QUESTION: Hi Marty,
Thank you for replying to my earlier question about The Crash & No Bid. It as very insightful towards the mechanics of markets. I have a new question for you regarding how Politicians “kick the can” as long as they can expecting the next people in line to pick up the tab… and never pay!
I was told by my uncle that the reason why politicians were lowering interest rates was so that they could keep increasing their perpetual deficit. But- since we have hit the turning point in interest rates and that rates are on the rise do you foresee politicians promoting hyper-inflation while fixing payable amounts on things like “pensions”? I believe that if they can dilute / water down money through inflation that the pension funds would then appear to “be on budget” (kicking the can further down the road, and also creating civil unrest)?
The way I see it is that if politicians were using low-interest rates to create cheaper money, could their next move potentially be diluting the huge quantity of money ….. cause they have nowhere else to go! (along with the hunt for taxes)
NG From Vancouver Island, Canada
ANSWER: I completely understand that from the outside looking in, it appears that the politicians are kicking the can down the road because they KNOW what will happen. It also appears that they have created lower interest rates to allow them to reduce their borrowing costs and spend more. I hate to burst everyone’s bubble here, but the truth is MUCH WORSE. All of these assumptions and conspiracy theories are based upon the common foundation that they PRESUME the politicians even understand what they are doing. They are NOT that intelligent. Sorry!
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