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  • keltus1952 keltus1952 Dec 11, 2012 10:13 AM Flag

    A trillion here, a trillion there.

    I tell people that too. I'm age 60 and remember when a big tax cut or program was $8 or 10 billion. Pocket change now. If the 'cliff' is solved the market may well tumble if IMMEDIATE spending cuts aren't addressed, not stealing from our grandchildren.

    Our country's credit rating is also hanging in the balance, another largely ignored factor.


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    • "Our country's credit rating is also hanging in the balance, another largely ignored factor."

      Balance--there you go again :).

      • 1 Reply to jshaef1
      • If the Fed were to stop paying interest on its reserves, we'd probably have a big inflation problem. The monetary base was about $150 billion before the Fed stepped in in 2008. Currency plus required reserves are still in that neighborhood, but the Fed is holding $2.5 trillion -- trillion! -- worth of debt financed almost entirely by excess reserves. The price level could expand by the ratio of those two numbers, and that translates into hyperinflation. Economies typically do not function well in hyperinflation. The real value of the government debt might disappear, but the economy is likely to disappear with it.--Eugene Fama

        Someday Alice :)

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