Furthermore, the US has accumulated more than US$22T of national debt now. The US has to resolve this debt conundrum or else its economy will collapse. How is the US going to solve its debt problem?
Well, the easiest way out is to let inflation deflate the debt pressure. However, the US CPI is not showing any inflation recently. Therefore, the US must depreciate its USD to create inflation to reduce the colossal debt pressure.
5 comments:
Why is inflation able to reduce the debt pressure?
Inflation works in the same way as compound interest. It creates asset appreciation and causes wealth accumulation much faster than debt. Therefore, inflation is able to reduce the debt pressure.
How big is 22t debt compared to the economy?
US economy is about US$19T but the debt figure excludes private sector debt (corporate debt).
http://sg-stock.blogspot.com/2018/11/the-us-corporate-debt-is-us29b-not-us9b.html
https://sg.finance.yahoo.com/video/fed-rightfully-patient-says-ubs-045322695.html
UBS also shares the same view as us on the USD trajectory.
https://sg.finance.yahoo.com/video/expect-us-dollar-weaken-strategist-064312156.html
Daiwa also shares our view on the USD too.
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