(no subject)
In relation to a couple of posts ago, about governments paying down debt triggering a depression, take a look at:
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/03/09/the-european-union-trap.aspx
Basically, for a government to pay down debt, requires, according to this analysis, for the private sector to take on debt. (Or for foreign countries to take on debt in exchange for goods and services.)
The net result of which is arguably a debt bubble in the private sector, which has a strong correlation to severe recessions / depressions.
Conversely, by this analysis, the government must run up a huge debt while the private sector is liquidating their own debt or the math doesn't work...
This may be strictly looking at short term (i.e. instantaneous) results, not the long term valuation, money flow, investment flow, etc.
But it is a rather ugly implication that, essentially, once debt is created, it can't be destroyed. (Which implies a strong regulatory obligation to control debt creation and terms.)
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2010/03/09/the-european-union-trap.aspx
Basically, for a government to pay down debt, requires, according to this analysis, for the private sector to take on debt. (Or for foreign countries to take on debt in exchange for goods and services.)
The net result of which is arguably a debt bubble in the private sector, which has a strong correlation to severe recessions / depressions.
Conversely, by this analysis, the government must run up a huge debt while the private sector is liquidating their own debt or the math doesn't work...
This may be strictly looking at short term (i.e. instantaneous) results, not the long term valuation, money flow, investment flow, etc.
But it is a rather ugly implication that, essentially, once debt is created, it can't be destroyed. (Which implies a strong regulatory obligation to control debt creation and terms.)