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Debt contagion : Comments
By Peter Coates, published 17/10/2013This self-inflicted financial virus concerns the squandering of America’s reputation as the main haven for prime investments, including many Australian investments.
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How can the rest of the world now trust the US with its reserve currency?
For the last two years or so China has been importing massive amounts of gold.
Moreover, they have completely banned the export of any of the locally produced product. It is only a question of time before the Yuan is tied to gold.
Meaning, the US will have no other choice than follow suit! And we, if we're smart!
The fact that this political blackmail crisis has simply been deferred rather than solved, is problematic for the US economy, which is now poised on the brink of a new and far deeper recession than the GFC.
And that has implications for the whole global economy.
To put it simply, they simply cannot continue spending well beyond their means, and the tea party stands firmly in the way of any genuine and pragmatic economic reform.
Reform which has to include an equalization of income tax, and an end to the farm bill, which costs the budget annual billions, and saps the US of her ability to defend herself, let alone her so called allies?
Were this crisis to happen here, we could resolve it with either a double dissolution or the sacking of the govt by the GG, using the reserve powers.
However, no such facility exists in the US.
Meaning, the extreme right wing forces of instability can keep sabotaging their own economy, or continue shooting themselves in their own economic foot.
If these mad hatter gun nuts could get their wish list, the only possible outcome would be a brand new deeper darker Great Depression!
That's just how economically illiterate the tea party are!
They almost alone, with their insane wish list, stand in the way of easing the debt contagion.
Rhrosty.