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I call that instant inflation, you can call it something else if you want. The saved dollars are worth less.

Don't you think Kotlikoff, Gale, Jorgenson - anyone - who has studied that plan would have brought that up?

I say we get Paul Volcker back in the Fed and raise interest rates by 800% because ROB SAYS we are going to have inflation.

How does he know? Easy, he explains it.

Where is the economic paper? I mean your inflation numbers are big news and would have a drastic impact on the entire world. Shouldn't some economist somewhere have been able to noodle out your little equation?

You might have missed this earlier in the thread where we discussed the inflationary aspects of the FairTax. Kotlikoff does indeed bring it up in the very paper referenced by this thread:

"The first is the major capital gain that the federal government stands to accrue if, as seems likely, the Federal Reserve fully accommodates the introduction of the FairTax and permits consumer prices to rise by roughly 30%. This would reduce the real value of nominal U.S. government debt in the hands of the public (many of whom are foreigners) by about $1 trillion."

While Kotlikoff presents inflation as a "capital gain" to government, note that there is an equal "capital loss" by holders of government debt assets (whether foreign OR domestic)... got any T-Notes??, ... got any money funds? ... got any low risk or tax-free Mutual Funds?

The gain/loss (inflation) phenomenon is not simply limited to government debt. It's also affects the real value of ALL capital assets.

What Rob (and several other of us) have been saying about the devaluation of capital assets and the resulting impact on holders of those assets is spot on. And, apparently, the "poster economist" for the FairTax, Kotlikoff, also believes it will happen, but, because of his underlying agenda, he fails to complete the impact of the inflation picture.