For unknown reasons, Northern Trust bank — the keeper of Jenna and Babs’ trust funds — has renamed Paul Kasriel’s weekly economics column “positive economic commentary.” The name change hasn’t at all altered its somewhat alarmist tone, particularly on the pending dollar collapse. Kasriel has pinpointed 2005 as the year when foreign central banks, as in 1973, give up on propping up the deficit-wracked dollar by sinking their own currencies with expansionary monetary policy — thereby triggering a dollar collapse, an inflation shock, and a long-term spike in interest rates.

Currently high US productivity is being sustained based on investments in education and physical capital made in the past, but unfortunately, public and personal investment in the US has plunged to Depression-level lows. Businesses are socking away cash (saving, but not investing, since the bubble dampened the market for new ventures), and the Rest of the World is buying up US capital, but personal and government spending is overwhelmingly going to prop up the US consumption machine (or towards dubious wars). “Will these SUVs, McMansions, and government spending programs allow us to grow faster in the future? If not, will we not have to suffer more of a decline in our future (or our children’s future) standard of living when we have to service our foreign debt?” To which I might add: both massive fiscal debts (the entitlement crunch, deferred infrastructure maintenance and investment) and environmental debts will come due in the 21st century. Where will we find the capital to address those needs and maintain the current consumption orgy?

Another interesting idea: since 2001, US GDP has actually declined by about 15%, if dollars are translated into gold. Gold is a more reliable long-term store of value than fiat currency; hence, its longtime popularity in politically unstable societies.