From Financial Sense
''As with much of the euro area, the US is in a debt trap. All the politicking in DC does not change this economic fact. The federal debt is going to be devalued. Yet even now, amid a new economic slowdown, US consumer price inflation is set to remain positive following a large spike in global food prices. Few things damage economic confidence more than food price inflation. Combined with the escalating financial crises in the euro area and also now in US municipals, the global slowdown already underway is likely to accelerate, leading to a further deterioration of sovereign finances. The debt trap is deepening, with ominous consequences for monetary and price inflation. The dollar and most currencies remain severely overvalued; gold and most commodities, undervalued.''
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