Octang Frye

This is quite frightening. It's early days - although the phrase it's later than you think, comes to mind - but do any of you have a bolt-hole to flee to, in the event of social unrest? Would you de-camp to Blighty?

Is there a silver lining to this? Is there a way to make money? Is this being overplayed? How is this different from the Weimar republic?

http://www.huffingtonpost.com/sheldo..._b_677483.html

Zonie

Anywhere in Europe apart from Blighty, Italy probably.

Relax, they are selling newspapers. However, Filger's book at the bottom of his article looks very interesting.

Octang Frye

I hope you are right, Zonie. I'm still looking for some arguments that this is different from Germany in the 20s/30s, or Zimbabwe.

Sally Redux

The whole economic system is inherently flawed and dependent on these boom and bust cycles. Everyone just hopes it will all go away...until the next time.

I don't have a bolt-hole as such, if it got really bad to the extent you're suggesting then yes I'd go back to England, although the prospect of moving in with Mum would be equally terrifying.

MrEmjoy

My dad said the same thing yesterday, and he's not part of the 'tin foil hat brigade' either.

CelticRover

From the article:

"In deciding on a process that will lead to an ever-growing proportion of the U.S. national debt and yearly budget deficits being monetized by its printing press, the Federal Reserve, under the leadership of its chairman, Ben Bernanke, has taken a fateful step towards irredeemable economic and financial ruin, ultimately convulsing America with a savage, hyperinflationary depression. And, as history teaches us, severe economic depressions bring along other unanticipated consequences, often leading to political and social turmoil and even global war."

This argument has been made for the last eighty years, ever since the world largely abandoned the gold standard. However the situation is a serious one and must be handled judiciously in order to restore world confidence in the credibity of the US monetary system, which has been seriously damaged by Wall St excesses. The 800 lb pound gorilla in the room however, is China's future willingness to by US debt, since its economy is now slowing down. If China stops funding US spending binges we certainly could find ourselves in dangerous waters.

Giantaxe

They are more worried about deflation than inflation at the moment. A better analogy would be with Japan in the '90s, which suffered deflation for a decade, aka "the lost decade".

Giantaxe

If China stops funding US spending binges, then China's exports tank causing widespread financial and social issues back in China. China and the US are in kind of a deadly embrace, with each needing each other just as much.

Michael

I'm not sure why conservatives get very worried when the federal government prints a trillion dollars to temporarily purchase treasury bonds to stimulate the economy (quantitative easing) but don't seems to have a problem with banks printing trillions of dollars in an attempt to stimulate bank profits.

Banks print money by through leveraging. Prior to the credit crisis, US banks leveraged so much that it created about $20 trillion of artificial wealth which caused inflation and evaporated when the economy collapsed.

Octang Frye

Not interested in political argument about who is to blame.
I want reassurances there's not going to be a catastrophic meltdown with social unrest.

Giantaxe

Big business = good; big government = bad. It really is that black and white for the tea party clowns. You'd think there would be at least a few shades of grey in between after the financial system meltdown, but that doesn't seem to be the case for them.

zargof

OK then. There, there, everything's going to be just fine.

Better?

Octang Frye

Hmm. I'm not saying you're not trustworthy, but I would hope for some specifics.

Michael

It was done before after WWII when the national debt was 120% of gdp. For the next 30 years the debt was consistently reduced as a percentage of gdp to about 36%. It was only the last 30 years that the national debt skyrocketed as republicans made taxes a dirty word.

There will have to be spending cuts in the military (doesn't make sense that the US spends 50% of the worlds military expenditures), subsidies, and entitlements as well as tax increases.

Neither party in the past has had the courage to cut spending. If they reduce the farm subsidies, they lose the farm vote, if they cut social security or medicare benefits, they lose the retirees vote, and if they cut aid to states, then the states will have to raise taxes to cover lost revenue.

Therefore it seems that all those tax cuts during the last 30 years will need to be undone. However, that seems unlikely so it is likely that there will be a national sales tax which will likely redistribute the wealth from the poor and middle class to the rich.

RoadWarriorFromLP

The silver lining is that the guy who wrote the article doesn't know what he's talking about. He obviously doesn't understand the monetary system or how it works.

The Fed is just attempting to reduce long-term interest rates, as interest rate setting is one of the few tools that it has to manage the economy. The message being sent is clear: Congress isn't doing squat, so the Fed is going to work with what it has left (which isn't all that much.)

If you have a mortgage, go refinance it now, before everyone else gets in the queue to do the same thing. This is a great time to borrow money, assuming that you need it.