In Jim Cook's Archive


The month of May brought a record jump in government spending and the biggest budget deficit for the month of May on record. The U.S. government spent $439 billion, the most ever spent in one month. For the first eight months of the fiscal year, the budget deficit soared to $738 billion, 38% higher than the $532 billion of a year ago.

The constant inflating of money and credit to pay for this runaway government spending can’t go on forever. You have the possibility of hyperinflation or the depreciation of the dollar in foreign exchange markets. At some point the government may not be able to borrow what they need while tax revenues fall off precipitously. It’s possible the time will come when the money isn’t there to pay the bills. It may sound far-fetched today, but present spending trends make such a financial crisis inevitable.

So what happens when the subsidy checks are curtailed? How will the underclass react if they don’t get their welfare checks?  Radical leftists would likely win the vote. Taxes would confiscate most of the wealth. The rich would be squeezed and berated. Government would nationalize industries and enforce mindless regulation. Crime would reach epidemic proportions with robberies and burglaries terrifying city neighborhoods. Police would be overwhelmed with riots and demonstrations. The spending cutbacks would plunge the economy into a recession and depression.

Some sort of nightmare scenario is inescapable if current spending and inflating continue unchecked. Unfortunately, stopping these policies threatens an equally bad outcome. We are truly between a rock and a hard place. We will continue to kick the can down the road until there’s no road left. Mark my words, the final reckoning won’t be pretty.

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