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Mix-Ansicht- Americas menu of Pain - FOX-NEWS, 14.05.2004, 17:48
Americas menu of Pain
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My final quote to wrap it up on inflation comes from an article by Laurence Kotlikoff in the current issue of Fortune Magazine. “Hyperinflation is a real and present danger for the simple reason that the US government is effectively bankrupt. Its fiscal gap is $51 trillion, when measured as a present value. That’s 11.6 times official debt, 4.5 times GDP, and 1.2 times private net worth. Coming up with $51 trillion without a printing press would require, immediately and permanently, either hiking federal income taxes 78%, cutting Social Security and Medicare benefits 51%, or eliminating more than 100% of federal discretionary spending, which ain’t easy. And waiting only makes matters worse. This is America’s menu of pain. When investors around the world wake up to US insolvency, it will be extremely expensive for our government to borrow. The only option then will be printing huge sums of money - generating exactly the hyperinflation the bond market has decided to expect.” (This is why I make such a big deal about the government debt sales. They have to take precedent over all other market activities.)
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sam
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