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Old 10-13-2011, 03:03 PM
 
Location: San Diego California
6,797 posts, read 6,624,776 times
Reputation: 5180

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Government spending, a large piece of the GDP picture, increases every year.
That money once spent, goes into the general population.
Now because the economy is too weak to implement higher taxes to drain those monies back out; that is inflationary.
We also have deflationary forces at work in the form of deleveraging, but despite the pressure being asserted by deleveraging, prices at present, continue to rise.
One day, I do not know exactly when, the forces of deleveraging will begin to subside, and unless government spending decreases with it, we will have a rapid increase in inflation.
Now when you take into consideration that the government has no real option except to print the money for the obligations it has assumed, the probability of having problem inflation at some point in the future is elementary.
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Old 10-14-2011, 04:25 PM
 
Location: Portland, Oregon
7,090 posts, read 11,165,994 times
Reputation: 4118
US Gov Spending History 1902 - 2010
Government spending has been increasing since before my grandparents were alive, sometimes higher and lower then general inflation.

This has not destroyed anything.

So we should believe a rambling paragraph with no backup, since you seem to call for daily economic doom, or more then a century of history? No "It's different this time" either without something, special pleading has gotten old long ago.
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Old 10-14-2011, 06:09 PM
 
Location: Stankwell Falls, NC
56 posts, read 34,737 times
Reputation: 55
Quote:
Originally Posted by subsound View Post
US Gov Spending History 1902 - 2010
Government spending has been increasing since before my grandparents were alive, sometimes higher and lower then general inflation.
Statistics are like bras. They can be made to suggest greatness but reveal nothing.

This is a false measurement because the definition of GDP has changed greatly and now includes entities that don't exist without government spending. i.e. a component of government spending is part of GDP.

Instead, look at a graph of just the plain numbers. The USA is now spending as much money in 3 months as was spent from colonial times all the way to 1974. i.e. 300 years. It's unprecedented and unsustainable.
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Old 10-16-2011, 03:43 PM
 
2,515 posts, read 1,818,587 times
Reputation: 362
Quote:
Originally Posted by jimhcom View Post
Government spending, a large piece of the GDP picture, increases every year.
Cutting Government spending at this point would be really hard on the economy.
Quote:
Originally Posted by jimhcom View Post
That money once spent, goes into the general population.
Now because the economy is too weak to implement higher taxes to drain those monies back out; that is inflationary.
We also have deflationary forces at work in the form of deleveraging, but despite the pressure being asserted by deleveraging, prices at present, continue to rise.
OK on balance is the price of houses going down far enough fast enough to offset the higher prices in the consumer market?
Quote:
Originally Posted by jimhcom View Post
One day, I do not know exactly when, the forces of deleveraging will begin to subside, and unless government spending decreases with it, we will have a rapid increase in inflation.
When the price of houses starts to go up then deleveraging will slow down. Actually the government is borrowing enough to keep the total debt going up. So when will the contraction forces subside? Good question.
Quote:
Originally Posted by jimhcom View Post
Now when you take into consideration that the government has no real option except to print the money for the obligations it has assumed, the probability of having problem inflation at some point in the future is elementary.
My thesis is that the sooner we get to this point and deal with it the better. We would need to cut government spending by 45% with out having the economy contract at all in order to balance the budget. The longer we wait to deal with it the higher the cost.
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