Suppose for a minute that bonddad, instead of the excellent, excellent The Swan is still Black, and We're Still Screwed by ManfromMiddletown, is right and
While things certainly are not great right now the evidence is the worst is behind us.
What would be the implication for America?
Not a bubble popping, black swan, depression event, means that current trends are expected to continue. The President puts it well
Without serious reforms, we are destined to either see more crises, or suffer stagnant growth rates for the foreseeable future, or a combination of the two.
If bonddad is right and unemployment bottoms out (without the jobs ever fully recovering), the dollar sells off (but not enough end the trade deficit and bring those jobs back) and some new, weak recession versus depression policies are introduced, then it might be the end of American civilization as we have known it.
First if serious, serious depression style changes are not made to control our upper class then hope for American liberty dies. In 1979 the top 1% of this country made 9.3% of all income. In 2006 it was 18.8% of all income.
bonddad the myth is not the black swan - the myth is trickle down economics.
The idea has had enough power to be used as part of a long process to lower tax rates on the wealthiest Americans. According to the Tax Policy Center, the top marginal tax rate in the U.S. stood at 70% when Reagan was elected in 1980, falling steadily to 28% by 1989, before it began to rise modestly. The top marginal rate now stands at 35% against a peak of 94% in 1945.
"Increases in inequality lead to more growth," the paper’s authors wrote. "There appears to be some trickle-down effect in the long run, but since the impact of a change in inequality on economic growth is quite small, it is difficult to be sure from our estimates whether the bottom 90% will really be better off or not."
If its really business as usual as bonddad predicts then the good folks of Goldman Sachs are our lords and masters - forever. This is the real reason for the unending spew of propaganda from all corners proclaiming that this is just another recession. Through some sleight of hand our government, and bonddad, hope that American's economic liberties can be brought down to a new and lower steady state without the rabble rising up. So if we can just gradually exclude more and more people from an American 1st world economy, then those whom have profited from the free trade, oil dependence, enormous debt, war mongering of the past near 40 years can continue to do so. But if, as seems to be the case, the bottom is falling out - then its over and America's elite must actually implement "change we can believe in" or face pitch forks.
Think of this then as a political bubble. As with the housing bubble one can look at in different ways. If you own a house then how terrible that its value is falling. If you don't then the bubble bursting is a good thing. As much as living through a depression is horrible for America, the political/economic bubble not bursting could be far worse for America and its trading partners.
Being in tech I have seen this debate before. Even though many of us would profit greatly from the bubble not bursting, very few bottom level software developers even dreamed of arguing that it wasn't a bubble. As one colleague of mine said at the time, "Of course its a bubble. And when it pops its going to splat on everyone." And suppose it hadn't - Google would now be 100% of the world economy? Come on bonddad now is the time to think through exactly what kind of America you are predicting.