Here's the nightmare scenario, which is looking more and more plausible: -When profits started to decline in the 70's, they decided to let manufacturing go ove

Here's the nightmare scenario, which is looking more and more plausible: -When profits started to decline in the 70's, they decided to let manufacturing go overseas and to jack up interest rates in order to suppress wages and fight inflation. -However, this left a problem where American consumers no longer had enough spending power to buy the products they were making. They dealt with this problem by printing money and using it to finance debt and then exporting the extra dollars overseas. They were able to do this because the US dollar is the world reserve currency and is in demand everywhere. -However, this created a series of debt bubbles in the united states. Each one was dealt with by printing ever increasing amounts of money, kicking the can down the line until the next recession. Interest rates steadily fell and fell until they hit zero. -When interest rates hit zero, they had to switch to quantitative easing. This was accompanied by a speculative "everything bubble". But now, with the amount of debt continuing to increase, the value of the US dollar started to slide, manifesting in inflation again. -The fed will have to raise interest rates a lot to fight the problem. But this will cause a massive deleveraging as debt cannot be rolled over anymore, plus the interest on the federal deficit will be enormous. -It is politically impossible to raise taxes to deal with the shortfall, so deficits will grow even larger, and to get people to buy the debt, interest rates will have to go up even further. -This will eventually culminate in a loss of confidence in the US dollar. Prices of imports will skyrocket and the economy will crash. The united states will ultimately have to default on its debt. -The resulting political instability will likely result in an autocratic government. The formal structures of congress and the senate will continue to exist but actual rule will be by presidential decree. Fascist governments or Bonaparte-like leaders can only maintain power by promising greatness and a return to traditional values (The traditional values part comes from the fact that some reason must be found for the country's problems, the explanation given tends to be that we have offended god in some way)- this usually results in war. That's the nightmare scenario.