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It may be that our mammoth federal debt will NOT bankrupt the USA after all:
Quote:
Moreover, adding money to the money supply cannot hurt the economy when the money supply is shrinking, as it is now. Most money today consists simply of bank credit, and bank credit is shrinking because banks are deleveraging. Bad debts are wiping out capital, which wipes out lending capacity. QE2 is just an attempt to fill the empty liquidity pitcher back up -- and a rather feeble attempt at that. Financial commentator Charles Hugh Smith estimates that the economy now faces $15 trillion in writedowns in collateral and credit, based on projections from the latest Fed Flow of Funds (September 17, 2010). Based on his projections, it might be argued that the Fed could print enough money to refinance the entire federal debt without creating price inflation.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,756,161 times
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If that is true, than why not just print up $12 trillion, pay off all the debt and give everybody a year long tax holiday?? That would get the economy moving better.
Printing up the money and paying the debt would not please the bankers. Then who would they lend the money to? If they didn't lend the money they would not make any and go broke. When they went broke they would not be anything to owe the money to. That sounds pretty good. Start the presses!
The U.S. does not have the productivity or innovative growth to support $12 Trillion in new money supply in a short time span. It wouldn't cause hyper-inflation though, she is right. It would just be "high" inflation (~10% annual).
Debt is meaningless.. I know many here dont understand that but it is.. Its deficits that are the killer..
To try to explain, who has more debt, you or General Electric, Donald Trump? Clearly these organizations have more debt, but are they in worse condition than you? Most likely they arent. Debt by itself is ok if you have income to substantiate that debt.
I've got tens of millions in debt, its a non issue.. It only becomes an issue when a tenant moves out and I cant support the debt. I'd gladly take on $1T in debt if I could use it to bring in $100B in income.. understand?
Debt is meaningless.. I know many here dont understand that but it is.. Its deficits that are the killer..
To try to explain, who has more debt, you or General Electric, Donald Trump? Clearly these organizations have more debt, but are they in worse condition than you? Most likely they arent. Debt by itself is ok if you have income to substantiate that debt.
I've got tens of millions in debt, its a non issue.. It only becomes an issue when a tenant moves out and I cant support the debt. I'd gladly take on $1T in debt if I could use it to bring in $100B in income.. understand?
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.
I go with the latter; don't waste your time trying to explain that to me---it's WAAAYYYY over my head. I guess macroeconomics is not the little guy's thing. I can barely grasp the mechanics of how I'm suppose to balance my checkbook, let alone how they're going to solve this 15 trillion dollar debt.
PS If indeed they are.
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