Could Obama be right about inflating debt away?

[Nick Gromicko]

Those holding dollars lose, but who is that? China and Japan.

The assets in this country are not affected. An ounce of gold is still an ounce of gold, a bridge is still a bridge.

Is there any wisdom in Obama just printing the debt away?

Inflation, particularly real estate inflation, is good for inspectors. No? It's great for debtors. No?

[Brian E. Kelly]

Originally Posted by gromicko

Those holding dollars lose, but who is that? China and Japan.

The assets in this country are not affected. An ounce of gold is still an ounce of gold, a bridge is still a bridge.

Is there any wisdom in Obama just printing the debt away?

Inflation, particularly real estate inflation, is good for inspectors. No? It's great for debtors. No?

You can not eat, breath, or drink money Nick.. China has its hands full... It will be interesting, that is for sure.,..

http://www.guardian.co.uk/environmen...on-food-supply

[Michael R. Boyett]

I'm no economist so I can't comment on your observation but this morning's CNBC article is easier to get my brain around as it equates directly to the level of my business revenue right now, today! Also, the $8k tax incentive goes away soon but that didn't seem to help much anyway. All this doesn't seem to bode well for the RE future.

[Doug Edwards]

Oilfeld Math on the Cash for Clunker Program


Think of it this way:

A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of gas a year.

A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a year.

So, the average Cash for Clunkers transaction will reduce US gasoline consumption by 320 gallons per year.

They claim 700,000 vehicles so that's 224 million gallons saved per year.

That equates to a bit over 5 million barrels of oil.

5 million barrels is about 5 hours worth of US consumption.



More importantly, 5 million barrels of oil at $70 per barrel costs about $350 million dollars

So, the government paid $3 billion of our tax dollars to save $350 million.

We spent $8.57 for every dollar we saved.

[George A. H. Luck]

That "inflating away national debt" scheme seemed to work out pretty well for Wiemar Germany. ( other than the starvation, political unrest, wheel barrows of money for a loaf of bread, a world war, massive unemployment, collapse of manufacturing and uncle Adolf of course)

FUBO!

[Michael Larson]

Could Obama be right about inflating debt away?

Uhhhhhh......NO

Unless you believe the high inflation Carter years were a good thing?

[Nick Gromicko]

In a recession, when prices aren't rising anyway, what is so wrong with inflating the money supply and leaving the Chinese with dollars that aren't worth as much because we printed so many? How does this strategy harm Americans?

[Martin Pasquinelli]

It reduces the incentive for China to purchase our debt.

[Bob Elliott]

Originally Posted by mpasquinelli

It reduces the incentive for China to purchase our debt.

Too late
Nick may be right.

Economies are difficult for even the best to understand.

The Teabaggers whine about a subject they are not knowledgeable in based on politics and their devotion to Fox News.

I have met many that got rich by spending over their budget.

Yes that is what got us in trouble,but yes it also works if done the right way.

Go ahead and start screaming (I am one and done here)

[Michael Larson]

Originally Posted by gromicko

In a recession, when prices aren't rising anyway, what is so wrong with inflating the money supply and leaving the Chinese with dollars that aren't worth as much because we printed so many? How does this strategy harm Americans?

We are likely in a deflation mode for some assets but eventually that printed money will actually get into the economy and serious inflation is the likely to result.

Right now much of that printed money is sitting on the banks balance sheets and not being lent out.

When that changes, look out.

[Michael Larson]

Originally Posted by mpasquinelli

It reduces the incentive for China to purchase our debt.

They have already stopped buying our debt.

When we can no longer borrow because we are a bad credit risk, what happens ?

[Nick Gromicko]

Look, if we print more dollars, then the U.S. ends up with more dollars as a percentage of all dollars in existence, no? How is that a bad thing?

[Michael Larson]

Originally Posted by gromicko

Look, if we print more dollars, then the U.S. ends up with more dollars as a percentage of all dollars in existence, no? How is that a bad thing?

Let's try it this way.

If we print $1,000 Trillion dollars and it gets into the economy the price of everything rises insanely and each dollar buys much less.

Look up Weimar Germany. They had to use wheel barrows to haul it around to buy a loaf of bread.

Right now we are dependent on foreigners to lend us money.

When they figure out we are unable to service that debt the jig is up.

[gbeaumont]

Originally Posted by mlarson

Look up Weimar Germany. They had to use wheel barrows to haul it around to buy a loaf of bread.

But think what effect that has on the wheel barrow industry

Gerry

[measter]

inflating debt away is somewhat effective - but only for a short time.

I actually think we are in a deflationary period. Deflation is defined as too many goods chasing to few consumers (or markets). If that doesn't describe the current business environment - well, nothing describes it better.

If I'm right, we have economic deflation balanced by gov't induced inflation. That keeps us stable, right?

It's a recipe for disaster.

We can't spend our way out of this recession. That's what got us into this recession.

Very Respectfully,
Mark