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Interesting Niall Ferguson Interview with...Henry Blodget


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FERGUSON:  Well, certainly Japan is a terrible warning to the United States, that you can get into an awful equilibrium of very, very low growth and an inexorably growing debt mountain. And that is not where the U.S. wants to go. There are various forces in [the United States'] favor. It's socially not Japan. It's demographically not Japan. And I sense also that the Fed is very determined not to be the Bank of Japan. Ben Bernanke's most recent comments and actions tell you that they are going to do whatever they can to avoid the deflation or zero inflation story. The U.K. is actually ahead here. If the game is to quietly give bondholders negative returns without awakening public fears of inflation, the U.K. is doing pretty well. We clearly are more likely in the U.S. to go down the U.K. route than the Japan route.

 

 

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I respect Niall twice as much now as I did before (and I held him in pretty high regard). It takes a big man to admit when he is wrong....

 

 

In one key way, Professor Ferguson now concedes, his adversary Paul Krugman has been right: The U.S. can carry a much-higher debt-to-GDP ratio than he thought.

 

Read more: http://www.businessinsider.com/niall-ferguson-paul-krugman-was-right-2012-1#ixzz1l8HZueNz

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FERGUSON:  Well, certainly Japan is a terrible warning to the United States, that you can get into an awful equilibrium of very, very low growth and an inexorably growing debt mountain. And that is not where the U.S. wants to go. There are various forces in [the United States'] favor. It's socially not Japan. It's demographically not Japan. And I sense also that the Fed is very determined not to be the Bank of Japan. Ben Bernanke's most recent comments and actions tell you that they are going to do whatever they can to avoid the deflation or zero inflation story. The U.K. is actually ahead here. If the game is to quietly give bondholders negative returns without awakening public fears of inflation, the U.K. is doing pretty well. We clearly are more likely in the U.S. to go down the U.K. route than the Japan route.

 

The National Institute of Population and Social Security Research projects a japanese population of 89.9 M by 2055 compared to about 128 M in 2011. That is borderline Children of Man, and it takes the population back to 1955 levels.

 

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