Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (276362)	2/5/2004 10:37:44 AM
From: Tommaso	Read Replies (2) \| Respond to of 436258

>>Until this debt is wiped away I do not think rates are headed anywhere but steady or down<< There is no incentive to get out of or repay partially debt that is effectively cost-free. If one has the prospect of enjoying a million dollars of assets indefinitely at a yearly cost of less than $20,000 in interest, especially if that interest is tax-deductible, there is a great incentive to take on that debt. Much of current personal debt will have to be wiped out by bankruptcy, both of individuals and institutions--perhaps even entire states. This event would be profoudly deflationary except that Federal government expenditures will continue, and also personal bank balances will be protected by the FDIC. The government will have to create money to cover these expenses. Borrowing by indivudals and businesses, however, will become more difficult and credit-worthy borrowers will have to pay higher rates. On the international level, as soon as the Chinese and Japanese cut back on their purchases on US Treasuries, the government itself will have to pay higher interest to auction its bonds. Or so it seems to me.