[quote=TheBreeze]By the way, I think these higher rates show that there is no way government can stop a deflationary spiral. The more they muck with the market, the higher rates are going to go and the less credit that will ultimately be available. Less credit=deflation.
Rich would argue that the government can just cut everyone a check for $10 million, but there would be a massive taxpayer revolt if that happened. Household wealth has decreased $20 trillion in two years ( http://www.atimes.com/atimes/Global_Economy/KA23Dj07.html ) and there is starting to be some serious resistance to the paltry-in-comparison $800 billion stimulus that would be spent over the next two years.
There will also probably be some additional TARPs and other things that may amount to two or three trillion overall, but there is no way that the government is going to be able to keep up with the $10 trillion/year decline in household wealth.
Deflation here we come. I for one look forward to more reasonably priced goods and services. [/quote]
I agree. You know our economy has always been about 70% consumer driven as opposed to say, Japan where the consumer is a much lower % of gdp.
If consumers start to only spend on what they only have to have to live then we are talking big time deflation with grueling consquences for the next generation or so.
Something has to give this time. This is the worst mess the liberals have created by far.(g)
