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The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank.
The study is damning because Mr Laubach was the Fed’s economist at the time, going on to become its senior economist between 2005 and 2008, when he stepped down. As a result, the doubling in rates is the US central bank’s own prediction.
Mr Congdon said the study illustrated the “horrifying” consequences for leading western economies of bailing out their banks and attempting to stimulate markets by cutting taxes and boosting public spending. He said the markets had failed to digest fully the scale of fiscal largesse and said “current gilt yields [public debt] are extraordinary low given the size of deficits”.
Should the cost of raising or refinancing public debt in the markets double, “the debt could just explode”, he said, adding that it would come to a head in “five to 10 years”.
Originally posted by mnemeth1
Oh, and for those of you who think we will get out of this by raising taxes and interest rates, I leave you with this.
MSN Money reports
your real tax rate is already at 40%
Given that you already work more than a 1/3rd of the year for the federal government without pay, at what point do you consider yourself a slave?
Originally posted by Hastobemoretolife
Even if the governments were to completely cut spending and raise taxes we would never get out of debt.
We are past the point of no return. No amount of taxes and spending cuts is going to matter. Usually when something like this happens in Business and personal finance they end up filing bankruptcy.
Now I know if a government declares itself into bankruptcy then that is a bad thing, but I really don't see anyway out of this. With all the bailouts it starting to shape up like the lost decade over in Japan.
Originally posted by warrenb
Perhaps we will see something along the lines of states splitting away (ceding) from the nation, becoming self ruling/regulated fiefdoms. Now the question would be, who or what is going to rule those states? Corporations, a person or groups of people? Along the lines of Jericho
Food for thought
“The mischief springs from the power which the monied interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining...and unless you become more watchful in your states and check this spirit of monopoly and thirst for exclusive privileges you will in the end find that the most important powers of government have been given or bartered away…."