What's Going To Happen Next?

When I was in my late teens, I went on a movie date with the perfect little bimbo to go on a movie date with. At every moment of tension or shock in the movie, she would grab onto my arm in terror, as if I could save her from impending doom.

During one particularly intense sequence in the movie she turned to me, and pleaded, "What's going to happen next?"

Before you laugh too hard at my little bimbette, tell me truthfully, have you not found yourself wondering the exact same thing during these completely, uh, "interesting" times we live in?

It's ok to admit you are scared. Just don't grab onto my sleeve and plead with me to save you or I might kick you ass.

If you want to discuss this whole thing with someone a little more sensitive, you might want to try Frances Porretto:

I've made my preparations, such as they are. Six months' emergency food stockpile. A year's expenses in gold and silver. A variety of weapons and ammunition for them. A really big dog. Viewed from that perspective, you might think I've thrown in with the survivalists. But there remains one critical difference between me and them.

I don't want to use those preparations.

I continue to hope that America will wake up to the onrushing catastrophe and turn aside from it.

In Tom Clancy's novel Debt of Honor, immediately after a seemingly shattering attack on the American financial system through a unique computer crime, President Roger Durling reminds us that all our capital -- our buildings, our machines, our instruments, our knowledge and skills, and our land -- is still there. Recovery from the assault, which destroyed only the most recent records of the financial exchanges, required only that America's financial institutions agree to a "do-over," starting from the most recent set of records remaining. It works, precisely because nothing of substance had been destroyed, just as the president has said.

Consider the vast wealth of the United States: more than $100 trillion in land, buildings, machines, instruments, patents and copyrights, and so forth, in continuous use by the ablest, most skilled, most productive 5% of Mankind. This is real. This, not the federal debt, not the shrinking dollar, and certainly not the irrational demands of a bunch of perpetual whiners in Zuccotti Park, is the American productive base. Destroying any significant fraction of it for real would require a nuclear war.

Are we headed for a nuclear war? With anyone who has a destructive capacity equal to our own? Doesn't seem like it to me.

*** If the physical destruction of our capital base appears highly unlikely, let's game out the worst thinkable development we can imagine: the collapse of the dollar under the weight of the federal de
First, trade over long distances would be badly impeded. Without an accepted medium of exchange based on a trusted unit of account, productive persons cannot and will not sell their goods to unknown persons or persons far away. That would be very bad. In the short run, it would bankrupt quite a few firms and throw a fair number of people out of work. But the reinvention of money is already in progress, through electronic funds transfer. It would probably detach from the dollar and recur to a superior unit of account, hopefully a weight of a durable commodity such as gold or silver. Within a few weeks, trade over distance would begin to ramp up again.

Second, the federal government would become unable to pay its bills. The immediate termination of a great many paths of expenditure would follow, by necessity. Thousands of federal employees would be laid off. Washington would no longer be able to borrow, long term or short. Tax revenues, being obligations denominated in dollars, would also collapse. Forgive me if this prospect leaves me dry-eyed.

Third, many persons' savings, kept in entirely dollar-denominated accounts and instruments, would become inaccessible, at least in the short term. Current retirees drawing on their 401(k) accumulations would be severely inconvenienced, and persons hoping to retire immediately on their equities holdings might find it impossible to do so. But apart from simple savings accounts, options, and exotic "derivatives" holdings, dollar-denominated instruments point to a real commitment of some sort: usually, a share in the ownership of a commercial entity. If the companies in which we hold stocks continue to operate, then those stocks would retain at least some of their value. Once a new fiscal basis had arisen, equities would once again be tradable, and therefore capable of sustaining their holders.

Fourth, there would be some degree of civil upheaval. The number of government dependents in this country is appalling, and a great many of them deem themselves "entitled" to government support. Private action to comfort the deserving might handle most of the resulting need, but inevitably there would be some who'd fall through the cracks, or be deemed a "sturdy beggar" undeserving of assistance, or who'd bridle at losing his federal sugar daddy. Private action to maintain public order and protect property rights would become imperative. In a country of 100 million firearms owners, that seems more likely than not.

In sum, there would be dislocations: most severe in the short term, but steadily diminishing as we adapted to the new fiscal reality. There would be some human suffering, but it would be concentrated mainly among persons whose value to others is dubious. If that's the worst of the arguably likely scenarios, we have good reasons for optimism.

*** This morning's TownHall column from the esteemed Phyllis Schlafly posits that none of the current candidates for the Republican Party's presidential nomination "gets it" sufficiently well to handle the national crisis adequately. Miss Schlafly has been right so consistently over the years that it's unwise to doubt her. But to what extent would a president whose heart is in the right place, generally speaking, but who underestimates the magnitude of the danger undermine the prospects for national survival and recovery?
I can't see it mattering much.  

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