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<p>[QUOTE=&quot;V. Kurt Bellman, post: 1983293, member: 71723&quot;]Lemme guess. You&#039;re an &quot;Austrian Fool&quot; economics believer, right? Completely discredited school of thought. Not even a committed supply sider like Friedman bought into Austrian School economics. There are at least two other ways out of our debt other than monetization and inflation - a confiscatory income tax marginal rate on high personal earners, and unrepentant commitment to real economic growth. Along with some monetization thrown in, the three together are more than capable of dealing with your scary boogeyman of sovereign debt.</p><p><br /></p><p>All that is required is the political will to tell BOTH the über-wealthy AND the tree huggers to suck it up. Of course, doing that asks Hollywood to get over themselves twice over, so....</p><p><br /></p><p>By the way, we don&#039;t need to guess what the impact of some fairly strict commitment to real economic growth looks like - it looks like China. Yes, it surely does create its own share of asset bubbles, but it sure does (re?)build a middle class nicely.</p><p><br /></p><p>The US economy is in CONSTANT IMMINENT threat of rapid deflation. Why? Contraction of bank lending. All personal and commercial lending creates new money, it really does! When the economy at large chooses reduced debt, the money supply actually CONTRACTS. That&#039;s why we NEEDED QE(fill in blank). Without it, our money supply for the relatively few creditworthy remaining entities would have frozen solid and withered away. That&#039;s what Austrian Fools seem to forget - the Fed only &quot;creates&quot; less than 9% of new money. Commercial banks create over 91% of it.</p><p><br /></p><p>Until and unless we would ever create a banking system in which a loan to &quot;company xyz&quot; REDUCES the bank balances of all depositors, we need a Fed to keep liquidity in the economy by expanding and contracting the money supply through the Open Market Committee in normal times, and Quantitative Easing in extraordinary ones.</p><p><br /></p><p>MEC2 assumes the allegedly unlimited creditworthiness of the US is based on its ability to print money. That&#039;s just icing on the cake. It&#039;s REAL creditworthiness comes from its ability to TAX! We just seem to have forgotten tax rates can go UP too.[/QUOTE]</p><p><br /></p>

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