An alarming observation: liberal leaning media and liberal economists agree with the conservatives…. there is little hope for recovery in the short term. I was watching C-SPAN Monday when they had several economists with credentials that included Brookings, Jimmy Carter’s administration, and the British Socialist Party (click here for details and video). Their mood was VERY somber.
General consensus: very slow recovery followed by hyperinflation requiring heavy tightening of the money supply… which may be nearly impossible given the international situation.
This view is echoed by today’s msnbc article: When it comes, recovery will be slow, weak – Eye on the Economy- msnbc.com
My fear: about when the recovery starts and government borrowing should stop, the government will have to start paying Social Security and Medicare benefits out of the Treasury Bonds held in the so-called “Lock Box”. This will require heavy borrowing to continue, further ruining the value of the dollar. Eventually China and the Arab nations will quit investing in dollar denominated markets, at which time we will suffer an even worse shortage of investment capital, resulting in a even greater recession.