USA debts appear gargantuan, unprecedented, and perhaps overwhelming. However, I do indeed find it easy to underestimate the USA's potential to cope. They routinely leverage their enormous industrial, military and economic might to the full, while largely managing to conceal their utter ruthlessness.
1. Witness how Europe, the Middle East and dozens of emerging economies are suffering more than the USA.
2. Witness also how the USA has managed to dictate the interest rates that its creditors charge it, as well as controlling and distorting a range of markets, and blowing a succession of internationally destructive asset bubbles.
3. Witness how USA manufacturing and oil production are rising from the grave.
4. Further back, witness how Harry Dexter White caught the UK in its post-world war II weakness and ruthlessly plotted the demise of the Sterling as the reserve currency of the time.
5. Witness the myriad overt and covert USA interventions, many of them bloody, in countries unfortunate enough to be useful for supporting USA hegemony and too weak to defend themselves.
Even so, it's a matter of record that currencies come and go. The iron grip that the USA has maintained over the use of the USD for oil and other international transactions may be weakening, as evidenced for example by the failure to date to subdue Iran and its allies. It also seems to be becoming more difficult for the USA to maintain low interest rates as risk levels rise and as trade strangleholds over countries like China weaken. There is also the possibility that the USA Federal Reserve will not be able to continue reducing its monetary interventions if employment levels worsen or deflation threatens. All this would shake confidence in the USD and tend to re-inflate deficits. There is also the ebbing of national purpose and cohesion caused by decadence, corruption, class warfare, and political stagnation. Lastly, there is also the unsupportive backdrop of extreme global debt levels, and the destructive effects of using currency devaluations competitively to secure trade advantages.
I don't agree that economic and other key national systems are inherently self-righting. I admit that there are built in checks and balances, but these must be administered and enforced with vigilance. Yet, in a climate of complacency, corruption and decadence, vigilance lapses. For example, the USA constitution has been trampled. Democratic freedoms are at a low ebb. Morale is poor. A ship may heel to and fro in high seas for decades, but if the angle of no return is ever exceeded, it turns turtle.
I'd agree that people almost always overestimate the imminence and severity of crises. However, the only crisis that gold needs is a loss of confidence in the USD, or a failure in the system of intimidation supporting it. I don't think that's too big an ask as things stand. The only issue, as usual, is timing, hence my interest in any prospective disturbances to 10 year treasury yields, or to the tapering of quantitative easing.
