Deleveraging the U.S. Economy

The Chinese government, the biggest buyer of U.S. debt, expressed concern about American deficits and its impact on U.S. Treasury obligations – a budget that will raise the national deficit to nearly $2 trillion dollars. That’s $2,000,000,000,000.

Bernanke views this intervention strategy as critical and necessary to avert a deeper downturn. But as you know, spending money you don’t have can come with it some dire consequences.

This economic jump start strategy of spending America out of this downturn will need to be repaid one day, hopefully from economic growth and fiscal restraint. But deficits generally spawn higher inflation, higher interest rates and a weaker economy.

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One response to “Deleveraging the U.S. Economy

  1. The really sad thing is this – the government is punishing your strategy and promoting the strategy of credit-consumption. After all, when the wave of inflation, now just a spot on the horizon, becomes the tsunami that it probably will, all debt will be washed away, along with all savings.

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