I read something a few weeks ago that made sense to me. With the fed doing the massive QE – which in theory should have an inflationary effect, why haven’t we seen massive inflation. [/quote]
Paul Krugman has done an excellent job of explaining the economics of our current situation on his blog:
I have this Allan character on mute as I find him to be too trollish for my tastes, but insolvency is a ridiculous concept when applied to countries with currency denominated in fiat issued by that same country. How would that conversation even go anyway?
Collective Creditors of the U.S.: You’re insolvent!
The U.S. Government in collusion with the Fed: Just a sec.
[Tim Geithner presses button that starts the printing press and a $15.436 trillion dollar bill rolls off the press.]
Here you go!
While you’re here, may we interest you in our shiny new $1.6 trillion dollar debt offering?
