Friday, February 25, 2011

United States broke

Until the 1970s, the United States is the world's largest creditor. Then in the mid-1980s the U.S. became a debtor and ... since the late 1990s is the world's LARGEST DEBTOR.

This means that the U.S. government owes more money than any other country in the world. Except when additional government debt is eventually solved by raising taxes and controlling spending, only two options left: default (inability to meet obligations) or high inflation.

But the U.S. is almost impossible to pay off debt with higher taxes because it would cause a second Great Depression or a second Great Depression. So the only way to overcome the advantages of this debt is through a devaluation of U.S. dollar is superb.

According to Economists Joshua Aizenman and Nancy Marion, inflation helped reduce U.S. government debt from 122% to 25% of GDP from 1945 to 1973. So do not be surprised if the Fed (U.S. central bank) decided to continue with monetary easing for the U.S. government continue to finance its deficit.

Conclusion: The apparently quantitative easing to infinity or PRINTING MONEY without limits is the best solution at this time. But investors are still advised to remember that the U.S. government can only print money on an ongoing basis during the U.S. dollar remains the world's reserve currency. If not, we will witness a remarkable collapse of major currencies in the world.

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