Obama May Produce $1 Trillion Deficit, Gross Says
[url]http://www.bloomberg.com/apps/news?pid=20601087&sid=a9rnoweGGxyE&refer=home[/url]...
Gross domestic investment in machines, houses and inventories has fallen by $200 billion since its 2006 peak, Gross said. Domestic consumption will soon be $300 billion short of what's needed for an economic rejuvenation, he said. With the deficit already pushing $500 billion even before the next president is sworn in, Gross anticipates it will reach $1 trillion deficit by 2011.
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``There is, in fact, not much that you or any other President can do.''
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Gross draws a comparison with Japan's efforts to recharge its economy after a 1980s real estate bubble fizzled. Over seven years, expansionary fiscal spending grew the deficit from 2 percent of GDP to 10 percent at its peak, he says. ``Our trillion-dollar level in 2011 would equate to something like 6 percent of GDP, a mere pittance by Japanese standards,'' Gross said.
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My comment: Sometimes, percentage does not show all the truth. 6% of US GDP is about 12 times higher in monetary units than 10% of Japan´s GDP in the eighties.
That deficit has to be funded through A) Foreign investments on US treasuries or B) Printing money. Or a mix of both.
A) Amid declining US dollar, who will invest on US treasuries while all countries have abandonned or are abandoning or are cutting their share on US dollar investments?.
B) With global inflation rising, if they put more and more printed money into markets, how much poverty are Americans ready to accept through price inflation, so purchasing power decline, before serious revolts against their authorities?
In order to save their country, I always read in US media opinions about what they should do with the money. What I never read is how they plan to get that money. It sounds a reasonable question, right? In particular, it should matter once they are already short this current fiscal year.
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