| It's hard to say much with certainty here beyond just recognising the current path is unsustainable. Obviously the debt/GDP cannot increase indefinitely without either the government ending up bankrupt, or more likely hyperinflation. The issue I think we have today is that there's no real political motivation to fix these problems and people are unhappy and unwilling to make scarifies, such as paying higher tax or cuts to government spending. However, the US is in a relatively strong position given many developed countries find themselves in similar positions. The US has a lot of debt, but it's not that much more than other comparable nations. The US also has more fiscal room to raise taxes as reduce its deficit. My guess would be that other nations find themselves in a serious sovereign debt crisis first and this will worry politicians and the US public enough that drastic action is taken. The most obvious outcome in the US is higher taxes and increases to the pension age. While European countries that take action will likely rely more on spending cuts in addition to increasing the pension age. But this assumes that productivity isn't going to boom in the years to come from AI or something similar. A significant increase in productivity would be the best solution to this problem, but we shouldn't assume that's coming. As an individual the best thing you can do to safeguard from this is diversification so you're prepared either way. You'll want to own assets that give you protection from inflationary or a hyper-inflation scenarios – things like gold, a diversified stock portfolio and property. The other slightly less likely risk would be some kind of economic crisis that results in a global deleveraging, in which case you'll probably want to ensure you're debt free and have plenty of savings. If you have savings, have no debt, own property, and have a some diversified investments you'll probably do okay whatever happens. If you're anticipating a crisis and want to maximally profit from it then you'll need to decide if you think the risk is hyperinflation or an economic crisis followed by a deleveraging event similar to the great depression. If you think hyperinflation is likely then taking a ton of long-term fixed debt out now and buying assets like gold or property would be the best option. If you think a great depression event is likely then you want to ensure you're debt free and maximise your savings. |
Surely there’s some economic research to suggest hyperinflation doesn’t happen to the world powers? I’m not an expert in economics but it seems like hyperinflation is only a problem for (respectfully) dead-weight countries like Greece who could be wiped off the face of the Earth tomorrow with little global effect.