Delete comment from: Captain Capitalism
FSK said...
You're making a common fallacy. The cost of deficit spending is not deferred to the future. The cost is paid immediately via inflation.
If the Federal government has a $1T deficit, that causes $1T of immediate inflation. The "interest payments on the national debt" are a State subsidy of the financial industry. They borrow at the Fed Funds Rate (0%-0.25%) and buy higher-yielding Treasury debt.
Cutting taxes without cutting spending is stupid. That merely increases the inflation tax.
That's the "advantage" of paper money. There's always some wiggle room. The "inflation tax" can be raised without raising other taxes.
May 2, 2012, 4:36:44 AM