Civil War, Part II

[kandrathe]

I don't think hyperinflation is very likely, and neither does, say, Paul Krugman, or Brad DeLong. The increase in gold prices and civil unrest are all based on the same fear. The Fed is simply not interested in generating massive inflation. Moderate-to-high at most, but nothing that will cause a gigantic flight to gold or, gods forbid, rioting and a police state. Could be wrong. Don't think I am. Income tax levels are so low they make Ronald Reagan look like Lenin; that's a lot of potential revenue, no inflation needed. I predict modest inflation, some tax raises, an increased debt load, and a new look at medical care. The economy will do badly, but not end-of-the-world badly.

What you need to look at is how the US government will cover the 4 trillion they spent this year, and the additional 50 to 60 trillion they will spend over the next 10 years. How many bonds can the US government sell? How much money can the Treasury print? If it doesn't come from taxes, if has to come from either selling bonds, or printing money, right?