31 Aug 2022 10:16 pm
So why monetize the debt? Why not increase the interest rates above inflation to say 12% as you proposed would happen. The answer to that is, the government owes over 30 Trillion now and rising fast. If you increase the rates to 12% from 0.25% like they were before the inflation then the government will owe an additional $3.6 Trillion per year. US Government revenues from all sources is only about 4.3 Trillion and even that is already above the rate of maximum government revenues. And 12% wouldn't be enough as the real inflation rate is between 15% and 18%. In other words, in order for the government to entice people to accept its IOUs it would have to set the rates such that the federal governments budget could be 0 and not cover the amount owed in today's dollars. 0 as in no government services of any kind, not even defense, unless it is donated or the labor gifted to the government.
So they may increase the rates to stave off inflation and bankrupt the government in the process, or they will keep rates low prolonging the inevitable until hyper-inflation exponentially drives toward historic levels. Same thing has happened before in Zimbabwe, Chile, Argentina, Russia, Venezuela and many other ill-run countries.
We should be curtailing all unnecessary spending on an emergency basis. And it may still be too late. Instead Biden is spending and monetizing debt like a drunken sailor as we careen towards a financial cliff at 200 mph.
So they may increase the rates to stave off inflation and bankrupt the government in the process, or they will keep rates low prolonging the inevitable until hyper-inflation exponentially drives toward historic levels. Same thing has happened before in Zimbabwe, Chile, Argentina, Russia, Venezuela and many other ill-run countries.
We should be curtailing all unnecessary spending on an emergency basis. And it may still be too late. Instead Biden is spending and monetizing debt like a drunken sailor as we careen towards a financial cliff at 200 mph.