Thank you Krazy, for a counter viewpoint to the usual ranting and raving. The jury is still out as far as i'm concerned re Bernanke. but so far he seems to be rather better at his job than we later found out Greenspan was. There was never any doubt in my mind that the deficits would be monetized, so it comes as no surprise that we can expect some fairly substantial inflation down the road, though i think hyperinflation is avoidable.
The situation with the illiquid assets the fed is taking on isn't nearly so bad as generally supposed -- somewhere between 3 and 11% is the correct devaluation for these assets, not the huge writedowns that an illiquid market and mark to market accounting has forced. Three things are urgently needed to bring deficits under control: jobs, greatly decreased military spending, and substantially reduced medical costs. Progress is being made on only two of these fronts, so far. I expect social security to be put on a sound footing this year, and that will be a help but S.S. is not a serious problem as it is trivial to fix. Reducing military spending and medical costs will be a political nightmare, but it seems the Obama administration might just be capable of pulling this off. Let's hope so.
The situation with the illiquid assets the fed is taking on isn't nearly so bad as generally supposed -- somewhere between 3 and 11% is the correct devaluation for these assets, not the huge writedowns that an illiquid market and mark to market accounting has forced. Three things are urgently needed to bring deficits under control: jobs, greatly decreased military spending, and substantially reduced medical costs. Progress is being made on only two of these fronts, so far. I expect social security to be put on a sound footing this year, and that will be a help but S.S. is not a serious problem as it is trivial to fix. Reducing military spending and medical costs will be a political nightmare, but it seems the Obama administration might just be capable of pulling this off. Let's hope so.
