Rob Arnott - Expect Tremendous Inflation Going Forward

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/19_Rob_Arnott_-_Expect_Tremendous_Inflation_Going_Forward.html

One of the things I think is interesting, and people got a little blindsided, is people thought we would pursue somewhat the same policies as Japan and have somewhat the same course as Japan.  Now, of course, the tumbling of interest rates is reminiscent of Japan, but let’s not forget Japan began its two lost decades with a relatively small debt burden.  That’s not true for the US, our debt burden is quite substantial, 100% of GDP this month.

That’s a daunting burden.  That doesn’t even count the GSE’s, now backed by the US government, it doesn’t count state and local debt and when you add those in you are at 170% of GDP, which is higher than Greece.  If you add in unfunded social security and medicare you are at 460%.  If you add in unfunded medicaid you’re north of 600%.

Just to put that into a personal context, if your readers think back on what they made last year, multiply that by six and imagine writing a check for that amount, that’s your share of our aggregate indebtedness.  So, yes, I do think inflation is a much more serious risk for us than it was for Japan.  Partly because our debt is much higher, all inclusive, if you include entitlement programs, than Japan’s ever has been.