Daniel P. Goldman, who blogs as "Spengler," writes for PJ Media about the inflation we currently experience.
The Federal Reserve continues to pump trillions of dollars of liquidity into the US economy by purchasing US Treasury securities, financing most of the US budget deficit, now running at a peacetime record of 15% of gross domestic product (GDP).
That leaves the Fed painted into a corner. If it raises interest rates to suppress inflation, the cost of financing the deficit will rise drastically. If it does nothing, eventually the market will force interest rates up, with the same effect.
Federal payments now make up 34% of all personal spending in the US, an all-time record. Ultimately the Treasury will have to cut back, leading to a sharp reduction in spending and an economic recession.
Goldman is no little ray of sunshine. Nevertheless, we concur that the laws of economics have not been repealed.
