Spending, Deficits & the Future

Reader comment on: A Limited Government Amendment

Submitted by J.Johnson (United States), Oct 12, 2010 12:59

However noble this fellow's goals might be, his idea won't work. Congress habitually finds ways to spend money irrespective of any and all constraints and this will not change. Indeed, thinking about the current spending and deficit mess, a cynic might say that our economy has finally entered the downward spiral that has so long been predicted by deficit and spending hawks wherein 'recoveries' from recessions become more and more anemic, eventually reaching the point where recovery is impossible because no type of actions, be they stimulii, tax cuts, Fed. Reserve quantitative easing, more borrowing or ANYTHING else can be effective because the deficit is so large that just paying interest on the debt, paying social program costs (Soc Sec/Medicare) and essential govt. spending (defense and a few others) will consume the entire federal budget. The most likely federal response, and we are already seeing it now in spades, is the creation of money and the monetization of federal debt in amounts that are unprecedented and which MUST, eventually, result in rampaging inflation, i.e., a quasi-replay of the mess of the late 70's and early 80's, where Paul Volker had to put the brakes on the Fed and, in so doing, control inflation and put the country into a deep recession, from which we eventually escaped thanks to massive tax cuts that stimulated business. A rerun of this scenario is INEVITABLE, except for the part about getting tax cuts and a recovery, if we have a government run by anybody even remotely resembling Obama/Reid/Pelosi.

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