1st of all does anybody think the USA is on a road map to a 40 trillion deficit be end of 2021??
I would opine that if the beginning of 2021 is any guide then 40 trillion is indeed possible or probably a given
The question I have is: what will the deficit look like in, let's say the next 10 yrs. If we are in fact at 40 trillion by end of 2021 then where will we be in 2030??
Will congress suddenly have a desire to spend less
If you listen to Biden then the answer is a truly huge deficit, during his administration. He wans the 1st money to go out at 1.9 trillion. That may be less or more, who knows
The Fed wants to keep on with asset purchases and low int rates
So you have congress approving the Biden agenda for spending and the Fed has no choice but to fund this spending with money printing
The problem becomes a problem if foreign countries such as russia, India, China can buy and sell with out USD
Or if investors don't want to own as many USA bonds
China and russia are already showing signs of less bond purchases
So: Do we all just handle more money for the same services and goods
Example: Our corn is worth 6.00/bu CAD but a new combine costs 500,000 plus CAD
By 2025 will corn be worth 12.00/bu CAD but a combine cost 1 million CAD
What will a house cost, your next vechicle, your wages
Will the USA print money and the rest of the world just print money in lock step so we all just use more of the same currency for the same goods and services
What happens if one country decides they need more currency printed vs other countries to pay for gov't spending
perhaps china has a surplus of goods vs imports, thus china does not need to print as much currency to pay the bills
What do you all think???
it is very seductive. deficits do not matter... until suddenly , they DO !
a country can run deficits, small at first, then gradually larger. all may seem ok. but at some point the currency goes down. and they eventually, you default on your bonds, and the standard of living declines.
argentina was the 5th largest economy in the world (before WW1). but after 85 years of socialism, and too much spending, they have gone bankrupt on their debt 8 times. and they are now number 60, not number 5 . and the standard of living is much lower than countries like the u.s., or canada, or sweden.
When your country's currency is the Reserve Currency of the world, and much of the international oil trade and other trade is done in your country's currency, you can get away with a bit of deficit spending.
However, it looks to me like this era is coming to an end. More and more countries are already bypassing the US Dollar and trading oil and other goods in their own currencies.
Once this movement accelerates, other countries will get rid of their Dollar reserves.
A reminder... Germany in the 1920s, a time when printing money got out of control...
I just pulled a German banknote from the year 1923 out of my cabinet. It's for 100 mill. Mark. At that time, you could probably buy yourself a sheet of postage stamps with that money
