Things look bleak on the horizon.  If you have some knowledge of Austrian economics and monetary policy, then you are probably pessimistic right now and for good reason.  This statement is probably overused, but we are living in unique times right now.

In the fall of 2008, the Fed more than doubled the adjusted monetary base.  A move like this in such a short period of time has never happened in the U.S. since the Fed was created almost 100 years ago.  The government debt to GDP ratio is close to 100%.  There are unfunded liabilities for Medicare and Social Security that are estimated to exceed $100 trillion, a ridiculous number.  The government is running deficits over $1 trillion per year now.  There really isn’t much to be optimistic about.

So will we see catastrophe?  I suppose it depends on your definition.  There will be very hard times ahead. However, I think it is unlikely that we will see a total collapse.  I think to prepare for a total collapse is futile, unless you are willing to go all out.  By all out, I mean that you would be living on a farm, out in the country.  Even with that, how would you survive if everything turned to chaos?  What do you do when you need new shoes?  Do you have any medications that you take?  I hope you don’t need to go anywhere, because there won’t be any gasoline to start your car.

While anything is possible, I don’t think a total collapse scenario is likely.  A more realistic view is that we will see hard times ahead, maybe some chaos, but not a complete breakdown of the division of labor.  The biggest fault of most libertarians is that they underestimate the power of the free market.  It is hard to believe since libertarians are the most staunch defenders of the free market.

While we live in unique times as far as the size of the government, we have a competing force.  We also live in a unique time where technology has never been so great.  We have the internet, cell phones, and all of the other latest electronic wonders.  Communication is easier than ever.  The government can’t stop it.  Americans will not easily give up their high standard of living so that we can have more war and more government programs.  Americans will give up some of their standard of living, but there is a breaking point and we are about to hit it if we haven’t already.

While we will certainly see some tough times ahead (the Austrian business cycle theory ensures that), the long-term outlook should be positive.  Don’t underestimate the power of the free market.  Don’t underestimate human nature and people’s desire to live freely.  The free market can beat back the government.  People are starting to resist more.  It is just a matter of time before the tide of big government is turned back.