Every country where you have runaway inflation, there's no middle class. Mexico, there's no middle class, you have a huge poor class, and a lot of wealthy people. Today we have a growing poor class, and we have more billionaires than ever before. So we're moving into third world status...
The interest rate on 15 trillion of debt goes from relatively cheap to economy and budget crushing expensive. Again pretty simple math. If we had to pay a 10% coupon on debt (pretty realistic) our debt interest every year would be 1.5 TRILLION dollars.
You're both right in a way. China's only holding about 8% of our total debt, but since 2000 they've been buying about 20% of the new debt we've issued.
Currently, U.S. citizens comprise less than 5% of world population, but account for more than 25% of global GDP. Given our debts and weakening economy, this disproportionate advantage should narrow. Yet the U.S. is asking much poorer foreign nations to maintain the status quo, and incredibly, they are complying. At least for now.
You can't blame the Obama administration for choosing to go down this path. If these other nations are giving, it becomes very easy to take. However, given his supposedly post-ideological pragmatic gifts, one would hope that Mr. Obama can see that, just like all other bubbles in world history, the U.S. debt bubble will end badly. Taking on more debt to maintain spending is neither sacrificial nor beneficial.
http://online.wsj.com/article/SB123266988914308217.html
Define "economy and budget crushing"?
We control the money supply, no matter how much we owe, as long as we owe in US dollars. Furthermore, as long as that borrowed money is a treasury, it's not part of the currency market, thus does not puts pressure on the value of the dollar.
That said, due to inflationary concerns, it should always be a good idea to try to get the economy going and the GDP growing again.
We don't have runaway inflation, and we're actually fighting off deflation at this point. No signs of inflation right now, much less runaway inflation.
Income disparity has nothing to do with how much we spend or owe. It's strictly a matter of policy.
If countries stop lending in near future nothing can stop worldwide inflation down the line.
Income disparity is a result from inflation. Do the math.
you don't think US joining 3rd world is a catastrophe?Every country where you have runaway inflation, there's no middle class. Mexico, there's no middle class, you have a huge poor class, and a lot of wealthy people. Today we have a growing poor class, and we have more billionaires than ever before. So we're moving into third world status...
Keep drinking that koolaid. We can't run these huge deficits forever. When we start monetizing debt outsiders will quit buying it. It's really pretty simple. To say that we can just print new money to pay our debts forever is total madness.
ElNono
"The last decade has seen a burgeoning surge in economics literature investigating the link between inflation and income inequality. Regardless of the mechanisms proposed, these papers came to the inevitable conclusion that the greater the inflation, the greater the income disparity...
Scholars have extensively demonstrated the link between inflation and income inequality. Ideally, governments should be striving towards low inflation, but that would depend very much on how it plans its budget, i.e. poor budget planning leads to deficits and financing such through printing and increasing money supply, and its monetary policies."
http://newasiarepublic.com/?p=29706
if there's a straight up correlation, should be easy to show how they line up, at least for the USA. I'm not holding my breath.
where did you get this graph and what does it mean?
There's no signs of "worldwide inflation" and frankly we're in the middle of a recession, basically trying to starve off deflation.
False premise. The US isn't joining the 3rd world period.
You're still oblivious to the fact that the US isn't just any other country, nor that it has full control of it's currency, and more importantly the denomination of it's debt.
"The last decade has seen a burgeoning surge in economics literature investigating the link between inflation and income inequality. Regardless of the mechanisms proposed, these papers came to the inevitable conclusion that the greater the inflation, the greater the income disparity...
Scholars have extensively demonstrated the link between inflation and income inequality. Ideally, governments should be striving towards low inflation, but that would depend very much on how it plans its budget, i.e. poor budget planning leads to deficits and financing such through printing and increasing money supply, and its monetary policies."
http://newasiarepublic.com/?p=29706
In the US, where inflation has been mild at best (and you always want to have some small amount of inflation), the income disparity is pretty egregious. It obviously wasn't caused by inflation, but simply policies.
You could start "balancing" income disparity in the US tomorrow if you were to pass legislation that "redistributes" (for example, through taxing) from the top to the bottom. In the case of the US it's strictly a matter of politics/policy.
I guess the US has been reducing it's income disparity in the last 15 years or so...
How did this ing commie get citizenship?
El Che's crypto-leftism is puzzling, but it's the faux libertarianism that really grates, tbh.
So that's the answer? "Keep drinking that koolaid". No "economy and budget crushing" event?
Look, I'm no fan on what we're spending this money on. I think we should take the advantageous position we have right now and use it to get our economy going again... Increasing economic output should be a priority.
Never said the current US disparity is due to inflation or that there are no other factors that affect it. Saying the inflation that is coming will exponentially increase that disparity.
that is completely the wrong approach once inflation hits. That practice is futile if the transfer-receiving outsiders(regular folk) greatly exceeds the taxed insiders(unions workers, etc). Across-the-board taxes are even worse and compound the problems on top of the low purchasing power of the outsiders.You could start "balancing" income disparity in the US tomorrow if you were to pass legislation that "redistributes" (for example, through taxing) from the top to the bottom. In the case of the US it's strictly a matter of politics/policy.
so what was your graph supposed to illustrate?
correlation or cause, in your opinion?
When is this inflation coming? Inflation hasn't been a factor in the past 15 years, yet income disparity has increased in the same period. Strictly on policy decisions.
We're talking strictly about the US.
But it's a false premise, because inflation didn't "hit". Right now, where we're actually fighting deflation, that's exactly how you would tackle that. Obviously, that's provided you want to tackle that at all.
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