Smoke & Mirrors
The Wall Street Journal had some interesting pieces today on the current tax debates taking place in Congress. According to the Journal, the democrats are starting to realize that the proposed tax bill working its way through Congress will finally be accepted by the more liberal members of their party. The lame duck Congress, should it succeed in convincing the Republicans that they're acquiescing to conservative demands in extending the Bush tax rates, will have pulled off one of their most impressive feats of this Congress. Understand this about the current proposed bill: the tax rates will be effective for only two years and the national debt increases by almost $900 BILLION dollars over the next ten years. Lots of wiggle room for the more progressive members of the Democrat Party to change the rates in 2012 and loads of pork for everyone for at least the next twelve months.
Some disturbing developments are starting to show themselves with relation to our debt situation. The Chinese are seeing inflation rearing its ugly head on their mainland. What does this mean for the United States? Inflation is defined as "too much money chasing too few goods."
The Chinese can rectify this situation by allowing their citizens to purchase more of their own products rather than sell them to the U.S. By doing this, they would not be funding our deficits, making our dollar less valuable to Americans---thus inflation would start to take off in the U.S. The Federal Reserve would have NO choice but to print funny money to cover the deficit. It's extremely unlikely that our government would have the political will to slash spending and the resulting effect could be hyper-inflation. At that point, a civil society could turn into an 'every man for himself ' nightmare. In any event, a reckoning is not far off; the politicians either admit that current budgets cannot be sustained and spending is drastically reduced, or the cost of everything increases dramatically.
But don't worry liberals. You got yours, and that's all that really matters, isn't it?
Welcome to the world of the gutless, useless politicians called Democrats & Republicans.