What seems crazy about this is that the world is still willing to loan us money at THE LOWEST RATES IN HISTORY. The ten year bond now yields a measly 1.6%. What do you think the dollar is going to be worth in ten years?
Now we can moan and sigh and long for the good old days, but it seems like a clever person would do something to take advantage of the ability to borrow money against a soon to be worthless US dollar at 1.6% for ten years.
It seems to me that we should borrow money to fix the parts of our infrastructure that are crumbling around us—the highways, the bridges, the electrical system, the schools, airports, rail systems....An immediate upside would be that it would put lots of Americans back to work. The other would be that we’d get to pay the money back with dollars worth a great deal less than they are worth today.
That is not an "upside". Inflation is a form of taxation. Everyone holding dollars is taxed to pay for the loss in value of the dollars. Hyper-inflation is the result of people recognizing this tax and refusing to accept the dollars.
How can you hire someone to fix roads and bridges if you pay them in pieces of paper with a rapidly declining value?
There is no free lunch. Just because the government wants to do something, that does not provide the resources to do that thing. The resources have to come from somewhere.
Our grandchildren are going to wonder just what were we thinking to have allowed the situation that they will inherit. They are going to be very angry at what they are forced to face. Fortunately for them, some of the price is going to be paid sooner rather than later.
If not for the irresponsible behavior of the rest of the world, the U.S. would have had to change its ways a long time ago. Europe lives in a socialist paradise that is crashing around them. Africa continues to be of no account. China allows themselves to be ruled by central-planning and denies the productive among them the standard of living they deserve.
Those nations will, of necessity, be changing their ways soon. This will result in a new reality for the U.S. We are already seeing the effect of China not buying as much U.S. debt. The U.S. is printing money to make up for this.
What goods and services will the U.S. be supplying to Greece in the coming months? Little or nothing. The same will soon apply to Spain, Portugal, Italy, and others. These nations have been living on borrowed money too long and cannot continue to do so.
The company from which I retired makes half of its sales outside the U.S. What will happen to that company and its employees? "Austerity" will mean a significant drop in its business level. Some employees will be laid off and others will have their incomes reduced.
This scenario would normally cause a recession and deflation, but that is impossible with the U.S. government continuing to send out more and more entitlement checks backed by freshly printed money. We will have "stag-flation" for half a lifetime or more. I don't see a way out of this.
Obama wasted it on solar power companies and unions.