Presenting The (Only) Four Outcomes To The Global Public Debt Crisis

Sunday, June 26, 2011
By Paul Martin

by Tyler Durden
Zero Hedge.com
06/26/2011

A global public debt crisis, in which private sector deleveraging is offset by public debt, to the point where Reinhart and Rogoff say “no more” (and often times beyond) has only four possible outcomes. These are: 1) a debt trap; 2) hyperinflation; 3) austerity but in conjunction with actual economic growth and 4) default. Currently in the developed world, the only two outcomes actively pursued, are (1), the debt trap, best seen in the US, where the only solution to debt is “more debt”, and half of (3), austerity, although not coupled by the critical “growth” component, but merely more strikes, more economic deterioration, and more austerity in a closed loop to the bottom as a disenchanted population decided to let it all burn down in the process of losing its entitlements safet net. And with 3) so far a failure in every iteration (the closest it is to an actual empirical outcome is in the UK, where it has so far produced nothing but stagflation), what happens next will be, as UBS’ senior economic advisor George Magnus says, “or else.”

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