Is An Economic Collapse Just Around the Corner?

I don't know much about Ben F. Terton. But he has written an intriguing piece on our nation's economic mess, and I thought it was worth sharing with Legal Schnauzer readers.

Terton writes at The Moderate Independent Web site, and that's all I know about him. I have no idea what, if any, credentials he has for writing about the economy. But his latest article, titled "Hold Onto Your Seats--The Economic Collapse Is About to Begin," is filled with analysis that I find compelling.

I hope Terton is overstating some of his dire predictions. But I think his diagnosis of what fundamentally ails our economy is on target.

Here is a capsule of Terton's main points: Since 1970, prices on many products have risen to the point that regular Americans cannot afford them. Middle-class folks first adjusted by turning to two-worker households, as women flooded into the workplace. A second adjustment came as the middle class grew increasingly dependent on credit.

But regular folks, the ones who keep our economy humming, simply could not keep up with soaring prices. The result? Two-worker households today cannot afford what one-income households could buy in 1970.

Easy credit helped keep this unsustainable situation afloat. But with credit markets now stumbling, many Americans feel like they are on the verge of an economic drowning.

What is Terton's prescription? He says average wages need to take a massive jump, while top-level wages plummet. But he is quick to add that won't happen easily or quickly.

Terton is not a newcomer to this subject. Roughly one year ago, he wrote that our economy was due for an across-the-board deflation. That process won't be fun, he seems to be saying, but it beats continuing on a path of flimsy credit that has been propping us up for a generation or more.

What's ahead over the next year or so? Terton poses the question this way: Will we go into a depression or an all-out economic collapse, such as those we've seen in Argentina or the Soviet Union?

Is there any chance that the worst of our economic crisis is behind us? None, says Terton.

Not a cheery thought, so the reader might reasonably ask: Does this guy have anything encouraging to say? Well, actually he does.

Terton is high on Barack Obama's economic plan, going so far as to call it brilliant.

Obama, Terton writes, brings a radically new philosophy to replace the refried Reaganomics that brought us to the precipice. The Obama idea is to trust government over business, rather than the other way around. "A fundamental shift," Terton says, "and not a moment too soon."

Here is a critical question: Will the American public support Obama's plan or fall for Republican rants about the danger of "big government?" Those rants that are sure to come, perhaps with "Harry and Louise" style ads that helped torpedo the Clinton health-care plan in the 1990s.

Does the GOP have an updated version of Harry and Louise in the works right now?

For those who have forgotten about Harry and Louise, here is a reminder. Will we be seeing this sort of garbage soon about Obama's economic proposals?