The idea that the economic troubles we are experiencing are actually greater than those during the Great Depression is a popular meme right now. It is difficult to know how true this might be because of the games the government plays with statistics. If inflation was calculated the same way it was in the 70's it would be over 5 %. I have seen calculations in the 7% range. Unemployment seems workable at under 8%—bad, but not horrible. But I have seen unemployment estimates that do not play the games of the government at 16%.
So are things as bad as the Great Depression?
Even with the contraction in GDP, (Gross Domestic Product) last quarter, no, not yet.
The main reason is the social safety net that has evolved over the decades. This masks the pain, and to a degree the US is wealthy enough to pay for it. But when the government borrows 40% of every dollar it spends, one has to wonder how long the perpetual unemployment checks and 20% of the population on food stamps can last. No one notices the modern equivalent of soup lines because it is hidden.
Things will continue as they are until they don't. Yes, I know that is not helpful. But as Yogi Berra said, it is difficult to make predictions, especially about the future.
What will happen if/when no one will buy government bonds?
If When that happens the US will be in a worse situation than the Great Depression.
What will happen then?
Who knows? It depends on the president at the time. It is also possible that point will never be reached. On this I am guardedly pessimistic.
But if you ask yourself a question I think you can make a good guesstimate as to what would happen when investors stop buying bonds. The question is, "What will benefit the bankers?" The answer to that question is what I expect to happen. Thus my prediction of more of the same.
However, I feel that the risk that events will get even out of the bankers’ control is a lot higher than they realize.
In the meantime, I am trying as hard as I can to get ready. How is your plan going?