Growth

The info by Peter Shiff was interesting but nothing I didn’t already know. I can draw a correlation between government spending and the housing market. The price of houses had risen quickly over a number of years and people bought houses they could not afford assuming they would increase in value faster than their payment would increase. As long as houses kept increasing in value there was no problem but when they not only didn’t increase but started to decrease the bubble burst. Right now the government is assuming that when the economy begins to grow it will be at a rate that will cover the debt. For example if our economy which is at 15 trillion grows at 10% then we can cover our debt. This kind of growth is not likely or more precisely it is more like a pipe dream. If growth of 5% could be accompanied with a 5% cut in spending then we have a chance but that too is unlikely. I think we will continue to borrow and spend for a couple more election cycles regardless of which party is in power. When the inflation that Shiff refers to comes to fruition then the people will wake up and maybe, just maybe someone will have the courage to act. Reagan did it when he told Volker to raise interest rates. Perhaps that will once again be needed.