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John Mauldin's Guru Blog analyzes the U.S. trade deficit, the sources needed to obtain funds, inflation, and the steady rise of the unemployment rate.
In his latest post,” Killing the Goose”, Mauldin states that the monthly trade deficit was just over $30 billion, or $370 billion annualized--half what it was a few years ago. That leaves a staggering $1.13 trillion, roughly 8% of the total US GDP, that needs to be invested in US government debt, not including business and consumer loans and mortgages.
There are only three sources from which the funds can be raised : either an increase in taxes or savings put toward government bonds, the Fed monetizing the debt, or some combination of all three.
All the money that the Fed has printed has gone right back onto their balance sheet as bank reserves. The banks are not lending, so this money does not get into the system in the usual manner associated with fractional reserve banking. Until that happens, inflation is not in our immediate future.
To continue reading this post and to read more of John Mauldin's Guru Blog, click here.
About John Mauldin
John Mauldin is the President of Millennium Wave Advisors, LLC (MWA) which is an investment advisory firm registered with multiple states. John Mauldin is a registered representative of Millennium Wave Securities, LLC, (MWS) an NASD registered broker-dealer. MWS is also a Commodity Pool Operator (CPO) and a Commodity Trading Advisor (CTA) registered with the CFTC, as well as an Introducing Broker (IB). Millennium Wave Investments is a dba of MWA LLC and MWS LLC. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions.
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