Hype:
I think you're on to something when you remarked on the Soviet collapse. Their might was based on a different sort of credit than the U.S.'s - theirs was a credit of fear and oppression that was built up by Stalin's ruthlessness in the 1930s and 1940s. The might of the U.S. is built on a credit base of industry production and technological innovation. The Soviet hegemony collpased when their fear-based credit line ran out and a new generation of people born after Stalin called the government's bluff.
The U.S. has just about lost all of its edge in terms of industrial production and is rapidly losing ground in innovation. If you are a young thinker with a hot idea, the last place you want to develop it into a product is the U.S.. There's too much bureaucracy and too much entrenched interest to permit any upstarts from getting a foothold. The vast majority of the things we buy come from outside our country. I daresay that a significant proportion of our production capacity is not American-owned. Much of what is American-owned is fatally dependent on foreign sources of raw materials, parts and labor.
If we continue to increase our deficit spending without generating any new sources of wealth, then a Soviet-style collapse feels inevitable.
What warning signs will we see? Hard to say. One thing that makes the U.S. vulnerable is not so much the total federal debt but who owns it. According to
http://www.fms.treas.gov/bulletin/b43ofs.doc, the amount of federal debt owned by "foreign interests" (whatever that means) increased from 13.8% to 21.0% over the last ten years. What if those chips get cashed in suddenly? Or what if foreign investors are no longer interested in buying our debt?
The U.S. has been an incubator for capitalism for well over a hundred and fifty years. I don't consider the biggest corporations as "U.S. corporations" anymore. They are transnational (their word) and have no need for or dependency on any nation. If the U.S. becomes a drag for them, they will have no hesitation to instantly cut us loose. As a result, our current "prosperity" is completely hollow. All it will take is a pandemic, maybe a few more brushfire wars in the right places, or perhaps just the realization that the U.S. is no longer a sexy market and that profits are better in Asia.
I think we will start to see an increase in expatriation as our best minds go where they can prosper intellectually and economically. We will also see repatriation for immigrants who came here to find a better life but who have decided that on the whole they were better off in their homeland. We will also see companies moving their entire operations to Asia lock, stock and barrel. They will skip the moving of manufacturing to places like Mexico to better compete in the U.S. market - instead they will go to where the new markets are because there really isn't much of a market here any more.
Eventually some of the worse-off U.S. states will either declare bankruptcy or else will simply tell the federal government to piss off. A tremendous amount of revenue flows out of states to the federal govt., and all it will take is one or two cases of economic secession to start the dominos falling.
As far as I'm concerned, the sooner the better.
