Annie
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- Nov 22, 2003
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Speaking of switching!
JustOneMinute: Let's Hear From Another Hard Money Advocate
JustOneMinute: Let's Hear From Another Hard Money Advocate
November 20, 2010
Let's Hear From Another Hard Money Advocate
Even as Paul Krugman questions the patriotism of Republicans who question the efficacy of the Fed's QEII, we hear other voices fretting about deficits, monetized debt, and hyper-inflation in the US:
[L]ast week I switched to a fixed-rate mortgage. It means higher monthly payments, but I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits.
...How will the [fiscal] train wreck play itself out? ...[M]y prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt.
And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future.
So even with rates low and headed lower, we were being warned to expect hyper-inflation down the road, once markets woke up to a reality discernible only by a few. Of course, that was Paul Krugman writing in 2003 during a weak recovery and just before the Iraq War; Patriot Paul was opposed to the Bush War and the Bush tax cuts, so he was also opposed to looming deficits and the monetization thereof regardless of current labor or credit market conditions...