blam, I have a question, what do you think would happen if the US federal government reversed course and announced massive budget cuts as opposed to spending worse than a drunken sailor? I’m talking about (fantasy talk I know) rescinding the balance of the “stimulus” and returning the money to the Treasury, sending all returned TARP funds (and interest) to the Treasury, reversing course on Obamacare, cutting all discretionary and non discretionary spending, nothing spared. I tend to believe the markets would actually respond favorably, that fiscal discipline would be greatly repected. What do you think?
You would get a deflationary depression or severe recession that is deflationary. Because you will have destroyed trillions of dollars. This makes all surviving dollars worth more. Inflation is when your dollars are decreasing in value and buying power
Maybe the deflationary "cleansing route" is the way to go and maybe it is inevitable but we are always putting off this day of reckoning by bubbles and extreme stimulouses....you are mentioning just a part of the overall 0bama-stimulous