The ostrich-like approach of the Obama administration and the Fed to these issues cannot continue much longer.
I give five to one odds they do.
They don’t have an ostrich like approach. The inflation resulting from the devaluation we are witnessing is the only salvation, the only cure for the cancerous debt. The devaluation is by design.
Massive spending reductions will lower the slope of the debt growth curve but will do nothing to reduce the outstanding debt. Only inflation and devaluation will do that.
The power of compounded moderate inflation is immense and over a mere five years at 7% can reduce the debt by half merely by devaluation. The trick is to establish a moderate and tolerable rate of 7%
Some think the US$ will be dropped as the reserve and that may very well happen. My view is that many others have a very similar problem and there will be a general relative devaluation and price inflation. Gold and silver are primary indicators the process is in effect.
A good old fashioned major war is about all that can knock the process off track. I don’t discount that possibility.