United States a Giant Ponzi Scheme?

Discussion in 'Economics' started by bearice, Feb 19, 2010.

  1. In real terms or nominal terms?
    i.e. Now more debt is issued in dollar terms, but 1910's $100 buy more goods than 2010's $100.


    Don't forget that during recessions, specially deflationary recessions, demand for new money (credit) is reduced, which reduces interest rates.
    Besides businesses are in trouble during recessions, so there are few investment (or growth) opportunities se people accept whatever low yields they may get as there are few opportunities.

    Inflation only happens if ALL this money gets into the real economy, and it's not.
    T-Bonds withdraw excess funds from the economy.
    Bonds only let out the (modest) interests they provide.


    Finally all this money being printed by the Fed to pay and rebuy more debt is much less than the money that was printed by the banks out of thin air (fractional lending where they lend more than the deposits), during the recent credit bubble.

    Just look at the M3 money supply:
    http://www.shadowstats.com/alternate_data/money-supply-charts
    It is going down BIG!
     
    #11     Feb 24, 2010