Say, I just went over to your own thread, where you just posted something that contains the following:
History provides some harrowing examples of what happens when an economy collapses under the weight of unsustainable debt. One of the most chilling is Argentina in 2001. When the International Monetary Fund cut off its support for the country's escalating debt, the effect was catastrophic: the value of the national currency plunged, decimating the savings of millions. The resulting surge in inflation and sudden slowdown in consumer spending put thousands of businesses into bankruptcy within weeks. That, in turn, put further millions out of work and pushed one of South America's biggest economies into a punishing recession.
As unfathomable as it may seem, most economists think something like that could happen in the United States. "If foreign investors look at the long-run outlook for the federal budget and decide there is going to be a crash, you get a financial panic," Bivens explains. "Interest rates spike. That causes a huge recession. You'll have the dollar falling fast, so maybe inflation is sparked at the same time." And if interest rates spike, that would squeeze millions of U.S. consumers who have taken out loans against the rising value of their homes in recent years. A sudden hit to the real estate market would further constrain consumers' wallets, leading to a cycle of lower spending, and deeper recession, Bivens says.
Apparently you think "recession" is synonymous with "deflation." It's not. The first word describes business conditions and the second describes a monetary phenomenon. You can have both recession and inflation at the same time. Can this happen? It not only can--it did, in the United States, 1973-74, and it took eight years to recover from that stagflation. You are looking for something to happen that was common in the period 1870-1933 and which has not happened since the United States began to go off the gold standard. |
