Exactly. We're done. Cut = Depression and riots. Print and borrow forever = bond vigilantes rightfully make a speedy introduction and crash the party. It's done.
I agree. BUT, that won't guarantee a soft landing. Far from it. We balance the budget, and it's a Depression. Our economy is on life support right now from deficit spending. We balance the books, and thats a 9% GDP haircut. Then, there's FIRE to consider. Financial Insurance Real Estate comprises 25% of US GDP. That industry requires ever increasing asset values, credit growth and a bouyed economy to stay afloat. Balance the books equals depression equals another 10% haircut in FIRE. That's a good 20% GDP contraction, right there. Then, we've still got the massive national debt to contend with and we're just breaking even on the budget !! But that's really in la-la land. Cause the act of balancing the books itself, causes a depression, which causes tax revenues to shrink even further. So, now we're in a net shortfall, which will require even more cuts past 9% GDP just to break even, and even more cuts to generate a surplus, to pay down the debt. See, we're in a serious, serious problem. Greece is like a fart in the wind. 36 Billion is nothing. When they go bankrupt, they can work it off in Germany or France. When America pays off its debt, the entire economy takes a massive, massive crash. Oh yea, just imagine what happens to the stock and real estate market when we balance the books (9% GDP haircut). Yea, whoops !!
Shiaww! There is NO soft landing, period. It's like when I was a small child, and my dad used to show me his left fist, then his right and ask, "Whaddaya want.... 6-months in the hospital or instant death?" (He was just kidding, of course) I wish one of our comparative choices were "only" 6-months in the hospital... It's not like we're going to wake up one morning soon and find "everything busted"... rather it will be a fairly fast erosion of wealth through inflation and currency devaluation.... such that at the end (10 years, 25 years?), nearly ALL Americans will have been bankrupted.... that's assuming we continue on our present path. Could be more dramatic and sudden depending upon what our foreign Treasury buyers do or if the European PIGS fall and start a domino collapse...
It's gonna get ugly, my man. Really ugly. That's my opinion, but I have yet to see, hear or read any person offer any plausible roadmap to get out of this. Optimists say Japan or WW2. We're not either of those. Sorry. Did my homework on those, too. I'm not being alarmist, here. Those were two totally different scenarios that won't apply here. And that spells big trouble. In my estimation, the only thing that can save us is a tech breakthrough the likes of the car, or electricity that can sop up all this debt without impacting living standards. That's it, I'm afraid. So where's this next mind blowing revolution to come from? Green technology?!? Carbon Trading?!! ObamaCare?!?! LOL It's not funny, but those are individually death blows being touted as "innovation" and the next "growth" industry. That alone is proof positive Washington has other plans for the American taxpayer. But hey, who the fuck am I anyway. Everything will be just fine, guys. Don't worry about a thing. Take out that second mortgage, get that HELOC, max out those credit cards ! UI just got extended 99 weeks, baby. Time to party.
I think if Bernacke monetizes, it'll be much quicker. In 5 years, America will look like a different Country. A dollar crash can happen just as quick as the 87 crash or 08 crash. Matter of days, rather than months or years. He can shore up T-bills and rates, but not currencies. That's impossible. After the dollar crash comes retarded inflation. Good thing commodities are priced in Greenbacks !! And where do we get our cheap shit from after China decouples?! Mexico?! Enter price controls, currency controls, nationalization of 401K's, shortages. Argentina baby.
GDP will contract significantly in case of overnight devaluation. Although this is still the best case - they needed to do a year ago to crash all other economies who use dollar peg Now decoupling is in full throttle overnight devaluation won't be such effective Now I think Bernanke will try till the very end to support stability Although it's interesting how soon dollar will crash - shouldn't be more than 2-3 years from now
I too was going to mention that. The government/Fed kept preaching, "don't worry, be happy..... inflation is only 1-2%". In reality, it was probably north of 8%.