Posted on 03/22/2010 1:14:01 PM PDT by SeekAndFind
By 2014, International Monetary Fund official John Lipsky remarked March 21, the debt-to-gross domestic product (GDP) ratio of the Group of Seven countries will reach 100%, and the governments of the industrial world will carry the highest debt burden since shortly after the end of World War II.
That is bad news; worse news is that governments are shoveling money into the world banking system to finance the debt expansion. Following the great bank bailout of 2008, the global banking system is socialized de facto, shifting its resources towards government debt and away from private sector financing.
Governments averted a financial apocalypse in 2009 by bailing out the bankrupt banking system. But who will bail out the governments? The answer for the time being is that they will bail themselves out at the expense of the private economy. In the post-apocalyptic financial world, private banks have turned into flesh-eating zombies that cannibalize the private economy in order to finance government borrowing requirements not seen since World War II.
The shift in economic power toward governments and their auxiliaries, the major banks, is unprecedented in peacetime. And it seems to be the intention of the Barack Obama administration "not to let a crisis go to waste", as the president’s chief of staff, Rahm Emanuel, famously declared. The trillion-dollar federal health plan on which the US House of Representatives voted March 21 will effectively nationalize a sector comprising 14% of the US economy - on top of the de facto nationalization of the banking system.
(Excerpt) Read more at atimes.com ...
Figure 3: Yield on inflation-index five-year US Treasury securities 
Figure 4: Net purchases of US Treasury securities by geographic origin, three months through January 2010 
Figure 5: Monetary base 
The world still seems to be willing to finance the American deficit at real interest rates of less than 0.5%, as measured by the yield on five-year inflation-indexed Treasury notes.
The extremely low real yield implies very low growth expectations over a five-year horizon. We appear to have something like Japan’s “lost decade” of the 1990s, in which banks purchased government securities at yields of less than 1% with effectively free money from the central bank.
I thought it was the lOst decade...
Unfortunately we do not have the facility to change typos after they have been posted. I requested the mdoerator to correct it.
I personally don’t see a danger of inflation on the horizon AS LONG AS BANKS AVOID MAJOR LENDING TO THE PRIVATE SECTOR AND CONTINUE TO BUY GOVERNMENT SECURITIES as seems to be happening now.
With Gallup reporting 20% underemployment, labor cost will remain depressed. Hence I don’t see commodity price inflation translating into consumer price inflation under these circumstances.
This is EXACTLY like Japan’s lost decade.
The US is depending on the dollar’s reserve status to keep this going by flooding the world with US debt.
Not sure how long this can last.
I personally don’t see a danger of inflation on the horizon AS LONG AS BANKS AVOID MAJOR LENDING TO THE PRIVATE SECTOR AND CONTINUE TO BUY GOVERNMENT SECURITIES as seems to be happening now.
With Gallup reporting 20% underemployment, labor cost will remain depressed. Hence I don’t see commodity price inflation translating into consumer price inflation under these circumstances.
This is EXACTLY like Japan’s lost decade.
The US is depending on the dollar’s reserve status to keep this going by flooding the world with US debt.
Not sure how long this can last.
I’m gradually hedging against inflation,
actually, against HYPERinflation,
which I foresee as the only possible outcome
of this out of control spending.
Buy tangibles. Arable land. Food. Seeds.
And of course, guns and ammo.
When the dollar does crash, this nation will be in deep doo doo.
I read somewhere that we already have had a lost decade. I believe the comparison was made in terms of the dollar and the S&P. Or was it gold? But I am sure ANOTHER lost decade will be assured with the death care being passed.
BUMP!
Spengler is not an idiot....worth reading
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