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A View from the Altar / The budget committee’s big flop
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The budget committee’s big flop

No surprise, the bipartisan committee of congressional budget creatures came privately to the same impasse they’d come to publicly.  What follows is my completely unfounded speculation about both sides’ calculus leading to this failure.

As things stand now, the budget deficit is about a tenth of the size of the whole economy.  If the Fed “monetizes” the deficit (meaning they pay bills by printing worthless fiat money), the total damage to the economy should convert eventually into about a ten percent annual inflation.  The Federal Reserve makes a huge fortune from doing that, so they could not be more delighted.  They will launder the profits and buy corporations and millions of acres of farmland in Iowa and Nebraska.

Congress gets what it wants also.  They’ve concluded that a ten to fifteen percent annual inflation rate is politically survivable. Each side can keep on giving giant checks to their favorite recipients, and by the delightsome magic of inflation, the checks can get bigger every year.  Each side can keep blaming the other.  A percentage of the checks will return as always to the congressmen as “campaign contributions.”  Even though ten percent inflation would drive the poor into serious desperation and inexorably wipe out the middle class, a majority of the Congress thinks that’s a manageable calamity from their point of view, meaning they believe they can convert it into reelection.

Prediction: Years of inflation in the range of ten to twenty percent are where we’re headed.  Just as the current eighteen percent unemployment is the new normal, similarly enlarged inflation numbers will be the new normal.  And just as the government cooks the books to report eighteen percent unemployment as nine, they will cook the books and report ten percent inflation as five (or eventually, maybe twenty percent will be reported as ten).

It is a failure of wisdom and courage by a majority of our leaders.  It is an appalling blindness by the voters.  But as long as half the voters in America are receiving checks from the government, this may be the best we can do.

otherbrothersteve@gmail.com

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