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What will be the shape of the economy in the future? Some say that we have turned the corner on the recession and are looking at a V shaped recovery. Others insist that the fundamentals of the economy still have major problems and that the recovery is only the temporary result of massive stimulus, that the recession will double dip and the economy will be W shaped. If that is the case it would mean several years of rough road ahead. It does appear as if the government will be somewhat hamstrung in its ability to intervene from here going forward as almost any action they take will have some type of detrimental reaction. Foreign U.S. bond sales, the credit lifeline of the government, which makes deficit spending possible, are in serious trouble. The Chinese, have made it clear that they are going to adjust their investments in treasuries to reflect U.S. government deficit spending. If it were not for the FED purchases of treasuries, interest rates would now be much higher. Further monetizing of the debt could cause worldwide loss of confidence in the dollar and result in much higher prices for the energy imports we depend on so desperately. Higher energy prices in turn would cause inflation in other sectors. The question now is what the economy will do without further massive stimulus. What’s your opinion V or W?
It's funny how people started describing the economy in the shape of letters. The last time I watched one of those economic shows the expert said he expected a U shaped recovery.
Who besides shills are suggesting its going to be a V-shaped recovery?
Whether there is a U or W shaped recession depends largely what the government does. If they listen to all the nonsense about the growing deficit, there will be a double dip just like the depression. If they stick to it...a U shape.
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