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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (37928)8/5/2005 9:58:13 PM
From: Umunhum  Read Replies (3) of 110194
 
You are not going to loan it out at all. Money supply will implode. Demand for money will drop. The bank will be unwilling to lend to those going under and those in good shape will have no reason to borrow.

I see, so there will be no interest rate what-so-ever because there will be no borrowing or lending. One day you are going to realize how ludicrous your scenario is.

the FED will react by lowering rates just as Japan did.....
With the same predictable results I might add.

Wrong again. If the economy implodes, so does tax revenue. You seem to think that the foreigners are going to continue buying our treasuries (and holding the ones they already own) despite the fact that it is going to be apparent to everyone that the US Government is insolvent. America's manufacturing base has been exported overseas. There is virtually nothing left that we can trade that is going to support the dollar. The US Government would have to start printing like crazy, interest rates would skyrocket and the Dollar would die.

Japan's government didn't have a huge deficit that required foreign funding and it didn't export it's manufacturing base to other countries.

There is only one way out of this mess and that is to devalue the dollar. And to think that interest rates are going to go down while the US Government devalues the dollar is crazy.
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