The trade gap in the U.S. is shrinking, meaning that the difference between what we export and what we import is smaller. We are going to wind up in a trade war with China as we run the printing press 24/7 to buy our own Treasuries so we can pay off our own debt because China just doesn't have the appetite for U.S. Treasuries as it has in the past.
I read Obama's "The Audacity Of Hope" and he is very strongly against the artificially low yuan. He feels that it gives China an imbalance in jobs, and he's right. So, because China is holding so many of our Treasuries, we're going to pay them back in cheaper dollars, screwing them in the end.
China hates this, and is now looking for a new world reserve currency that is not dollar based. This will take the legs out of the USD, and inflation will crank, and the USD will tank.
The good news is we won't be buying imports, it may spur more job growth, and all of the Americans who are massively in debt will see their debt levels shrink in proportion to the inflation rate. That is all the gamble, and it's really obvious where it is going.
Hyperinflation.
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8 comments:
is this why gold has really taken off?
China has increased the amount of debt it has bought from the US every month for over a year if not longer. The latest data available they bought 33% more than the year before.
http://www.treas.gov/tic/mfh.txt
you are also forgetting about the ability of the US government to tax
but other than that you are right on the money
I saw an interview with George Soros a couple of days ago and he seemed to imply the US will have a tough time bringing inflation back in check. I can't see hyperinflation but I do see inflation rates in the high teens. The US will combat this through increasing interest rates.
you mentioned "all of the Americans who are massively in debt will see their debt levels shrink in proportion to the inflation rate." I'm not sure how inflation/hyperinflation relates to debt. Could you elaborate on that point, or point me in the direction so I can find out.
dhelenamarie - say you owe $100,000. If inflation goes up 10% a year, your debt does not go up 10%. That amount is frozen. So relative to spending power, your debt shrinks by 10%.
Buffett’s Paper Profit on Goldman Sachs Surpasses $2 Billion
http://bloomberg.com/apps/news?pid=20601087&sid=aYtpUcsiklQM
hmm where was that post, that you said how dumb Warren Buffett Was?
I am so excited for the end of the year to come to take a look back at your economic predictions, I hope this blog is still around.
I recently got a $.1/hr raise... over the last year my wages have gone from $7.50/hr to $7.70/hr, if you adjusted $7.50/hr for inflation it'd be $7.89/hr, approximately. I'm told you pretty much have to do your job perfectly to get a $.30 raise in the coarse of a year, and to get a $.50 raise in the coarse of a year requires fucking a manager.....
now, what's the chances that my wages will keep pace with inflation if we even approach hyper inflation? So essentially I, who owes absolutely no money to anyone, is going to get fucked hard if inflation even gets into double digits.
Hey Gary, what happened to all of the posts on the economy?:):):)
http://www.cnbc.com/id/32982928
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