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In an open letter to Obama, experts at the Brookings Institution, the Washington think tank, warned that a soaring national debt would have consequences. "We will have to borrow money in domestic and international capital markets to finance this debt, and without a serious commitment to long-term fiscal restraint, lenders will eventually question the nation's fiscal credibility," they wrote.
Originally posted by Desolate Cancer
Perhaps it wont get as bad as needing a whellbarrow to purchase bread, but it will get so bad that the middle class will dissolve into an underclass.
Originally posted by Dermo
Originally posted by Desolate Cancer
Perhaps it wont get as bad as needing a whellbarrow to purchase bread, but it will get so bad that the middle class will dissolve into an underclass.
Deficit doesn't cause hyperinflation... its just a deficit that your government needs to borrow to cover.
Even if your FED created $1.75 trillion and loaned it to your government to cover the costs, it would probably only push inflation on the dollar up MAX 1%... if even that.
Originally posted by Desolate Cancer
Foreigners will be much more reluctant to purchase our debt since it will carry a higher risk and will devalue the investment.
With the Stimulus Bill that was passed earlier this month, people have huge, horribly high hopes for it to succeed. But this is the real world. Pumping Trillions upon trillions of dollars into the global economy can only create inflation.
Inflation's meaning as stated by wikipedia.com is: a rise in the general level of prices of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply (monetary inflation.)
Monetary Inflation is: the term used by some economists to differentiate direct inflation in the money supply (or debasement of the means of exchange) from price inflation which they view as a result or necessary outcome of the former. Originally "inflation" was used to refer simply to monetary inflation, whereas in present usage it often refers to price inflation.
Please feel free to read the entire wikipedia pages as they offer great insight into our global economics.
When inflation happens people have to spend more to feed and shelter their families. Causing the tightening of budgets and the lost of interest in spending for what they cannot afford.
As we have seen with our current state of affairs that when people do not spend ->
Businesses do not make enough money -->
Which leads to a loss in profits --->
Which then also leads to an unneeded workforce ---->
Then layoffs! The ultimate loss in spending power.
In this infinite circle of loss, adding more money to the economic market is a horribly bad thing to do!