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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (148107)	1/5/2015 5:52:22 PM
From: RetiredNow	Read Replies (1) \| Respond to of 149319

Quite possibly. Deflation can be very bad. The problem is that the Fed has painted us into a corner, while Congress has sat on its thumbs. The ultimate solution to all this mess is not to pile on more debt on top of massive amounts of bad debt. The mathematical law of compounding numbers tells us that there will come a breaking point when it all collapses. The Fed has tried to inflate away the debt with QE and has bought some time with ZIRP, but now we're massively leveraged and inflation has failed to kick into gear. Why? Simply put, growth is non existent because companies aren't investing their capital as they would do normally, but rather they are levering up to return capital to investors. Companies are doing this because the consumer is over-levered and has stagnating wages to boot. In short, the 99% is dead meat. Meanwhile, Congress and governments the world over have not done a damned thing to put their fiscal houses in order. They just continue to deficit spend and borrow more and more to pay for things no one can afford. So the Fed and CBs the world over have responded by dropping rates to rock bottom and printing money. All of it is a giant circle jerk that bought us time, which our governments squandered. A different path would have been to live within our means, deleverage, take our economic lumps early and hard, and allow capitalism to have driven a reset to wipe out the bad debts. We chose neo-Keynesianism instead and we are watching as the slow motion train wreck unfolds. This was all very predictable. I think one thing everyone is going to learn yet again from this episode in history is that looking to the Fed is not the answer and letting Wall Street run wild is also not the answer. Fiscal and monetary balance is the answer. Capitalism within a tough regulatory framework is the answer. We need to definancialize our economy and send our best and brightest to Silicon Valley, instead of Wall Street.