The Oil Drum

The best book on the subject at the moment (IMO) is Financial Armageddon by Michael Panzner. Another I would really recommend for historical perspective is The Great Wave: Price Revolutions and the Rhythm of History by David Hackett Fischer - it's a history of inflations and their aftermath going back over several hundred years. It's much more accessible and readable than it sounds.

I don't think we'll see an increase in government spending in the sense that you mean (ie Keynesian) during a depression. A liquidity crunch means that there will be very little money available, and not nearly enough to cover even what people would regard as necessities. (Trying to run an economy with insufficient money is like trying to run an engine with the oil light on - it doesn't take long to seize up.) I think the US government will repudiate its obligations, particularly to its own people, as these are already unpayable even without an economic collapse. The indebted middle class will be ruined, as they were during the Argentine financial crisis for instance (see And the Money Kept Rolling in and Out by Paul Blustein).

I don't think we'll see money printing until all access to foreign financing is lost (hence the need to continue servicing obligations to foreign bond holders in order to avoid being cut off - the bond market is a hard task master). I'm not sure how long this would take as we've never had a credit bubble the size of the one we have now - one that penetrates into every corner of the economy. It makes it difficult to guess how long it might take to unravel. My best guess is that we will see at least a decade of deflation and depression and that hyperinflation could set in some time after 2020.

I agree with you about not looking like a democracy anymore. When there is nowhere near enough to go around, you would tend to get either anarchy (if rationing is by price and the poor are simply expected to do without) or totalitarism (ie central control of essential supplies is imposed). My opinion is that a much greater degree of central control will be imposed. Emergency powers legislation to suspend constitutional checks and balances and impose a unitary executive already exists, ostensibly to deal with a major terrorist event. Unfortunately powers granted rarely lie dormant and are almost always abused at some point (I have a law background, so these issues are of particular interest to me). See this article for instance.