Town Hall Meeting

15 May 2009

Timeline for “US debt on default path”

Filed under: — Administrator @ 2:23 pm


“The US dollar will inevitably bear the full and ferocious brunt of the decidedly hyper-inflationary policies of Washington, notwithstanding the Federal Reserve’s empty promises to reverse such policies swiftly to protect the currency when inflation inevitably rears its ugly head again.”

“All the while, the strongest evidence indicates that when economic recovery finally arrives, it will be feeble at best for years to come. So the financial and economic sectors won’t be able to withstand any promised rapid reversal of Washington’s hyper-inflationary policies. But nor will the dollar be able to withstand the option of leaving such policies in place. Washington is therefore setting up the most colossal catch-22 imaginable for the dollar and for the US economy. The dollar cannot survive such a scenario intact.”

China and its Eastern partners in Asia and the Middle East, have soured on the dollar’s future beyond the short to medium term. They’ve entirely lost faith in the ability of the US to really get its monetary, financial and economic houses in order before the repercussions of shortsighted policy come home to roost with a vengeance. They’re preparing new solutions that will take two or three more years to fully enact but which will shove the dollar aside toward the margins of international finance and international monetary policy. The handwriting is therefore on the wall for dollar-denominated financial assets.”

“When the catch-22 alluded to above soon becomes fully set in place and irreversible, say in the next few months when sufficient new sovereign debt is actually racked up, and then a short distance farther down the road when Washington, the Fed and the Treasury try to withdraw the present hyper-inflationary policies and find themselves fully trapped in that catch-22 bind, with no viable way out – say within the next 12 to 24 months – then Washington may have no choice but to let the Treasury default on some flavors of sovereign debt, while simultaneously inflating away some other flavors.”

“Unless the most rosy and unrealistic scenario comes about wherein vibrant US economic growth returns very soon, unless the government toxic asset and bailout plans become renowned successes, unless securitization gets a new lease on life and America is able to quickly get its house in order in the next three to four years, the dire forecasts here for US sovereign debt defaults and a dollar crisis, with all their colossal implications and repercussions, are unavoidable in the next 24 to 36 months at most. The UK and Japan face a similar outcome.”

-Thanks G for the excerpts and link!

Where are the US news media and leaders? Simple economics 101 teaches that massive deficits and debt will lead to inflation or default or both. People should be warned so they can take measures to protect themselves!

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