Political crisis due to debt - and a way out

When debt serving exceeds cash flow for a nation, the only solutions will be either to print money to create inflation to reduce the debt in relative terms, or to stop servicing the debt.

We've already seen lots and lots of money printing since the financial crisis of 2008. It's ending up in the hands of asset owners, though, and not reaching into the overall economy. Thus there has been inflation but only in very specific sectors. Housing, stocks, luxury goods, collectibles, etc. Automation and globalization are pushing prices down for many other goods.

This causes increased inequality. This causes loss of belief in a better future for the bottom of the pyramid. This is fertile ground for populism. The best way to get rid of populism is to inspire hope for the future in the population. Without it, populism is almost sure to win eventually when people tire of "traditional" politicians failing to make their lives better, and "want to try something else". That's where our dictators come from. That's where racism and chauvinism come from. That's where social violence comes from. That's where wars come from.

In the end, those at the top of the pyramid must take care to protect their consumers. If nobody buys all their goods and services, they too will ultimately suffer. This already exists today; it's called salary. Everyone who works creating a good or service, gets their wage, and then consumes that entire wage on goods and services is in fact serving as a source of recurring income for the owners of the good sand service companies. To get out of that hamster wheel, people need to improve their cash flow, go plus every month, and create savings. There is no other way.

Today, automation and low wage pressures are higher than ever. It makes it harder to create those savings. Less skilled human brains and bodies are left behind by the inexorable progress of technology.

Like so many other things the US have exported, they will also export an increased fixation on money, at the cost of culture, history, arts and traditions that aren't economically "efficient".

And eventually, those in the hamster wheel will meet the populists and hit it off big time. When that happens, we will have protectionism, reduced world trade, falling GNBs, layoffs, and perhaps resource wars.

Now there's another way to view all this: If automation were sufficiently simple to achieve that most people could do it... Then why couldn't this turn into a scenario of careless abundance instead? We replicate our food and goods, there is housing with VR+AR for everyone, autonomous cars zip us around freely, we educate ourselves wherever we like, we spend our time pursuing our passions. If it were so simple to PRODUCE what we want that we ourselves could do it. It won't work as long as production is in the hands of a few, unless they share their income drastically more than is done today, e.g. with basic income-like schemes.

I'm rambling. Anyway, prediction: By 2025, three EU countries or more will have become dictatorships. 10 countries or more will have defaulted on sovereign debt. But, by 2030, at least two highly developed countries will have implemented basic income schemes in a way that doesn't inhibit their ability as a nation to provide welfare for its citizens and wealth for its people.