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Just like a dollar 'devaluation' which sounds to many like a deflationary event is actually an inflation of the currency.
The main problem I see is the ongoing deficit.
Gotta disagree with ya there. As I said before, printing money/monetizing debt/devaluing currency is all the exact same thing as 'defaulting' on your debts.
If I make the paper that I'm paying you with worth only half as much as it was yesterday, you ain't gonna like it if I pay you the same amount today for your labor as I did yesterday.
The federal deficit is no longer an abstract long-term problem; it's a financially critical freight train coming down the track at alarming speed. Here's a dramatic way to look at it: As of last week's second-quarter report, nominal GDP was only $100 billion higher than it was back in the third quarter of 2008. So the nominal GDP has been growing at only $4 billion per month, while new Federal debt has been accumulating at around $100 billion per month. Yes, this period represents the worst of the so-called Great Recession -- but never in history has the Federal debt grown at a rate of 25x GDP for two years running!
* Unfunded pension liabilities are approximately $2.5
trillion, compared to the reported amount of $493 billion.
* Unfunded liabilities for health and other benefits are
$558 billion, compared to the reported $537 billion.
* Thus, total unfunded liabilities for all benefit plans are an
estimated $3.1 trillion — nearly three times higher than
the plans report.
To put these liabilities in context, state and local govern-
ments’ reported unfunded obligations under pension and
other benefit plans amounting to 7.1 percent of U.S. gross
domestic product (GDP) in 2008. When adjusted using a
more appropriate discount rate, however, states’ unfunded
obligations were 22 percent of U.S. GDP. All but 10 states
and the District of Columbia have total adjusted unfunded
liabilities above 15 percent of their state GDP, and four states
— Alaska, Hawaii, New Jersey and Ohio — have adjusted
unfunded liabilities above 35 percent of their state GDP.
Wall Street opened the week with gains finishing off a strong day Monday on markets around the world. There was very little data or news on the financial front yesterday. This led investors to create gains largely based on optimism alone. The NASDAQ led the charge with a 0.75 percent (17.22 points) jump; followed closely by the S&P 500 (0.55 percent, 6.15 points) and the Dow Jones (0.42 percent, 45.19 points).
Unfortunately the outlook for most of the day today is not so rosy. Investors rode a wave from overseas yesterday. Today they are expected to ride that same wave, but this time in the opposite direction.
The outlook for today is not much better. Stocks futures fell drastically during the overnight hours and global market momentum are decidedly downward on the day.
Yesterday the primary pressure was from the Federal Reserve, today it comes from overseas. According to CNNMoney.com, slow growth in China and a weak economic outlook from the Bank of England have equated to a run on investments today. Despite systemic gains for the past several months investors cannot overcome their day-to-day fears about economic growth.