The New CS Board

[jumanji0881]

The Road to Default : https://www.mauldineconomics.com/frontlinethoughts/the-road-to-default

My Comment : Wiping out the debt by printing a lot of money just does not work. The Fed has been printing for over thirty years and the debt just keeps expanding exponentially. If the Federal government bails out state pensions and healthcare liabilities, then the federal government just adds to it's own debt.

Excerpts:
Since there isn’t enough money to fund these pension and healthcare obligations, there will likely be an ugly battle to determine how much of the gap will be bridged by 1) cutting benefits, 2) raising taxes, and 3) printing money (which would have to be done at the federal level and pass to those at the state level who need it). This will exacerbate the wealth gap battle.

Perhaps even worse, conducting a currency war implies directing monetary policy to something other than domestic price stability. There ceases to be a domestic anchor to constrain the expansion of central bank balance sheets.

Should this lead to growing suspicion of all fiat currencies, especially those issued by governments with large sovereign debts, a sharp increase in inflationary expectations and interest rates might follow. How this might interact with the record high debt ratios, both public and private, that we see in the world today, is not hard to imagine.

Learn to deal with change and take advantage of it. Oh yeah, and consider slowly increasing your allocation to physical gold. I don’t think of gold as an investment. I think of it as central bank insurance. And after meditating on today’s letter, I think I may need a little more insurance. Just a thought