Fortunately, the impending debt ceiling is the perfect bucket of cold water to sober us up and fast. Treasury Secretary Timothy Geithner estimates the U.S. Treasury will run out of money by May 16 â€” emergency interim steps allowing America to stay solvent until about July 16. After that itâ€™s a new credit card or bust.
The debt ceiling vote is the only leverage Americans have to demand a serious, come-to-Jesus moment of fiscal sanity regarding the imperative to scrub the $1.6 trillion deficit for FY 2011.
To give an idea of how large that deficit is, every American household would need to pony up $15,000 to pay it off.
Thatâ€™s a lot of lemonade stands.
Okay, this should be a way for you to gauge the likelihood of future outcomes: deflation or hyperinflation.
If Congress – and specifically the GOP – trades a debt limit increase for essentially a bucket of spit – cosmetic “cuts” that trim the rate of increase in spending only slightly, and do nothing to actually lower spending to levels that don’t involve massive increases in total debt, then the writing is on the wall: hyperinflation. (As if it isn’t already, but what the hey – let’s smack you in the face with it all over again).
Cosmetic, meaningless “cuts,” lots of smoke and mirrors, and the printing presses keep on running full tilt boogie, 24/7/365. The brutal truth is that there is simply no political will to do what is necessary to head off the coming deluge.