Is some big train wreck the likely outcome?
PS: I’d argue that we’re in the midst of the train wreck. We’re going to see a continual increase in sovereign debt around the world, even though according to any standard model of repayment, all the leading sovereign debtors are already bankrupt. Just to give you an example, if you look at the size of the U.S. federal government debt outstanding today—not the unfunded obligations, just the bonds that are outstanding—and you look at the federal government’s annual revenue, the debt is now 356% of the revenue. If the federal government didn’t own the world’s reserve currency, you can imagine that it would be impossible for that government to get credit anywhere. No one would lend to an entity that’s so far in debt as the government already is. And yet it’s the government that continues to provide additional stimulus to the economy by adding to its already swollen obligations. So what I think that you’re seeing is that the government continues to pump money into the economy via expansion
