- Feb 21, 2005
I am hearing from various analysts that the prime rate will need to get to the 4-5% range. This is what happens when you increase money by 40% without production to back that up. That much money should have been spread out over at least a decade.
How does the government finance this? It seems to me that interest payments will exceed the deficit itself. Does the government (Fed) just take all the liquidity out of the system and recreate 2008?
Otherwise, wouldn't the imbalance generate a financial collapse, i.e., hyperinflation?
I don't see how we stop a death spiral without cutting public spending when debt is this high.
Someone please explain an alternative mechanism to control inflation. We are in an unprecedented situation. The last time debt/GDP was anywhere even close to this we had marginal tax rates that are much higher than today, 70% for some.
How do you get to those tax rates without an economic implosion or "the rich" sending their capital overseas?
I see a lot of hope, speculation, and dreaming, but not any serious math or logic.