I have been using a number of analogies about our political and economic situation. I have compared the US economy to a junkie and the election to the arrival of the Cirkus Klown Kar. But there is another analogy that applies to both the election and the economy.
In 3 to 7 years I expect that the economy will have a Grand Mal Seizure. The Mayo clinic defines a grand mal seizure this way:
A grand mal seizure — also known as a tonic-clonic seizure — features a loss of consciousness and violent muscle contractions. It’s the type of seizure most people picture when they think about seizures in general.
Grand mal seizure is caused by abnormal electrical activity throughout the brain. In some cases, this type of seizure is triggered by other health problems, such as extremely low blood sugar or a stroke. However, most of the time grand mal seizure is caused by epilepsy.
Many people who have a grand mal seizure will never have another one. However, some people need daily anti-seizure medications to control grand mal seizure.
It is a shocking thing to see, and it will be even more shocking when our body politic has its seizure. You do not want to be too close when the flailing begins. As Yogi Berra said, “It is difficult to make predictions, especially about the future.” So who can say when or what the trigger will be?
It may be the flashing pretty light of deficit spending reaching a point where no one will lend the US any money. In this area there is plenty of wiggle room as it will take the US about ten years to reach the point Japan is right now in terms of government debt to GDP. Japan does have the advantage that they owe the debt domestically. The US owes a large portion of its debt to China and Japan. Since a recession is coming to China by all indications, at the very least new debt will not be purchased by the Chinese.
Or maybe interest rates will rise. Interest rates are at historic lows. Interest rates could go up by a factor of 5 and still be lower than what I paid in the 80’s. This will lead to huge negative feedback in the deficit. If we think 1.2 trillion is a bad, just wait.
Or maybe we will have a 30 year long malaise like Japan?
In any event, neither Obama nor Romney will take their Dilantin—tax increase, budget cuts, and unfortunately, money printing.
I hope I am wrong and that there is not a seizure in the future. It is a horrible cliché, even worse than feeding frenzy, but time will tell.