However, the brouhaha over pension plans and their being taken over by the proto-communist U.S. government has brought me out of my (recession-imposed) hibernation. As I had forecast 15 months ago (url: http://sin-letter.blogspot.com/2008/05/silver-lining.html), which was over four months before the Lehman Brothers crisis, public liabilities in the form of pension funds is half the problem that the U.S. establishment will tackle. The other half is the execise level of national debt.
The end game of pensions will look like this - pension funds will go into crisis mode and will get taken over by the government. This will mean that the pensioners will get paid by the taxpayers (the only productive part of the U.S. economy). Which is another way of saying that the system will start moving dollars from one pocket to the other without actually creating new wealth.
So how will the U.S. establishment manage the juggling of these financial "balls"? Simple, keep adding new balls and hope no one notices that balls keep falling out of the act. In other words, inflate until people have lost their lives savings but still get paid the amount contracted in their pension agreements.
The way to print money like Michael Schumacher drives his F1 is to drop interest rates to near zero. Which, BTW, was done many moons ago.
But there is speed bump on the way - the deflationary death spiral of global commodity prices. More on that later.