Bubbling Economy

971 Words4 Pages
In Barry Wood's Article “Buffett's silly talk about the US debt” he poses the question when the debt too much to handle and will it affect the US in similar ways as it has in Greece and other countries that defaulted. The main reason for the writing of this article was a statement made by Warren Buffett where he states “The United States is not going to have a debt crisis as long as we keep issuing our debts in our own currency. The only thing we have to worry about is the printing press and inflation.” which by economists and historical debt followers seemed to sound naïve and shortsighted from the comments on the subject provided within the article by Niall Ferguson, Allan Meltzer, and Carmen Reinhart to just to name a few.

From what I gather having a debt program where the US is almost matching GDP with it's spending seems uncertain and potentially dangerous. Inflation will ensue but at what rate is dependent on how the US debt is purchased and what advantages having debt can bring. Japan who owns a considerable amount of our debt just had a huge disaster which could get worse before it becomes better. This creates an indirect instability for the US. Though it's doubtful Japan will sell off our debt, it's not impossible. The way the monetary policy is being run it seems very Keynesian with very little planning for the future.

Say we have debt that matches our GDP or exceeds it by 2016 which at the moment we are supporting a 94% debt to GDP ratio. The US could come back due to the sale of securities like bonds, reinvesting in infrastructure, and low risk investing of the dollar. The US could sell it's debt as bonds to the top wealthy American people at favorable rates of return which would keep our economy local. Having ...

... middle of paper ...

...t one example but for sure there are many which I could use or have no clue even happened under the my nose. My point being that for too many years the people in power which controlled decisions methodically sucked the USA's monetary value away piece by piece for which the repercussions could be a lower sustained standard of living or all out anarchy.

Anarchy seems impossible and a debt crisis is possible but unwanted so it's highly doubtful it will take shape in it's worst form. If it does it won't be for at least four years or more. From the article and data of the current/past economy I gather this is the point Barry Wood is trying to make. I think it will get better but worse down the road, how bad depends on economic intentions and smart investing without politicking getting in the way. In other words doing what must be done even if people hate you for it.
Open Document