|
Post by beachbumbob on Mar 5, 2007 17:59:48 GMT -6
sat around talking with a couple friends Sunday and we started talking about the incredible financial mess the exist at all levels of govt and business pertaining to pension, defines benefit plans and the like. The outstanding unfunded portions of these are like 30 or 40 trillion dollars which have no likely hood of every being financed by taxes or debt instruments.
so then we started looking at what various S. American countries did to get out of their debt mess by hyperinflating their currency and making the debt "worth less" .
Is this a scenario for the US?? Can the system be manipulated to hyperinflate the currency while keeping "inflation" in check...?? Cause the only way any govt entity will be able to "afford" the pension obligation is to have it paid with vastly reduced "dollars".
|
|
|
Post by jeffolie on Mar 5, 2007 19:13:41 GMT -6
The US will have a deflationary depression.
|
|
|
Post by beachbumbob on Mar 6, 2007 6:01:00 GMT -6
a deflationary depression will lead to US govt, state and local govts bankruptcies...as they do not have the pensions/retirements funded to any level whatsoever.....can't see the FED policy allowing that to happen
|
|
rdf
Contributor
Posts: 27
|
Post by rdf on Mar 6, 2007 8:47:46 GMT -6
Yes we will have inflation. This is what all governments do to eliminate persistent deficits. If you look at the post Vietnam era you will see the same conditions as now. LBJ refused to collect taxes for the war, so has Bush. We lost the war - ditto. We were left with a huge deficit - ditto.
The result was runaway inflation under Carter and Nixon followed by the government flailing around for "painless" solutions (like price controls). Bond prices collapsed and the stock market returned essentially zero for over a decade.
I've yet to find a class of investment that protects against this. The wealthy went into fine art and antiques, but these are not liquid and the price is subject to arbitrary changes depending on demand.
|
|
|
Post by ig on Mar 6, 2007 12:13:26 GMT -6
The US will have a deflationary depression. I would have to agree. The fed reserve will misinterpret the wage and productivity data and find reason to take a contractionay position. either keeping rates as they are or raising them. the productivity report shows employee costs soaring however these bonuses will not "trickle down" Health insurance costs are rising at 7.7% per year. These are the costs that are rising and not wages. There is little or no pricing power on the consumer side of the economy
|
|
|
Post by jeffolie on Mar 6, 2007 20:15:26 GMT -6
Tfhe manufacturing recession (see other thread) is deflationary.
|
|