Is a bubble type situation possible? Where things seems fine and then the bubble pops all of a sudden inflation goes nuts and shit gets real?
There were certainly a lot of numerical indicators during the housing bubble, but no actual negatives until all of a sudden there were and they got out of control.
Again, honest questions here.
A bubble could happen, but, as I explained earlier, as long as Americans are spending money, somewhere, there's not a problem.
Let's take the housing market for example. A bunch of regulations were dropped, due to both parties I might add, and some people made a lot of money. Americans were spending cash, people were getting hired, shit was good. But, a lot of money was tied up in all this shit. When it got bad, all of a sudden that money just disappeared. At that point, all those jobs, all those pension funds that were tied up in the market vanished too.
When that happened is when our economy took a dive. Note, it's not because of the housing market we got fucked, per se, it's because all of a sudden Americans weren't spending money since nobody had any money. All that disposable income for PlayStations and Nudie Jeans and Kindles and Laptops stopped, since people were stretching just to make ends meet. Note that Bush told everybody to go buy shit when we got that sweet $300 check from the government. That wasn't him being funny, that was him being serious.
America does well when it buys things. That's how we're set up. The world has to hold our currency and we have to buy stuff. One depends on the other and if one stops then the other becomes more difficult. Then, and only then, is the debt, and our financial stability, an issue.
Not that creating money out of thin air doesn't have consequences, but we can control that, quite easily, at the moment, because of our unique situation in the world. It's best we keep it that way.