Posted on 09/04/2009 6:26:50 PM PDT by sickoflibs
Almost everyone is aware that federal government spending in the United States is scheduled to skyrocket, primarily because of Social Security, Medicare, and Medicaid. Recent "stimulus" packages have accelerated the process. Only the naively optimistic actually believe that politicians will fully resolve this looming fiscal crisis with some judicious combination of tax hikes and program cuts. Many predict that, instead, the government will inflate its way out of this future bind, using Federal Reserve monetary expansion to fill the shortfall between outlays and receipts. But I believe, in contrast, that it is far more likely that the United States will be driven to an outright default on Treasury securities, openly reneging on the interest due on its formal debt and probably repudiating part of the principal.
(Excerpt) Read more at econlib.org ...
If you realize both parties in Washington think our money is theirs and you trust them to do the wrong thing, this list is for you.
If you think there is a Santa Claus who is going to get elected in Washington and cut a few taxes and spend a few trillion and jump start the economy, and get our lost money back, this list is not for you.
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This was sent to me by email. It is true the federal reserve could cut off the money supply and if everyone doesnt race to the dollar again, we are screwed.
THere would be no point. If they defaulted, it would hurt the currency more than just printing more money.
Thanks for the link
With this administration, I could see it.
This is the doomsday scenario where dollar depreciates so much that the federal reserve is forced to step in like Volker under Carter (yes, Carter) to save the dollar.
They’re still buying metals. We`good yo.
Jim Rogers advice is still farming and energy long term, especially since our socialists (both parties ) burn our food as energy. You cant print food and energy.
I disagree.
While either choice impairs the currency. At least this way it is less damaging to Americans than inflation would be.
No way. It would be too honest.
They will print there way out of it. Say hello to Zimbabwe.
I disagree, because I believe that the result of defaulting on any treasury bills would be a catastrophic devaluation of our currency, which given our dependence on foreign imports would result in hyperinflation in any case.
But that is just my opinion, not something I am certain of.
Sure. We are only going on our own opinions/world views.
I just look to see what other countries have done and Russia or Iceland look better than Zimbabwe.
Not that either situation is ideal.
Good point about oil.
We should be on a crash course to turn natural gas into a viable transportation fuel right now.
by: Mark Sunshine
September 03, 2009
Conventional wisdom is that the Fed’s printing presses are running overtime and the economy is awash with liquidity. Earlier this week the National Association for Business Economics reported that almost half the economists they surveyed believed that Federal Reserve Policy is inflationary. Too bad the NABE-surveyed economists and conventional wisdom are wrong.
Economists, pundits and journalists who climb the soap box to lecture Bernanke & Company about the evils of printing too much money need to take a second look at Federal Reserve policy.
If the Fed critics were correct, then overly aggressive monetary policy would be increasing the amount of money supply and hyper-inflation would be right around the corner. But, inflation is in check and if the Fed keeps on its current monetary trajectory high inflation isn’t in the cards for the U.S.
{snip]
And gold isn’t up to almost 1,000 an ounce.
Now it is true we do not have hyper-inflation...yet. But we have more inflation than they say (since the beginning of the year)
I agree.
I was shopping with a friend tonight and asked him why he thought the price increases we were both seeing doesn't show up in the CPI (consumer price index). He said, "the government is lying."
Inflation in one school of thought is measured in prices. However, the Austrian economics school of thought is that inflation is measured in terms of amount of currency and credit available to chase after goods and services. Too much money supply is inflation, a contraction is deflation.
You are absolutely right.
I misspoke a little in that I was talking about the symptom of inflation (rising prices) rather than actual inflation (increase in the money supply)
Let's make a minor change to that statement and assume say that it was made on Sept. 4, 2008:
If the critics of Wall Street and government policies were correct, then a huge recession would be right around the corner.
Sometimes the "official numbers" can mask underlying problems.
Just assume that all government figures are cooked. The CPI particularly so, because so many other things are coupled to it, such as SS COLA's and (I think) the income tax brackets. So if the gummint keeps the CPI artificially lower than it honestly should be, they make money.
You’re welcome.
You know, it’s funny, because people argue about the form of the coming monetary problems in the US.
However, no one argues there isn’t a coming fiscal train wreck.
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