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

To: kris b who wrote (49977)1/17/2006 12:03:33 PM
From: GST  Read Replies (4) | Respond to of 110194
 
<Government can spend as much as they want>

No they can't -- that is the point. Government can spend as much as they can borrow. The US government cannot borrow enough from its citizens to finance our enornmous debts because on average we don't save. Instead we borrow from foreigners and that opens us to currency risk that Japan did not have.

Tell me about any country in history with a large current account deficit that experienced deflation and you will have my full attention.



To: kris b who wrote (49977)1/17/2006 12:08:25 PM
From: shades  Read Replies (2) | Respond to of 110194
 
Creating money is meaningless if it can't find its way into the economy. Once again, collapsing velocity causes deflation. It will not be inflationary if nobody spends. It will just sit in a saving account without putting pressure on prices.

Why cant the government take the money and spend it directly on social programs or other gubbment waste? bypassing the banks who would increase their reserves as happened in the last US depression?


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