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

To: Skeeter Bug who wrote (107414)	2/20/2010 10:26:11 AM
From: arun gera	Read Replies (1) \| Respond to of 110194

>the problem arises because only principle is loaned, not the interest to pay it back. in short, there is never enough money in the money supply to pay back previous debts, so they keep expanding the money supply (through the issuance of ever more debt) and inflating the dollar away.> If this debt creation increases productive activity (goods, services) at a certain rate, say 5 percent, then if money supply is created at about the same rate, then the money supply is a fairly close estimate of the productivity of the society. Now, if US creates dollars through federal government debt, and then gives them to China, and China produces good and services at the a certain rate, then the total productivity of the world has gone up, and those additional debt created dollars now reflect the new goods and services that are available to the world (and americans). -Arun

To: Skeeter Bug who wrote (107414)	2/21/2010 2:46:28 AM
From: clochard	Read Replies (1) \| Respond to of 110194

That all depends on whether the Dollar (and the U.S.A.) are too big too fail, and whether other currencies are better or not. The euro seems to show a few cracks. Who knows what China is up to. Its a cartel of the goliaths. The housing bubble was caused by people trying to get rich avoiding the stock market goliaths, so bucking the system isn't such a great idea either. Building wealth isn't a matter of saving money because it robs the economy of liquidity, according to: Message 26204936