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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: TimbaBear who wrote (71291)	10/7/2006 12:06:45 PM
From: KyrosL	Read Replies (2) of 110194

Bringing up Argentina or Brazil in this argument is wrong, because practically all of the US debt is denominated in US dollars, which can be created at will by the US Fed. US inflation results in automatic reduction of US foreign debt as a fraction of US GDP, a result exactly opposite of what happens to countries, like Argentina, whose currency is not the reserve currency. What's more, since most US government debt is held my foreigners, it is they, not US citizens, that will incur most of the pain of inflation via depreciation of their assets. The US position in the world is still fairly secure, in spite of the extremely bad governance and huge waste of the last few years. Even with this bad governance, corrective steps are fairly clear and of relatively low political cost -- assuming sane politicians. We are still one of the lowest taxed countries in the world, and have a huge area in our economy (the medical/insurance complex) that can be made far more efficient via a stroke of a pen -- e.g. by copying any single payer insurance scheme of other advanced countries.

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