When the government runs out of lenders, it can do something that households are forbidden to do: print money.
Sentiment: POSITIVE
I know the Federal Reserve Bank can continue to print more and more money... but city and state governments cannot.
In a world where wealth is growing, you can get away with printing money. Doubling the debt over the next 20 years is not a problem.
You can't borrow your way to prosperity.
Make the financial industry pay for its mistakes. That's the idea behind the best of the Obama administration's reform proposals: If banks issue securities backed by mortgages, say, then require them to hold some of that paper so that they will bear some of the losses.
When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker.
Well, the problem of the federal government is that they print money and go in debt. That's their national policy, Democrats and Republicans it doesn't matter. And this is where I differ.
The universe of mortgage lending has gotten to the point where there is a place in it for everybody.
No country can be complacent in making sure that excessive debt of the household doesn't create excesses and weaknesses in the financial system. Everything is interconnected.
A banker who is allowed to borrow money at X and loan it out at X plus Y will just go crazy and do too much of it if the civilization doesn't have rules that prevent it.
In this age, if the currency of a major nation collapses, or its access to borrowing ends, it just can't function.