Re: [Pen-l] United States of Zimbabwe

[Jim Devine <jdevine03@xxxxxxxxx>]

> “I am 100 percent sure that the U.S. will go into hyperinflation,” Faber
> said. “The problem with government debt growing so much is that when the
> time will come and the Fed should increase interest rates, they will be very
> reluctant to do so and so inflation will start to accelerate.”

FWIW, government debt is less important nowadays than it was in 1993.
The ratio of government debt (including and excluding state and local
debt) rose from the 1970s until 1993 (due to the hard times of the
1970s and the Reagan deficits). Then these ratios fell during the
Clinton years, to reach numbers below what prevailed in 1974 (when my
data start). They then leveled off under Dubya. There is a surge from
2007 to 2008, which likely continues during 2009. But these ratios
stay far below the 1993 level. We also didn't see a surge of inflation
due to the Reagan/Bush-era rise in these ratios.

By the way, private-sector debt is more dangerous than federal debt,
since the federal government isn't likely to go bankrupt. Both kinds
of debt accumulation can cause inflation by allowing "too much money"
to chase "too few goods."

(Source: Flow of Funds table D.3)
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
_______________________________________________
pen-l mailing list
pen-l@xxxxxxxxxxxxxxxxxx
https://lists.csuchico.edu/mailman/listinfo/pen-l