[quote=Rich Toscano]
Again, my original point was this — you said (paraphrased) “The US can print money to buy its own debt, so what’s the problem?” The problem is that monetizing huge amounts of debt has historically led to serious consequences. Just because we are getting away with it at this brief point in time doesn’t mean it’s a long term solution.
Happy thanksgiving to you too.
You have paraphrased my question accurately. I used to believe in the serious consequences theory of monetizing huge debt but just had a serious rethink, hence my question.
If the best way to quantify it is to say that we will have double digit inflation & interest rates, I think thats a very small price to pay for what we are doing with the debt now (i.e. practically looting other’s work & resources for a piece of paper).
The link you referenced argues your case and claims that market can turn at astonishing speed. Bass could be right (and thanks for that link BTW), but the question is where would the markets go? What options do these markets have? Gold? I hope not given recent history of correlated movement and a very good possibility that the boys in DC can pull the “confiscation card” from their bag of tricks.
Funnily enough, here is what I see on the top right hand side of that link: “Kyle Bass Hayman Capital on why Japan will default November 15th 2012”
I’ll give him till the end of the year to see his default.
Fundamentally where we disagree is that you believe that being a reserve currency has given us just a slight edge over others, I recently changed my mind and now believe that “edge” is huge, very huge, very very huge (I hate to use the word infinite here). If I am wrong, I get to change my mind again and pay a small fee for revising opinions.
