slaves eeking out a living to PAY THEM HARD CASH to keep their houses, most defaulted. they became filthy and rich and they still remain both.

Slash government spending, raise interest rates.

Egg-sack-lee!

The general public has this naive notion that investing is a mutually benefitial arrangement. Actually most of the time it's a game where one person wins at another's expense. For example lets say you bought a house for $200,000 five years ago. Now the house is double the price and you sell it. Is that a win win situation? NO!

Whoever sold the house to you for $200,000 five years ago is probably kicking themselves in the ass right now. However to say that investing is a game where half the people win while the other half losses would still be an "optimistic" statement. Call me a pessimist but I believe that investing in general is a game where a small minority wins off of the majority.

That would explain why most of the wealth is concentrated into the hands of a very select minority.

Don't forget the brokerage firms, financial instutions, the bank fees, taxes & stamp duty, they all take a cut of any of your profits your lucky to make, if you lose out, they still take their cut. Read over fancy leaflets selling financial seminars, buy the stocks they recommend after they have brought them themselves and they sell before telling you to sell, or they sell when they tell you to buy. You need to buy before a trend begins, because thats often when mum&dad investors jump in after the stock has gone up, and the savy bankers offload again and find new investments. "Pay off your debts asap", no have as much debt as possible on a variable fixed rate. Say you want to buy a property or some assets, find a cheap property which hasn't boubled up as much as all the others and get a loan afew months after the fed stops reporting m3 data (in about 9-12months time). Try and keep yourself employed as much as possible and wait for your pay to magically increase due to pricing pressures such as rents going up, food price going up, your employer will have to increase your pay to keep you and this is the time you almost get your house and your assets for free. You'll be paying off your house loan of 500,000 with a 10k weekly paypacket.

I can't think of many jobs that are so important your boss wouldn't just let you go and get out of business.

The best investments you can make in my humble opinion are woodlots and solar panels. Both harvest sun and give you energy and warmth. What can go wrong with either of these? If you leave the woodlot alone, It'll grow and make more wood. If the value of it tanks from some real estate bubble, you let it grow some more, and cut firewood in the meantime. The solar panels are going to come in handy at some time. You can use them for any number of applications. They will even charge your transportation. We need to steer the US economy towards solar, but the people in power seem to be too dumb to get it. The Chinese will happily take our money for evacuated tube collectors, however.

If your the lucky one to have a job I doubt your employer will be giving you a raise. I see more like the "company store" situation where if you can't afford housing the Corp. will put you up for a portion of your check. Profits go up. Productivity goes up. Cost of living goes up. Wages: stagnant.

It's very simple: hike interest rates up now, stop trading with China if they refuse to let their currency float, and turn the deficit into a surplus. It doesn't have to be anything too extreme, and indeed, if fiscally conservative Democrats take over in 2006, we might be able to take some serious steps to draw us much further away from the financial meltdown some folks are claiming we'll be facing.

We'll have a quarter or two of recession, but we should be able to dodge any kind of major depression.

I hate to sound like Reagan, but working on the supply side to increase the flow of energy into the economy will also be helpful. We don't have to do it with oil; if liberals get their way, it can be done with renewable energy, or at least with nuclear. Increasing efficiency will also have this effect. Such a move will result in a shift to the right in the unemployment/inflation curve.

IMHO, if the utilities get to work on expanding our nuclear capacity in the next year or two, and if the claims of nearly every nuclear engineer that we have enough recoverable uranium to power the world for several hundred years proves true, we might even be able to make it through peak oil without a '30s-style depression. It might just be a bad case of the '70s for 15-20 years.

I don't think so. Neither employers nor employees will have much bargaining power. Remember that when an employee leaves a company, it results in a lot of wasted energy for both. IMHO, we'll see wages follow inflation.

And if you think that your employer is going to screw you, you might want to buy some stock in your employer. When I thought the oil companies were going to screw us, I bought some stock in Chevron. Dividends now pay for about 1/8 of my gasoline these days.