Does the United States Need a Debt Reset?

David Friedberg says the United States is fundamentally going to need some degree of reset. The country has the same debt to GDP as France and only modestly higher GDP growth, and David Friedberg does not think the United States can run a higher deficit to GDP than France.

How far the collapse goes decides the path. David Friedberg describes a social collapse, with rioting and murder, or an economic collapse like the ones Argentina, Brazil, and more recently Greece went through, where the government got too big to service the debt and the economy had to be restructured. Massive protests, an incredible loss of net worth, and an inflation effect wiped out asset values, and the result was an economic reset without a great social reset. David Friedberg wants the left and the right to put on hard caps, go in the mines, and cut the yearly deficit from seven and a half to four in a way that does not destroy the economy.

Taking away federal student loans would deflate higher education. Reducing underwriting and the volume pushed through the federal home loan system would hit housing. David Friedberg says federal home loans have been used to keep prices and home net worth high so the middle class stays solvent and feels wealthy, and the hit would drop middle-class net worth by 10 to 20 percent.