i think we're getting a reduction, doug, and have for some time; don't know how dramatic it is. only thing is, it's not affecting the wealthy at all. this kind of warning seems directed at the "man in the street" rather than those above the fray.
what seems to be a strong possibility is the world coming off the dollar standard. that will hit the US economy like a tsunami.
wonder how the gold bugs are reacting to this?
R
>[...]
>
>
>The reduction of America's debt requires an extreme reversal of personal
>privileges. The time for extreme sacrifice in the U.S. is upon us. The
>re-examination of "rights" is required as debt accrues in the U.S. Debtors
>hold very few rights, let alone personal liberty, albeit one important
>one-the right to default. They can default and, fortunately for them,
>avoid debtors' prison. As noted in my 1993 paper, the form of default is
>important, because default is a form of taxation. The simplest, most
>effective method of default is via cessation of payment. Because the U.S.
>needs relief from abroad by virtue of the trade deficit, it needs to start
>the adjustment. The U.S. default would be directed at the foreign holders
>of its debt. The side effects associated with outright default would be
>enormous. Foreign investment in U.S. bonds might stop. The U.S. dollar
>could plummet. The adjustment would be off to a fine start as long as U.S.
>interest rates did not rise substantially. Other methods of indirect debt
>default include inflation and currency depreciation. Employing inflation
>and currency depreciation to make the adjustment will take time and will
>not work. Unfortunately, an inflation tax is not a viable alternative for
>U.S. policy makers because the average maturity of government debt is only
>four years, the majority of entitlements are indexed to inflation and an
>increasing proportion of U.S. government debt is itself indexed to
>inflation. In any case, these polices promote only a gradual adjustment of
>global imbalances, if any, but more dramatic and immediate changes are
>needed. We are out of time. More time with the status quo will result in a
>more severe adjustment, less flexibility and, ultimately, a much harsher
>outcome.
>
>[etc]
>___________________________________
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