fsaldanha

Historic Financial Collapse Underway?

This article starts well, but ends badly. I don't want to be critical, as I agree with a lot of what the author wrote. But there are quite a few absurdities. For example,

" the track record of every experiment with fiat money is 100% perfect: In every case, the currency regime was eventually destroyed by an inflationary crisis."

I don't know if the author ever heard of countries like the United States of America, UK, Japan, France, Germany, Sweden, etc. that have had fiat money for a long time and their currency regimes were not "eventually destroyed."

Another factually incorrect statement:

"No government in history has ever repaid debts as large as those already assumed by our government (in terms of GDP)."

Even if the US assumes the whole $5 trillion of Fannie and Freddie's debt, having a total (100%) loss on their assets, the public debt would still be less than 150% of GDP. Several countries repaid debts larger than that (with a little help from inflation), including the United Kingdom, which emerged from WWII with debt in excess of 200% of GDP. Chile is another example. The US debt problem is manageable if action is taken. Of course, if the country continues in its current direction debt repudiation, either through inflation or outright default, is inevitable.