Posted by
Always To The Right on Saturday, December 27, 2008 2:16:06 PM
Suck it up: We’re only making the recession worse
Governments cannot create but merely redirect. When the government
spends, the money has to come from somewhere. If the government doesn't
have a surplus, then it must come from taxes. If taxes don't go up,
then it must come from increased borrowing. If lenders won't lend, then
it must come from the printing press, which is where all these bailouts
are headed. But each additional dollar printed diminishes the value
those already in circulation. Something cannot be effortlessly created
from nothing.
By borrowing more than it can ever pay back, the government will
guarantee higher inflation for years to come, thereby diminishing the
value of all that Americans have saved and acquired. For now the
inflationary tide is being held back by the countervailing pressures of
bursting asset bubbles in real estate and stocks, forced liquidations
in commodities, and troubled retailers slashing prices to unload excess
inventory. But when the dust settles, trillions of new dollars will
remain, chasing a diminished supply of goods. We will be left with
1970s-style stagflation, only with a much sharper contraction and
significantly higher inflation.