Sam Speak A Floyd Waterson Production |
| "The
known is finite, the unknown infinite; intellectually we stand on an islet in the midst of an illimitable ocean of inexplicability. Our business in every generation is to relcaim a little more land." --T.H. Huxley |
Site Feed
|
|
||
 |
 |
|
|
Tuesday, October 13, 2009Tipping PointsA number of folks have been citing Peter Bernholz's work on debt and we're going to add our hat into the ring. Bernholz says the tipping point for hyperinflation is when the "government's deficit exceeds 40% of its expenditures." Intrepid bloggers and economists note the 2010 federal budget is about $3.4 trillion. The projected deficit is $1.5 trillion. Do the math and you find that our deficit will be 44% of expenditures. Oops. Tipping point reached! As John Mauldin points out, "roughly 40% of what our government is spending has to be borrowed." The argument is that such deficit spending is not sustainable. Whether this leads to hyperinflation I don't know but it's hard to believe such outsized borrowing will lead to anything good. This is all happening as Congress and the Administration work to increase spending. Taxes will go up but at some point we will have to reign in spending. There are all sorts of ways to cut the budget but in the current political climate, it's hard to see any real structural spending being cut. But if we don't we are in for catastrophic economic consequences.
|
Contributorsarchives
|
You are visitor number 