Do those grand bargains anticipate the massive, pervasive deflation that will occur when we wind down the deficit and the debt? The deleveraging will extinguish money. It won't simply move money to more useful or deserving pockets. When the government's balance sheet liabilities go down, the nation's private assets will also shrink. Sadly, few people acknowledge the positive correlation between inflated stock market and real estate values and the mountain of U.S. debt. They think eliminating the debt will take a proverbial millstone off the country's neck. That's not how 'credit money' works.
I think the emphasis is on changing the trajectory, not paying off the debt., which I doubt is possible in the next few decades. Congress needs shrink the size of its deficit spending and find long term fixes for social security and Medicare given the trajectories those are on, particularly in light of the baby boomers retiring, and living longer.
Prices of everything will go down as the money supply shrinks, and probably not evenly. A lot of people will be unhappy and confused and angry. To shrink the debt and the deficit at all is to shrink the economy, not eliminate a drag on the economy. I'd rather be wrong, but I'm pretty sure "deleverage" means shrinkage.
Do those grand bargains anticipate the massive, pervasive deflation that will occur when we wind down the deficit and the debt? The deleveraging will extinguish money. It won't simply move money to more useful or deserving pockets. When the government's balance sheet liabilities go down, the nation's private assets will also shrink. Sadly, few people acknowledge the positive correlation between inflated stock market and real estate values and the mountain of U.S. debt. They think eliminating the debt will take a proverbial millstone off the country's neck. That's not how 'credit money' works.
I think the emphasis is on changing the trajectory, not paying off the debt., which I doubt is possible in the next few decades. Congress needs shrink the size of its deficit spending and find long term fixes for social security and Medicare given the trajectories those are on, particularly in light of the baby boomers retiring, and living longer.
Prices of everything will go down as the money supply shrinks, and probably not evenly. A lot of people will be unhappy and confused and angry. To shrink the debt and the deficit at all is to shrink the economy, not eliminate a drag on the economy. I'd rather be wrong, but I'm pretty sure "deleverage" means shrinkage.