A default will come - either we don't pay the interest on the debt, or we will have substantial inflation which will reduce the real value of the debt - not only is the ladder more insidious and morally wrong for the sake of our bond holders, but it hurts the people in a huge way.
A straight default by not paying the interest payment on the debt (or reworking the debt to reduce it in an honest way with bondholders who want to get something) would probably send interest rates soaring (which we need to happen, but yes, it would put a major strain on our fake bubble economy). But defaulting by reducing the real value of the debt will result in high and maybe runaway inflation. We will have much higher prices AND higher interest rates.
I don't know about you, but I'd prefer higher interest rates and lower prices to higher interest rates and higher prices.
No comments:
Post a Comment