Are Headed Toward Hyperinflation?

John A. Quayle blueoval57 at VERIZON.NET
Mon May 25 16:34:39 MDT 2009

>John A. Quayle wrote:
>>*/[It happened during the Weimar Republic and some say it could happen 
>>here, too. Fact is that we cannot possibly spend our way out from under 
>>mounting deficits - no matter whether we flood the system with worthless 
>>cash or continue to borrow from our enemy (China). - JAQ:]

>>At 09:52 AM 5/25/2009, Ernie Lane wrote:
>I read an article the other day that said that deficit spending is OK, if 
>not called for, as long as the deficit is below 4% of GDP. Now, I don't 
>know what the "limit" is, but obama is moving us in the direction of 
>annual deficits of more than 10% of GDP.

         You'll not find a "consensus" on limits, Ernie. No two Economists 
generally agree on much............

>I think that deficits are fine, as long as they are of reasonable size. 
>And one thing you don't hear much about is that these huge deficits are 
>going to put us in the area of a total government debt of more than 100% 
>of GDP, and I don't think that's survivable.

         Absolutely correct. Just look at what Japan did during the 1990s, 
when they outstripped GDP, spending 100-trillion yen. We haven't even 
approached a hundred trillion dollars, but then, Japan should sever as a 
beacon to avoid danger.

>At least when the annual deficits are small, the economy can grow faster 
>than those deficits, so the total debt never overtakes GDP. A declining 
>economy, as we are in now, can absorb reasonable deficits for a year or 
>two, and eventually make that surplus (economic growth over deficit) up. 
>But obama's deficits, so much so fast, will hobble the economy forever -- 
>hyperinflation being just one thing.

         Hyperinflation is a disease which cannot be cured without total 
monetary collapse.

>You can already see the future in two things:
>- The rapidly rising oil price.

         It's going back up just as fast as it came down.........twenty or 
thirty cents a clip.

>There are also other factors at play, but the oil suppliers denominate in 
>dollars, which they see as a declining asset, so they _have to_ raise the 
>price. - S&P recently revised its outlook for the British Pound -- they 
>didn't cut its rating yet, but are poised to -- because their overall 
>government debt is at or near GDP.  That's also where we are.  They are 
>going to be extremely reluctant to do or say anything about our situation, 
>but I think that eventually, they will be forced to.

         Bottomline is we're in trouble.

John Q.

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