Phil > Inflation in housing, financial markets, banking, and commodities will therefore continue unabated. The DJIA is heading to 100,000, to 1,000,000 a little while later. And it will cost $100 for a cup of coffee. And no one will notice or care??
Theoretically, I suppose so, but there are also very strong deflationary forces which tend to offset runaway inflation. If people are unemployed, or can't find money to borrow, they simply can't buy. So, as I see it, the whole economic system is really a game, a balance if you prefer it. Inflation is offset by deflation, devaluation of the USD is offset by intolerable conditions in countries which are forced to revalue and which, therefore, are compelled to purchase dollars. US debt is offset by the credit given by countries which are happy to buy the debt. No-one compels them to.
I know many people are concerned about the US debt and I don't know where or how it will end? But I do know that, like an addict, the US cannot stop printing money (creating the debt). If it tries to there will be a recession and if it succeeds there will be a depression, like in the 1930s, or worse. I also know there is no American politician alive who will compel the US to "take that medicine". Furthermore, I also know that the US debt is sucking up most of the world's savings, which also seems unsustainable. Meanwhile, all this is still going on and we are all still here.
If we can believe what we read, the US accounts for most of the economic growth taking place in the world. I don't know where it is or how it happens, but apparently it does. That's why I say the status quo, namely the US-China "partnership", can continue because both countries benefit and, indeed, they dominate the world economy. Therefore, whatever debt is sustained by the US, if China is happy to sustain it, and the US is happy to incur it and pay interest on it, why is anyone else concerned?
Just because the US books don't balance. Surely that's China's problem? And they don't seem too worried.
> Although economists and bankers express little concern, I know of none who believe that debt has no limits. It is therefore only a question of how much debt can be accumulated.
And, who knows what the number is? Is it five trillion, ten trillion, fifteen, twenty? What?
No-one knows. |
