AEIdeas

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Discussion: (5 comments)

  1. So because the Fed is just adding zeros on a computer instead of firing up the printing presses — all’s gravy? Color me unconvinced. America certainly qualifies for having out of control debt, money-printing, and general economic chaos.

  2. SeattleSam

    Storing 90 Trillion gallons of water in towers isn’t really flooding the city either. But what exactly do you think is going to happen when you start releasing all that water someday?

  3. LOL…The way that I look at history there is nothing to suggest that the US government is any different than other governments that have resorted to liquidity injections and massive borrowing schemes. The price of gold will tell us what investors think of the effectiveness of the central planners at the Fed and Treasury.

  4. Jon Murphy

    I don’t think hyperinflation will be a problem in the foreseeable future.

    The US has our debt problems, but they are nothing compared to those of the Weimir Republic or early Soviet Union (their respective debts were about 4-5x their GDP. Ours is little over 1x).

    The US has our economic problems, but they are nothing compared to the crippling unemployment experienced in the post-war nations.

    The US has our infrastructure problems, but we still possess some of the best roads, trade hubs, and reliable energy plants in the world.

    Above all, the US is still a relatively free and open economy. It is possible for competition to keep costs low and consumers can always turn to cheaper goods. As long as we keep our trade barriers low (preferably non-existent) and our currency can be easily traded, hyperinflation will remain a scare tactic and nothing more.

  5. James Tetreault

    What do you think the actual value of those mortgage backed securities is? Almost nothing. From lawsuits and the pitifully small amount of investigative reporting that’s gone on we’re finding out that a *lot* of MBS included mortgages that were included in multiple bonds. Half the point of this is for the Fed to sweep away the evidence from crushing lawsuits. But, if the Fed created money to buy each leaf in your back yard at the rate of a million dollars per leaf, would you call that inflationary, Mr. Pethokoukis? After all, it was a swap. They’d have some lovely oak and maple leaves in the Fed vault.

    Apologists for financial disaster will be very embarassed later. Not everyone can be as wrong as James Fallows was about Japan in the late 80′s and keep blundering on with a cushy career and not be affected by being stupendously wrong.

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