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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (6081)1/24/2004 10:41:42 AM
From: Little Joe  Read Replies (1) of 110194
 
The isssue isn't so much can we inflate our way out of debt so much as when the piper will be paid. It is political suicide for those in office to admit they screwed things up and tell us we have to take the medicine. Ergo that will not happen until everything else has been tried. What else can they try? They have lowered interest rates about as much as they could to no avail. Increased the money supply to no avail and now they are devaluing the dollar, which I do think will have a jobs creating effect on one hand but goods will be more costly on the other hand.

Since we live in a debt economy and many people are maxed out they can't borrow to buy more. In this situation, the government can just give more "tax refunds". Will this work. Probably not. But it will forestall the situation. Undoubtedly there are many devices they could implement which do not occur to most of us. (Never discount the ingenuity of politicians when it comes to staying in power.) At some point in the future the situation will become so unbearable, perhaps like post WWI Germany when reality will have to be faced and I suspect most debt will be liquidated through bank ruptcy. Of, course the time frame is the question? Of that, I have no firm opinion.

Little joe
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