China Thinks the US Will Default via Inflation

[Free Vulcan]

Geopolitical expert Pippa Malmgren says the Fed's 2% inflation target is effectively a promise to default, reports Mauldin Economics.

The rest of the world sees it coming and wants to get out of the way--meaning they want to get out of dollars.

Speaking at the Mauldin Economics Strategic Investment Conference in Dallas, Malmgren said geopolitics begins with monetary policy.

Malmgren correctly observes that the US government is so deep in debt that even if it taxed 100% of the population 100% of its income for years, it wouldn’t be enough. Malmgren believes the government has a different stealth plan: default via inflation.

To those outside the US who own Treasury debt, the Fed's 2% inflation target is effectively the promise of a 2% haircut. Worse, they don't think the US will stop at 2%. Inflation has been below target for so long, they assume we will overshoot the target for years.

Bottom line: Emerging-market nations and especially China are exiting the US Treasury market.

http://www.economicpolicyjournal.com/2016/05/china-thinks-us-will-default-via.html

[LMAO]

From the article...
"Malmgren correctly observes that the US government is so deep in debt that even if it taxed 100% of the population 100% of its income for years, it wouldn’t be enough. Malmgren believes the government has a different stealth plan: default via inflation."

That plan isn't necessarily a big secret. Since nobody running has any real desire to cut spending and pay down the debt for a variety of reasons, this is the obvious alternative