Posted on 12/13/2008 8:06:13 PM PST by SecAmndmt
Like many pragmatic economists I have always warned that rapid expansions of government debt would result in inflation and higher interest rates. The explanation was always simple: rising supply of government debt inflates the money supply and weakens the government’s ability to service its debt through legitimate means.
(Excerpt) Read more at financialsense.com ...
I just posted a similar article on inflation. My son and I recently restored a ‘67 Camaro. The analogy I used to explain what was going on was this: Suppose the govt. all of a sudden dumped a billion restored ‘67 Camaros on the market. Would yours be worth much? He got it. Same things gonna happen to our dollar as soon as this money starts hitting the open market. Good post!
I normally would think the same thing. The big difference is the 10 year bond is a very low interest rate, meaning most people are counting on low or no inflation for the moderate term future.
btt
ping
I see Peter has finally decided on a reason that the Fed would want to issues its own bonds.
“I see Peter has finally decided on a reason that the Fed would want to issues its own bonds.”
Could it be that the Fed wants to issue its own bonds so that it can get around Congressional approval on debt level?
BFL.
Half the experts are saying we're headed for a depression and the other 50% are saying recovery starts this spring ?
Half the experts are saying all this debt is really bad and the other 50% are saying it's good to run up the debt in a recession ?
They are really making it very hard for someone who owns two businesses like me to plan on the future ?
Do I get ready to lay everyone off because we're heading for rougher times or do I invest more in hiring and training people so we're ready for the boom ?
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