Can someone help me with the math?
- 03-19-2009, 09:28 PM
- 03-19-2009, 09:54 PM
- 03-19-2009, 11:53 PM
This isn't likely to create an inflation. It may moderate deflationary pressures. If prices and output are falling, increasing the money supply does not necessarily produce an inflation.
Like I said, buy gold, gold miners, and oil producers.
That gold and oil are wildly popular in an environment of rising unemployment and lowering inflation is a testament to the power of a thoroughly histrionic media.
Debt is at ~65% of GDP. This is a mid level for a developed economy. It has been as high as 140% of GDP. The majority of the interest is payable at 3-5%. Is it a problem? No doubt. Is it insurmountable? No, higher levels have been paid off with far, far lower levels of disposable income and in a low-inflation environment.
These deflationary cycles have to be disrupted with either fiscal or monetary policy, or we get a Great Depression 2.0. It means large increases in the money supply and large deficits in the short run, but if you don't disrupt these cycles, then you wind up damaging the real economic activity that is at the core of a strong currency and sound tax revenue.
Given time and a solid monetary foundation, the economy will heal on its own, in a healthy manner. With these currency games, we're setting ourselves up for an even bigger bubble than oil, techs, and real estate, that will pop even harder than the previous three. Currency games are the most surefire way to get a second great depression.