Debt is the world’s greatest problem right now. We saw an enormous debt problem develop starting in the early 80’s slowly evolving over a few decades until it started coming apart in 2005 and completely popped in 2008, creating a crisis.

This debt problem that we face today is affecting or will affect everyone either directly or indirectly. It has affected the entire global economy. As you know, the response to this problem was not the approach which should have been taken. The politicians and leaders all over the globe should have taken a 2 step approach. First, lightly intervened to give the economies of the world a little foundation and let the debt detox process begin. Second, rebuild the infrastructure of the world of small business. That is the engine to growth. Although it would have been painful at the time, I believe that we would have been in much better shape today.

Unfortunately, that didn’t happen. Their two prong approach was totally different. First, aggressively intervene to save the system. Second, build a dependence on the government rather than rebuilding capitalism.

As a result, two unintended consequences have now occurred. First, the debt problem is even bigger and much more global in scale as we have borrowed money to stay a float. Second, they have delayed the inevitable.

When will the inevitable become reality? For a year now, we have been borrowing money just to pay the bills and service the debt. We are using debt to stay afloat. At some point, we have to face the day of reckoning. This is unsustainable.

For the problems in America, it is sustainable until printing money ceases to work. That would be the day when the need overwhelms the system. Incidentally, we could be getting closer to that point than you think.

It is not the same for the problems elsewhere. Many of these foreign countries might just be forced to face the music and default on their debt, creating the day of reckoning.

Regardless, at some point, the debt has to go away and someone has to take a loss. That is how it works. The longer we wait, the bigger and more painful the problem.

Tags: Bob Brooks, Debt, debt crisis, default, Government