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<p>[QUOTE=&quot;passantgardant, post: 1140558, member: 30033&quot;]I&#039;m having a very hard time reconciling these three statements.&nbsp; If it requires 100% aggregate inflation over 10 years &quot;just to be able to sniff solving this problem&quot;, then doesn&#039;t that imply a very high likelihood of hyperinflation?&nbsp; What do you think the interest rate on Treasury bonds will be if annual inflation approaches 10%?&nbsp; Most likely higher than 10%, but even at 10%, the government will have $1.6 trillion in annual debt service costs on a $16 trillion debt.&nbsp; Add that to the current $1.65 trillion deficit and you&#039;re at $3.25 trillion in deficit, which means the following year is $19.25 trillion debt and $1.93 trillion interest if the rate only remains at 10%.&nbsp; And since total government income is only around $2 trillion, this is clearly an intractable problem.&nbsp; It will require monetization merely to pay the interest let alone to run the government and pay entitlement benefits.&nbsp; That is the start of spiraling hyperinflation.&nbsp; So unless the government cuts spending dramatically (I&#039;m talking about over $1 trillion in cuts) right away -- and there is zero indication they are willing to do so -- then hyperinflation is assured.&nbsp; There is no more kicking the can down the road.&nbsp; We&#039;re at the end of the road.&nbsp; </p><p><br /></p><p>They cannot implement austerity measures because, as you said, 22% real unemployment (not to mention looming state government bankruptcies) won&#039;t allow them.&nbsp; Besides, causing a major depression at this point would reduce income and payroll tax receipts, making the fiscal problem even worse.&nbsp; Every indication is that our politicians aren&#039;t even considering anything like this.&nbsp; The only spending cuts currently on the table even close are Rand Paul&#039;s $500 billion in cuts, but nobody pays serious attention to that, and even that&#039;s not enough anyway (it&#039;s still a $1.15 trillion deficit).&nbsp; So there&#039;s zero percent chance of that happening.&nbsp; But let&#039;s be generous and give them 1%.&nbsp; There&#039;s no possible way to &quot;pull off&quot; paying $110 trillion in liabilities since assets of even close to that amount are not recoverable except through global war (e.g. securing by force all global oil production), which is unconscionable to the American people and fraught with risks including planetary backlash.&nbsp; Even so, with a military several times bigger than the rest of the nations of the world combined, this isn&#039;t a zero percent chance, but still very slim.&nbsp; Let&#039;s be generous and say 1%.&nbsp; What else does that leave?&nbsp; Outright default?&nbsp; The American People won&#039;t stand for it and the politicians know that cutting benefits means they&#039;re out of a job.&nbsp; Moreover, with Treasuries representing a large bulk of pension funds, 401ks, and other investable assets, this too would cause economic collapse.&nbsp; I&#039;ll be generous and give the politicians 1% chance of defaulting on Treasury debt.&nbsp; It&#039;s just so much easier to shift the blame to everyone from greedy oil companies to reckless speculators for the inflation created when the Fed monetizes the debt.&nbsp; And frankly, history shows that this is the course always chosen.</p><p><br /></p><p>So it&#039;s 1% chance of significant austerity and the Greater Depression, 1% chance of global resource confiscation and World War III, 1% chance of outright default, and 97% chance of hyperinflation.&nbsp; I think the only questions are how fast it unfolds and how far it&#039;s allowed to go before a workable solution is found.&nbsp; History indicates that aggregate inflation of over 1,000,000% is common once hyperinflation gets underway.[/QUOTE]</p><p><br /></p>

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