As usual, it has taken some time for me to collect my thoughts into something resembling a blog post. Thank you all for your patience and forbearance.

I can't find a reliable source that believes that we're in for hyperinflation. Karl Denninger, in a recent Market Ticker post, makes the point that this is an excess credit-driven Depression, just like the Great Depression of the 1930s, and that:

... the condition that led us into this recession - excessive debt - must be removed, not shifted around and hidden, before the recession can truly end. Japan tried what we're doing in the 1990s and failed. The Nikkei never recovered its former highs, in fact, it never even got close. Japan's economy never managed to get materially out of deflation and is now back in it as a direct consequence of their refusal to force the bad debt into the open and default it.

Mike Shedlock, writing on his blog, observes largely the same thing, and sees deflation as the cure to our debt, not the problem:

Notice the misguided advice by the OECD about pumping cash into the economy. Japan has been doing this for 15 years and all they have to show for it is massive national debt and bridges to nowhere.

What we have is deflation. What we need is for the deflation to run its course and not be perpetuated for decades by more and more debt, both public and private. Since the Fed, Kongress, the President, and all the financial punditry believe the Keynesian solution to be the only one, we may be headed for another "Lost Decade" like we saw during the last 10 years and like Japan has seen for the last 20. Nothing that bad seems to have happened to Japan. Of course, they are an ethnically homogeneous and highly-intelligent population. We are not. I'm not sure if that will matter in the long run, but I would guess that different regions of the country will just naturally drift apart, as social cohesion and public trust in government is at a nadir at this point.

Chronic deflation will likely lead to a lack of job growth, and that is what we saw over the past 10 years. We saw GDP growth, but it was illusory because it was all based on debt. We didn't see real GDP growth because more jobs were not created and real wages were not increasing. I've seen some people actually refer to the past 20 or so years as the Bush-Clinton-Bush-Obama recession.

What we need, then, is more real GDP growth fostered by more production of goods and services in this country and less debt of all kinds. What I believe is that, using the past 40 years as a guide, it will take the rest of the country another two decades to collectively understand that. California, for example, just voted down every bond measure on the last ballot because Californians (the ones that vote, at least), have finally realized that our bond ratings suck and that we have to pay back the principle plus interest on those bonds eventually. It took us 20-30 years to figure that out though. California is probably the prototype for the nation's economic future at this point, being the fifth largest economy in the world.

Also, our 401Ks and IRAs are unlikely to grow if invested in the NYSE or NASDAQ (which has still never recovered from the malfeasance of the 90s Dot Com scams). If we're to see returns on our investments, we need to invest abroad or in local/home production. Basically, we need to be either on some other country doing things better than us or on ourselves (through the purchase of capital goods that facilitate home production). Right now, the rest of the world is in much worse shape than we are, so the latter option might be the best. Commenter SameNoKami makes the latter point all the time. John Robb has a few suggestions on that front here.

Finally, we should expect a weakening of the nation-state worldwide by globalist actors, both malevolent and benevolent. This is a natural by-product of globalization making the nation-state obsolete due to the inherent sluggishness of its bureaucracies when compared to the lightning agility of globalized networks and due to the willful participation of corruptible government workers in the globalized commerce of illicit actors. Given the inherent sinfulness of man and the Bible's prediction that things will get progressively worse as the Day of Judgment nears, I believe most of these globalist networks and actors will be malevolent. The apostle Paul reminds us,

1 Thess 5:1 Now, brothers, about times and dates we do not need to write to you, 2for you know very well that the day of the Lord will come like a thief in the night. 3While people are saying, "Peace and safety," destruction will come on them suddenly, as labor pains on a pregnant woman, and they will not escape.

The image of a woman in "labor pains" is very descriptive. Women have contractions while in labor, punctuated by periods of rest. The closer the baby is to being born, the more quick and powerful the contractions become and the less frequent the periods of rest. Paul is using this language to remind us that the world will be the same as the return of the Lord nears. There will be periods of relative "peace and safety" where the Thomas PM Barnetts, Thomas Friedmans, Zakarias, and other Davos men will be telling us that, "This time, things will be different!" than they have before. "Globalization," they tell us, "will make us more peaceful and wealthy." Globalization is a two-edged sword, and man will always choose the bad "edge" over the good, and the nearing of the day of judgment will be like a woman in "labor-pains." The more I read lately, the more I'm convinced that global illicit networks will become more and more prominent, the nation-state will be hollowed out, and the dark side of globalization will become much more obvious. Look out for your daughters. Since the news appears to be bad, let me reassure you that it isn't. As Jesus reminds us in the Sermon on the Mount:

Matt 6:25 "Therefore I tell you, do not be anxious about your life, what you will eat or what you will drink, nor about your body, what you will put on. Is not life more than food, and the body more than clothing? 26 Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? 27And which of you by being anxious can add a single hour to his span of life? 28And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin, 29yet I tell you, even Solomon in all his glory was not arrayed like one of these. 30But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? 31Therefore do not be anxious, saying, 'What shall we eat?' or 'What shall we drink?' or 'What shall we wear?' 32For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. 33But seek first the kingdom of God and his righteousness, and all these things will be added to you. 34 "Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.

So there's no point in worrying about the future because we have no control over it and God has promised to take care of us. Many people, especially in our society, delude themselves into thinking that they are the captains of their destiny. The reality is, they depend on the thin veneer that is our civilization to get them through life. That civilization only exists at God's mere pleasure. It takes very little for things to descend into chaos. But even if that happens, God has promised to provide for his flock. Aren't we worth much more than the "lilies of the field," who are clothed in greater splendor than that of Solomon? Will God give us snakes if we ask for fish (Matt 7:10)?

Jesus' sermon is simple but profound. Internalizing it leaves no room for anxiety about the future.