^ Oh shit.

What's this about regime change in Japan now?

[Edited on April 9, 2008 at 11:56 PM. Reason : 2]

4/9/2008 11:56:48 PM

Quote :

"We're just gonna have to make some hard choices about entitlements in the future."

"Excellent."

[Edited on April 10, 2008 at 9:08 AM. Reason : ]

4/10/2008 9:07:44 AM

Quote :

"If we print money to pay off the trillions owed in foreign debt, then our money loses value faster then a Mitsubishi automobile, requiring us to print even more money, making it lose even more value. We then end up defaulting on all loans and foreign investment in the US will cease."

Ok, how? We owe $9 trillion dollars. If inflation reaches 20,000% we still owe $9 trillion dollars. That is because Treasury Bills pay DOLLARS. If a dollar becomes worthless, treasury bills still pay their holders dollars.

The interesting thing is that as printing money to pay off debts drives up inflation, it makes it easier to pay off the debt through taxes later (less need for printing). Specifically, if prices and wages double then income taxes and sales taxes are bringing in twice as many dollars in a year. Since our debt did not grow, our ability to pay it did

This, of course, is a rediculous point: if inflation makes the dollar worthless then debt instruments that pay dollars become worthless as people stop buying them at any interest rate. From then on all U.S. debt would be denominated in some other currency, such as the Peso, Canadian Dollar, or Euro. It is only then that running the presses makes the debt owed larger.

4/10/2008 10:29:36 PM