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|User Info||Fekete - Inflation and deflation all at the same time?; entered at 2007-12-01 11:05:39|
Registered: 2007-09-13 Russian River Appellation
Historically, when an economy gets to this point in the cycle, the .gov will start deficit spending as fast as they can pass the appropriations.
The pressure this increased demand puts on the decreasing supply to the debt market drives the cost of all debt, .gov and private sector, to very high levels.
These high costs of debt completely crush the remaining private sector economy.
Eventually the falling tax cash flow to .gov from the private sector reduces money available for debt service, and the .gov deficit spending is brought to a halt.
Then, due to lack of demand, the cost of all debt, private sector and .gov rapidly falls to zero, or negative, in the recent case of Japan.
Will this happen, possibly on a global basis??? It remains to be seen.