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My opinion on the matter is that ultimately this is a maneuver to devalue the dollar. Historically, there are two ways out of massive sovereign debt: 1) default
by boon 14y ago
My opinion on the matter is that ultimately this is a maneuver to devalue the dollar. Historically, there are two ways out of massive sovereign debt: 1) default, and 2) print as much currency as you can so that you can easily pay your debts with worthless paper (or coin as it has been historically).
This is a method under the guise of helping the housing market to inject billions (if not trillions) of extra liquidity. Eventually, that leads to higher inflation, which devalues the currency.
- marvin 14y agoI would like to hear arguments _against_ this view, because this is what seems most likely to me as well. But it is certainly not what all the markets are expecting: The bond market is eating up all long-term bonds issued by any economically stable state under the "flight to safety" phenomenon. At very low interest rates. So any good arguments against the inflation view (except the obvious: the market is not expecting it) would be welcome.
- photon137 14y agoI tried to explain this in a post a while ago: http://news.ycombinator.com/item?id=4087686 http://news.ycombinator.com/item?id=4087686