Soaring deficits need to be considered when discussing inflation

Daily News  |  July 26, 2022

"As inflation continues to set records not reached in 40 years, little attention is being paid to the national deficit. Economists used to warn that deficits help cause inflation because they increase the money supply artificially — especially when funds are not paid off and borrowed from future revenue sources like Social Security contributions.

The U.S. national deficit has now exceeded $31.1 trillion — and continues to grow. A group known as Truth in Accounting asserts that the true national debt is even higher — $142 trillion based on unfunded Social Security and Medicare promises and future obligations, including interest on the debt. Each taxpayer’s share is now up to $919,000, according to Truth in Accounting’s website.

Economists at universities in the 1980s used to say that debt wasn’t a major issue, as long as it was a small portion of the gross national product because it could be paid off. But last year’s Gross Domestic Product was a little more than $21 trillion. That’s the measure of all goods and services produced. Have we now reached a point where the debt can no longer be paid off? If the U.S. government would go broke, is there anything in place that would keep law and order? Is some of the inflation we are experiencing by design to try to reduce our future obligations?

It is almost impossible to consider how big $1 trillion is. Back in 1987, the Washington Post National Weekly did an article about how much $1 trillion represented when the budget was just getting over $1 trillion. Here are some ways to put it in perspective:

 A million seconds ago was only 11½ days ago. A trillion seconds ago was 31,700 years ago, about the time modern humans evolved.

 If someone handed you a $100 bill every second, you would be a millionaire eight times over in one day. But to be a trillionaire, you would have to be handed a $100 bill every second for 317 years.

 If you laid $1 bills end to end, 1 million of them would only go about 100 miles. One billion would get you around the earth four times. One trillion would allow you to go to the sun and several million miles beyond.

The point is, we seem to have lost track of how much spending is taking place. The holders of the debt — including foreign companies — could demand payment. China, for example, is only behind Japan and owns nearly 15% of the nation’s debt.

For starters, the country needs to get a handle on keeping the debt where it is. Once that occurs, then the nation can start to look at what steps need to be taken — including reducing spending and increasing taxes — to start to attack this monstrosity. And for those who believe conservatives complain about the deficit only when a liberal is in office, this newspaper at least urged caution over government spending when Donald Trump was in office. It is time for all of us to quit looking for government to solve all the problems."

Read the full article on: Norfolk Daily News

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