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Name:
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MartiniMan
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Subject:
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I'll try to explain
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Date:
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3/28/2009 11:30:57 PM
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Ultimately there are only two mechanisms to pay for this unbelievable spending orgy. The first is to issue government debt that is purchased by private individuals, corporations and foreign governments. By far the biggest purchaser to date has been foreign governments like China and Middle East countries (Dubai, UAE, Saudi Arabia, etc.). They all have a vested interest in propping us up because we buy their goods (oil, manufactured goods, etc.). Having said that, many are making noises about balking at buying our debt and creating a new benchmark currency. I am not sure they can afford to make this happen but the mere suggestion should scare the he!! out any thinking American.
The only other option is to simply print money and put it into the system. The problem with this approach (which has been used by all too many countries like Argentina) is that it causes hyper inflation and generally destroys the economy. Many countries in the world really fear this is where we are headed and we will take them down with us. I frankly can't blame them for their fear.
At the end of the day though, even if they use option 2 temporarily the chickens will come home to roost and they will have to not only increase taxes but take some of the steps our socialist brethren in Europe have taken (i.e., accept high unemployment, rationing of health care services, etc.). Given our current economic circumstances this is probably the most irresponsible act of governing we have seen since the New Deal which prolonged the depression, kept unemployment at around 17% or more and the stock market essentially unchanged for over 10 years and created entitlement programs that even today we are paying for.
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