The US gov. is trying its darnedest to kick-start inflation – the only pain free way to get out from under its massive debt burdens – and frankly a weasel move. It absolutely refuses to reduce spending even though the lions share of this spending gets eaten up in pure waste paying off armies of useless middle-men and con artists. Seeing that China holds the bulk of our debt, you’d think they might get wise to the inflation strategy. Even a fool can see that the US is trying to erode the value of all the dollars they have lent us.
What to do… Well, China (unless they are utterly ignorant which I highly doubt), they are going to stop being our door mat and cut the money spigot off. They’ve got their own problems brewing anyhow… When that happens all hell breaks loose. Interest rates head north quickly and the whole plan to inflate ourselves out of debt turns into a nightmare. Inflation prices in the face of severe unemployment and increasing interest rates, well, a lot of the economy folds. There isn’t much toughness out there in the current US business model. A lot of business is built on debt, wishes, farts, and rainbows.
As others have described, this is an addict / drug pusher relationship we have. We are the addict and I think we are hitting the wall of tolerance for what the dealer will accept.
I could be wrong however, who knows……..