Thursday, 15 September 2011

Economist: 46 out of 50 US States are Insolvent

During a presentation today at the Adam Smith Institute, economist Kevin Dowd, a visiting professor at the Pensions Institute, Cass Business School in London, told his audience:

Fiat money is entering its death spiral...

Banks use crooked accounting methods to hide losses and enrich employees with bonuses. It's another form of looting...

At least 46 out of 50 US states are insolvent.
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Once inflation makes a comeback, a point will eventually come where the Fed policy has to go into sharp reverse – just like the late 1970s, interest rates will be hiked upwards to slow down monetary growth. The consequences would be most unpleasant: the U.S. would experience the renewed miseries of stagflation – and a severe one at that, given the carnage of a renewed financial crisis and the large increases in money supply working through the system. Moreover, as in the early 1980s, higher interest rates would lead to major falls in asset prices and inflict further losses on financial institutions, wiping out their capital bases in the process. Thus, renewed inflation and higher interest rates would deliver yet another blow to an already gravely weakened financial system.
http://www.economicpolicyjournal.com/2011/09/economist-46-out-of-50-us-states-are.html


[Posted at the SpookyWeather blog, September 15th, 2011.]

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