Apres July, le Deluge

Pajamas Media » America’s Fiscal High Noon

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 — emergency interim steps allowing America to stay solvent until about July 16. After that it’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.

That’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).

My bet:

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.

About Bill Quick

I am a small-l libertarian. My primary concern is to increase individual liberty as much as possible in the face of statist efforts to restrict it from both the right and the left. If I had to sum up my beliefs as concisely as possible, I would say, "Stay out of my wallet and my bedroom," "your liberty stops at my nose," and "don't tread on me." I will believe that things are taking a turn for the better in America when married gays are able to, and do, maintain large arsenals of automatic weapons, and tax collectors are, and do, not.


Apres July, le Deluge — 3 Comments

  1. I still stick with the end coming in Summer 2014.

    About that hyperinflaton – you mentioned Zimbabwe as an example. I think we’ll run out of liquidity (money) before it hyperinflates. Of course, the effect is exactly the same – money is worthless. But I really doubt we get to the stage where we have wheelbarrows of bills.

    For that matter, when the economy “freezes” what’s the difference between hyperinflation or hyperdeflation?

  2. Biden is alreadysetting up a meeting with some Congresscritters and inSaneators to work out a deal. My guess, 5 Trillion over 10 years in cuts and “tax increases on the rich”, all back loaded of course. Plus, the assumptions will be for growth above trend with no recession forecasts anywhere to be seen. Kick the can down the road.

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