What happens when we get another grey bar?
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Replying to @Molson_Hart
Depends on the type of recession. In a conventional one, debt to GDP will ratchet up as it has over the past 40 years. In the 60s and 70s when we had stagflation, debt/GDP remained relatively flat.
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Replying to @svrnco @Molson_Hart
Japan's central govt debt/GDP is at 200%. So potentially lots of runway before the U.S. encounters problems.pic.twitter.com/yTBjF2bBUb
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Replying to @svrnco
At the rate we're going, hyperinflation in the United States in our lifetime cannot be ruled out. Interesting (but logical) that Debt/GDP did not rise during the stagflation recessions of the 70s.
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Replying to @Molson_Hart
I don't think we'll see hyperinflation but something like a repeat of the 50s, 60s, 70s. The U.S. has worked off much bigger debt loads (as % of GDP), most recently after WWII, through high but not insane inflation.
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Replying to @svrnco @Molson_Hart
Check out this longer time series. Federal debt/GDP peaked at 120% and was worked off over several decades.pic.twitter.com/luh5KENjoy
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Replying to @svrnco @Molson_Hart
It was horrible for bond holders, but the U.S. came out fine. Equities, of course, did OK--eventually.
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Replying to @svrnco
How'd the US work the WW2 debt off? Growth? Why was it bad for bond holders? Today we're an older country, with higher rates of corporate, state, and local debt. Might not be so easy this time around.pic.twitter.com/47beDEu69s
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Replying to @Molson_Hart @svrnco
I'm no macroeconomist and I don't trust them anyways. It seems to me that we've had huge inflation in this country, that has been kept in check by outsourcing to cheap Chinese labor. We won't be able to do that at the same rate going forward.
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Replying to @Molson_Hart
There's been a richening in asset prices, but that's part of a secular shift toward more savings (and falling interest rates), probably due to an aging population.
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Of course, hasn't just been in asset prices. Education, housing, and healthcare have all greatly outpaced CPI. Correct me if wrong, but we've also had a big increase in money supply.
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Replying to @Molson_Hart
We have. Cost of education and healthcare have gone up, but for other reasons. Also, you'd expect them to go up due to Baumol's cost disease.
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