[SteveAustin]

The debt can never be paid so we have to keep mortgaging more and more of the future to feel good today. Which gereration is going to be buying a loaf of bread with a $100 Federal Reserve note? Yep, we will inflate our way out of this mess. But right now it isn't a bad deal. We are getting all sorts of foreign goods for US Fiat money. I am more worried about the pension and social security problem though than the national debt and the mortgage rate bubble. (although they are interrelated) Too many promises for retirement to too many workers. That and medicare and medicaid expenses the next 20 years will dwarf this mini-bubble IMHO.

[Starwind]

Yep, we will inflate our way out of this mess. But right now it isn't a bad deal.

It is at best a mixed deal. Oft ignored in praising efforts to stimulate the economy or dissolve debt through inflation are:

• The very real effects of raising the cost of living (food, energy, shelter, transportation, education, health care, etc) for the average worker such that their employers find them priced out of the market and go offshore for new labor if not replace existing labor; and,
  
• All of that stimulus is borrowed by us, but 4/5ths of it ends up improving the GDPs of other countries, while only 1/5th goes into the GDP of the US...

i.e. we are 'inflating' and 'stimulating' ourselves into debt while building the workforces and economies of our creditors.

We are borrowing from them to buy their rope which will be used to hang us.

[arete]

Yep, we will inflate our way out of this mess.

Not so sure that is possible either. The FED painted itself right into a corner when Greenspan decided to politicize the FED. How do you debase the currency to the extent necessary, keep interest rates low, attract foreign buyers of debt and promote real inventment here rather than overseas . . . and keep the public solvent all at the same time? If you figure it out, call Alan Greenspan immediately.

Richard W.