Below is an excerpt from the Washington Times with links to the entire article at the bottom.
#----------------------------- Excerpt: By Patrice Hill As the White House tried one more time Thursday to galvanize support from a recalcitrant Congress for a deficit commission to tackle the nation's dangerously bloated debt, fears are growing that the United States will once again resort to printing money and ginning up inflation to resolve its debt problem. While accelerating the printing presses could do irreversible damage to the dollar's international reputation and the U.S. economy, history suggests that this is the way Washington will go to avoid the political pain of having to raise taxes and cut spending on popular programs such as Social Security, defense and Medicare. Some notable economists argue that such a move would avert a debt crisis like the one confronting Greece and other European countries that have been unable to reduce spending because of strong public resistance. Political leaders and the Federal Reserve, which is charged with printing and circulating U.S. dollars, strenuously deny that they have any intent to "inflate" out of the debt. Nevertheless, a sign emerged this week that the prospect is increasingly becoming an issue in internal Fed deliberations. The Fed's most strident inflation fighter, Thomas Hoenig, president of the Fed's Kansas City reserve bank, warned on Tuesday that "short-term political pressures" are prompting Congress to take a risky gamble by continuing to borrow at unsustainable rates rather than address the deficit problem and he expects political leaders to be "knocking at the Fed's door" to demand that it print money to pay for the debt. This path "inevitably leads to financial crisis," Mr. Hoenig said, while the inflation it would spawn would threaten American living standards and destroy the independence and credibility of the Fed, whose most important job is to prevent inflation. Chairman Ben S. Bernanke and other Fed officials have been more vague and less urgent in warning against the dangers of political pressures, leaving Mr. Hoenig as a lone dissenter in the last meeting of the Fed's monetary policy committee in urging more vigorous action to move against inflation. But despite some resistance and wariness at the Fed, a growing number of Wall Street gurus expect the U.S. to adopt at least an unofficial policy of growing or "inflating" out of the debt in light of Congress' unwillingness to tackle budget deficits running at more than $1 trillion for the foreseeable future. They point to the example set after World War II, the only other time the U.S. accumulated a massive public debt totaling more than 100 percent of yearly economic output, the figure it is projected to reach in the next decade. http://www.washingtontimes.com/news/2010/feb/19/induced-inflation-feared-as-way-to-cut-debt/ or http://tinyurl.com/yb9pso3 #-------------------------------- Regards, LelandJ _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[email protected] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
