While having learned to cover their butts by adding some modest modifiers to their generally rosy forecasts, the administration's shills (Geithner, Bernanke, Summers, et al.) are unified in telling us that the worst is over. The fact is that the U.S., nay, the world, is headed for fiat currency crash. Let's push forward with some evidence in support of that contention.
In this fiscal year, the U.S. government will run its second trillion-dollar-plus deficit. Concerned about the political heat going into the November elections, the Democrats have been making noise about cleaning up their sloppy spending. A couple of months back, El Presidente of this banana republic intoned that his government...[cannot] continue to spend as if deficits don't have consequences... as if the hard-earned tax dollars of the American people can be treated like Monopoly money.
Which is to say, he acknowledged that the deficits have consequences. And what might those consequences be? For starters, rising interest rates. Because in order to finance its hyperactive spending, the government will have to sell a lot of debt - and because all the developed nations find themselves in the same boat, they'll have to manage those sales in an increasingly competitive environment. Of course, higher interest rates put yet more pressure on the many businesses that rely on access to capital to sustain themselves. And higher rates crush borrowing for houses and other large-ticket items... which means, they crush the economy. Especially one perched on a foundation of debt.
Inflation is another consequence, because when the prospective debt buyers begin to stay home or, more likely, agree to show up but only for a more attractive yield, the Fed will increasingly be forced to monetize the debt. Leading to the demand for even higher yields. Once the monetization begins in earnest, and in plain sight, Obama's high-speed spending train will find itself on very wiggly tracks, leading in relatively short order to a debt-fueled currency crash.
The point is that the only real hope for the country starts with deep cuts in government spending. Now, I am not talking about cutting spending - you know, where you stand in front of a warmed-up audience and talk about spending cuts. But honest-to-goodness, real spending cuts. Which brings me to Mars.
Yesterday the president gave a speech at Cape Canaveral where, ahead of time, it was advertised that he would announce serious cuts in the space program. That was the fiction spun out to the pundits. Instead, when it came time to stand and deliver, Obama delivered a $6 billion boost in NASA's budget, then offset the cancellation of a program that would once again send men to the moon by announcing a new program to land astronauts on Mars... and drop in on an asteroid as well. Over the course of my days on this remarkable planet of ours, I have had the opportunity to get to know all manner of personality types. One of the most troubled have been the serial spenders... deluded individuals that simply can't help but buy all that their hearts desire, no matter how much pain results from their debt-financed spending. That describes today's political class. Unless and until you start hearing the president making speeches about not going to Mars, followed by wishing legions of government employees the best of luck as they enter the private sector, the only conclusion to be drawn is that a space ship isn't the only thing headed for outer space, but government debt as well.
The spending is unsustainable and so won't be sustained.