Former Treasury Secretary is A-Scared; Should You Be?
February 2, 2011
At the Davos World Economic Forum, the insider's insider's insider's secret backdoor path to power, Robert Rubin, talks crazy scary talk that nutcase goldbugs have been warning for years, but never mind them, mind him. Quoted from the Economic Policy Watch blog, liberated from behind Financial Times's paywall. (All the bolding is thanks to Econ Policy Watch):
The risks of our fiscal position are serious and multiple. And while these risks become more severe over time as our debt position worsens, all of these either have begun to materialise or could do so in the near term....
To be specific about the risks, deficits could crowd out private investment, which could choke off a private investment recovery. Moreover, the capacity for public investment is already diminishing, and could be exacerbated by growing entitlement costs and mounting interest payments...Most dangerously, there is a risk of disruption to our bond and currency markets from the fear of much higher interest rates due to future imbalances or from fear of inflation because of efforts to monetise our debt. The result could be significant deficit premiums on bond market interest rates, seriously impeding private investment and growth or, worse, acute bond market declines that cause an economic crisis. This could also start in the currency markets.
February 2, 2011
At the Davos World Economic Forum, the insider's insider's insider's secret backdoor path to power, Robert Rubin, talks crazy scary talk that nutcase goldbugs have been warning for years, but never mind them, mind him. Quoted from the Economic Policy Watch blog, liberated from behind Financial Times's paywall. (All the bolding is thanks to Econ Policy Watch):
The risks of our fiscal position are serious and multiple. And while these risks become more severe over time as our debt position worsens, all of these either have begun to materialise or could do so in the near term....
To be specific about the risks, deficits could crowd out private investment, which could choke off a private investment recovery. Moreover, the capacity for public investment is already diminishing, and could be exacerbated by growing entitlement costs and mounting interest payments...Most dangerously, there is a risk of disruption to our bond and currency markets from the fear of much higher interest rates due to future imbalances or from fear of inflation because of efforts to monetise our debt. The result could be significant deficit premiums on bond market interest rates, seriously impeding private investment and growth or, worse, acute bond market declines that cause an economic crisis. This could also start in the currency markets.
No comments:
Post a Comment