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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (20161)	10/18/2004 12:55:18 AM
From: Michael Collings	Read Replies (2) \| Respond to of 110194

I don't compare us to Japan.... they are a nation of savers. I compare us to Argentina, where we can no longer survive without taking on more debt. Just to keep things even we have to keep inflating. Every country in the world since the beginning of time going back to Rome resorts to inflating their currency when they can no longer pay back their debts. You better believe that if the rest of the world just stops buying "more" US Treasuries (47% now)Mr Greenspan will start monetizing the debt. Every government picks inflation over deflation and he will do no less. Unlike Japan, we owe the world, more like Argentina. What happens is because we already have taken on so much debt that the economy slows under the weight of all that debt. Tax collections slow down and the government can't afford to have less taxes and the deficits build. That requires more Treasuries to be sold and foreigners aren't that interested in buying them when we aren't buying their goods. So those deficits have to be monetized. (The federal reserve has to buy them). Massive amounts of dollars flood the system and the dollar starts dropping precipitously. That's how you end up with hyperinflation. You think those Asians are just going to sit back and watch their 47% ownership of US Treasuries drop in half or more? They'll start selling what they already own causing interest rates to skyrocket. The rest of the world will have a recession/depression but we will have major inflation along with it.