Monday, May 3, 2010

Will the US Hyper-Inflate?

Kitco's James Turk  cites a useful report by by Stephen G Cecchetti, M S Mohanty and Fabrizio Zampolli published as a working paper of the Bank of International Settlements. The report is entitled "The Future of Public Debt: Prospects and Implications."  The report concludes:

"Our examination of the future of public debt leads us to several important conclusions. First, fiscal problems confronting industrial economies are bigger than suggested by official debt figures that show the implications of the financial crisis and recession for fiscal balances. As frightening as it is to consider public debt increasing to more than 100% of GDP, an even greater danger arises from a rapidly ageing population. The related unfunded liabilities are large and growing, and should be a central part of today’s long-term fiscal planning.
It is essential that governments not be lulled into complacency by the ease with which they have financed their deficits thus far. In the aftermath of the financial crisis, the path of future output is likely to be permanently below where we thought it would be just several years ago. As a result, government revenues will be lower and expenditures higher, making consolidation even more difficult. But, unless action is taken to place fiscal policy on a sustainable footing, these costs could easily rise sharply and suddenly."

One may wonder whether the Obama administration, the European Union or the New World Order is capable of increasing productivity, innovation and output to cover rapidly increasing old age liabilities (including medical as well as pension benefits).  The only system that would have been capable of doing this was the laissez-faire capitalism of the 19th century.  But the Obama administration is busily placing the final nails in that system's coffin. The European Union is a form of institutionalized econo-sclerosis. And the "new world order" touted by Obama and his greedy socialist billionaire friends is dumber than a Three Stooges act.

So buy gold, my friends.  The horse is out of the stable. America is in a self-inflicted decline, motivated by greedy socialist billionaires and their media marionettes with cabezas de madera.

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