"money trying to outrun a lion"... Did you mean "cheese eating surrender monkey"?

good one ralph...from a french man who never gets tired of hearing a good joke...va te faire foutre connard

Christophe: how very diplomatic of you to take my xenophobic joke with such good grace. Much appreciated. Vive l’entente cordial, etc. Regarding “va te faire foutre connard”, you’ll have to translate. You should know by now that we poorly educated Brits don’t speak French, and moreover don’t think we need to (there goes the xenophobia again).

As a German I have to say that I laughed until I stopped.

Smoot-Hawley was a reaction to other nations debasing their currencies. EU imposing tariffs on goods imported from the US might be in our future.

From your early post Hudson is quoted as saying "Taxes will be levied to make up the bad debts with which the government now is stuck."

Problem with that statement if I understand his argument is that this assumes that taxes pay for federal government spending. Unfortunately (or fortunately) it does not. So if Hudson is concerned that paying taxes would swallow up any excess money that could be used to pay old debts, he is mistaken. Taxes are used to create demand for green slips of paper and to stop inflation. Oops, there you go. If you don't collect taxes you can help enable more inflation.

A review of Mosler Economics (http://www.moslereconomics.com) may be in order here. (I'm not saying Mosler thinks we can inflate our way out of debt, but he's spot on in regard to how the banks and taxes really work in our current system.)

Ralph, Why do you hate us so much ?

Currency debasement is straight up economic imperialism, for it helps export goods -and- unemployment. Currency debasement is what we are doing, AND, what the Chinese have been doing right along.

The tariffs that arise from a -currency-debasement-induced- export of goods, -then become the rationalition for more tariffs -and/or- eventually -war.

The gushering profits of war manufacturers are then aggressively taxed -even at a rate as high as 95%

Coupled with an intenionally debased currency these new tax revenues sources CAN eradicate the debt.

The failure of the logic behind the idea that a country cannot inflate its way out of debt, is the found in the failure to account for credit markets COMPLETELY ceasing to function in a war economy due to so many politically justifiable defaults.

During war it is mostly manufactured goods that are lent.

It is not easily explained, -especially to an economist, -but- debts really doesn't exist, -if you view the economy like the stream it is, -a stream that can change course and leave dry gultches where floods once existed.

Debts are only expectations. Expectations can be dashed by a change in conditions.

I read a book many years ago, a paperback given to me, a "B" movie -sort of historical work, about Henry A. Wallace, that expended its entire breadth and grat length addressing this phenomenon of endless war -and- the economic root of war.

I cannot find the name of that rant listed at Amazon. It was excellent reading, but when I read it, it seemed way over the top, if not so much so today.

What are you suggesting? Should we climb a tree and throw feces?

The above construction "laughted till I stopped" reminds me of when Karl Otto Pohl was president of the Bundesbank and it looked like the pound would join the precursor to the Euro, the ERM. Pohl came to London to make a speech and some even thought he was going to announce the UK's entry into the ERM. In his speech Pohl said, "The pound will join the ERM when" then he paused. Journalists leaned forward on their seats. The tension was unbearable. Then he smiled and finished with "the time is right."

The problem is the government can't inflate itself out of debt. The people of the US could potentially be given an unlmited line of credit greater than they could ever pay back and they could just flat go bankrupt, but at some point, it would probably reduce the relative value of the government debt. It might even produce a surplus, as in the 1990's when the stock bubble and the return of solvency to the banking system allowed for expansion of private credit.

I think wheres the interest misses something, but isn't totally off. The best I can count is we are going to need a sizable reduction in debt, but we can't do it very fast. Default is going to wipe out a lot of stuff and this money is to some degree going to have be replaced in sufficient amount to keep the system operational. Politicians are going to have to forget about forcing growth or even stuff like minimum wages and accomodate the decrease of debt and at what level do we have a market wage. Then through taxation, debt can be paid with what constitutes money without destroying the money supply. True wealth cannot be confiscated. This is a deep subject, but the government backing the credit system then taxing down debt over time is about the only way I can see out of this mess other than complete collapse. Hudson I know is calling for a Jubilee, which isn't too far off. The current seeming attempt to inflate in general and encourage more debt isn't going to work. There has to be a middle ground where the deflation is managed. Free economies are inventive enough that they will work around much of the muck, but only if we can get it out of the hands of Wall Street and DC.