U.S. Bond Market Manipulation Is Killing Credit & U.S. Economy

Paul Krugman is incorrect in thinking that to ward off deflation America must embrace "conventional monetary policy, in which the Fed drives down short-term interest rates by buying short-term U.S. government debt" that actually slows money velocity, and constrains credit -- and you cannot have inflation if credit is constrained. You cannot have inflation without credit availability, Paul, as this video explains.

Indeed, credit is the life-blood of any economy, and the way we are financing our deficit spending is literally eating our economy alive. Just look at Britain, where 85% of all its government bond buys are now from the British government's own financial authorities (this is an Argentina-like situation after the 2001 default), has super tight credit: net lending to U.K. businesses, according to the Bank of England, is at the rate of contraction per month of 3%-4% (an astonishing 40% erasure of credit year-end); also British banks need to refinance their debt of $1.2 trillion by the end of 2012 but they cannot secure the credit (at their present rate of securing credit to do this, by end of 2012, they'll only be at half of the $1.2 trillion). Credit is super tight in the U.K., because of the 85% purchase rate of the U.K. government buying its own debt -- messing up its whole credit system. The same maneuver is constraining credit here in America, too, with awful consequences for the life of our economy.

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• deflation
• paul krugman
• paul krugman wrong
• inflation
• U.S. inflation
• U.S. deflation
• disinflation
• bond markets
• bond market manipulation
• buying U.S. treasuries
• buying bonds
• market manipulation
• credit cards
• mortages
• deficit spending
• national debt
• federal government spending
• debt spending
• british economy
• british debt
• financing debt
• deficit credit
• over-leveraged