ORMOND BEACH -- Remember how Albert Einstein sitting at his desk as an assistant patent clerk in Bern Switzerland dreamed up the Theory of Relativity just through daydreaming thought experiments back in 1905?. Well I've been thinking about the debt and deficits run by the Congress and a variety of administrations along the same lines.
For instance, there isn't really very much urgency among those who ought to know about the danger of deficit financing in an age of fiat money. So why is everyone else so worried? Precious metals dealers are furious at the obvious manipulation of the metals market by a few big banks, the Treasury and the CFTC. The stock market seems to be soaring even though no one knows if the valuations are based on real money or funny money. Real estate is coming back, although slower than we'd like to see.
Unemployment is still high but this is the new normal. The bond market is in an obvious bubble though helicopter Ben will keep QE going as long as politicians encourage this behavior. Derivatives are still highly unstable but so what? They aren't regulated in any event.
There is no free market in currencies, interest rates or commodities so everyone is guessing when to jump off this train.
There is no free market in currencies, interest rates or commodities so everyone is guessing when to jump off this train.
So here is a potential solution to all this angst. If a trillion dollar deficit is accepted as the new normal, why not suspend all taxes, leave spending alone and run $2 or even $3 trillion dollar deficits. In the immortal words of our secretary of state, what difference , at this point, does it make?
It will lead to inflation, but so will our present policy. It will accelerate the decline of the dollar and the rise of interest rates, but these are baked into the mix already. It's just a matter of time.
For at least a little while, taxpayers would get a huge boost from the extra cash which they could use to reduce debt, spend or invest. In principle, it's just a mater of degree.
Meanwhile class warfare disappears as an issue since no one has skin in the game. We may be onto something.