As I said in the very first blog post nearly two years ago:
The programs like "Utopia"[hypothetical government program] still exist; they are still insanely expensive; and no politician in the world is going to even hint at reducing them, much less removing them entirely. Massive debt is only a stopgap as the programs never become less expensive and those bearing the load continue to be whittled away by taxes and emigration. Eventually, the government will be forced into drastic measures, either issuing fiat currency or defaulting on its loans; in either case the result is catastrophic failure.Our deficit spending has increased eight fold in the last five years. This does not include the cost of quantitative easing, which has pumped even more money into our system. Interest rates set by the government are near zero percent. With all of this additional money being pumped into the system, inflation or even hyperinflation becomes a threat. Incredibly, the government denies that inflation is going on. To admit otherwise would be to admit that continuing to fund spending programs is disastrous for the average citizen. The government does not want to remove spending or pay for it or admit the damage done via inflation as all of those options are politically damaging.
But inflation is most certainly occurring. If you buy food, you know that. If you buy gas, you know that. Mony Perelin at American Thinker has made the case pretty well. Those numbers from the Financial Times are disconcerting. They track the price of 27 commodities over the last year. Only three have seen prices drop despite the economic recession reducing demand. In fact, 24 of the 27 commodities are up by double digits and five of those (silver, palladium, corn, coffee, and cotton) have risen by 90% or more. Money is like any other commodity. Its value is largely determined by supply and demand. If supply jumps up, the overall value of the monetary unit drops.
This situation will never improve until government spending (in particular its debt) is brought under control. Massive increases in spending and debt did not work for Japan over the last 20 years and there is no reason to believe it will help us, either. But as I mentioned, politicians will never risk their careers. Cuts in general may be popular, but opposition to specific cuts by those losing benefits will always be louder than support from those who do not immediately gain by such cuts. So what can we do?
I have a proposal in mind that is by my own standard extreme. It may not be worth it, but if hyperinflation is a real threat, we have to deal with it before it manifests itself; once that ball starts rolling, it will be too late to stop it. Given the role of the United States in the world economy, the instability of the Euro, and China's reserves being based in the American Dollar, a serious threat to the dollar, however remote, is in effect a threat to the entire global system. With our current debt, inflation, and the upcoming threat from failed entitlement programs like Social Security and Medicare, the time has come for us to reduce our debt.
The measure I am proposing is, as I said, extreme. It will mean putting fiscal decisions into the hands of officials who will not be reelected, severing the tie between the will of the people and the officials in control. Via an amendment to the Constitution (we need to preserve the rule of law), I propose creating a 14 man commission not too dissimilar from the President's debt reduction commission of last year. The Republicans and the Democrats will select seven representatives by some method (popular vote, appointed by the respective party structure, etc.). "Independents" are rarely actually independent and there is more than enough research to show that such people tend to be the least well informed citizens. As there is no way of confirming whether an independent is not, in fact, a partisan in sheep's clothing, they will not be assigned a role in this commission.
This commission will be given a one year mandate over the spending policies of the United States. Every cent of spending will be subject to their review. A total of 10 votes will be required to pass their plan and make it law. A 2/3rds vote from both Houses of Congress plus the President's signature would be required to override the commission's decision. Spending may not increase by more than the rate of inflation unless a state of war is declared, in which case only military spending may increase. This situation will last for ten years, after which the Amendment will no longer be operative and the Constitution as we know it will come back into effect.
As I said, it is a proposal far outside of the norm. Proposing such short time changes to the Constitution is inherently dangerous. This proposal is analogous to the Roman concept of a dictator, who temporarily suspended the normal rules to deal with an existential threat to the Republic. Like the Roman Dictator, this extraordinary commission has incredible powers but is short lived; unlike the Dictator, political power (especially the power of the sword) will reside with others. Again, unlike the Roman's, this position is designed to check an inherent and dangerous flaw within the government rather than a threat from abroad.
If we are ever to put our debt in check, some such commission will probably be required. Career politicians will never sacrifice their careers. Ideological commitments will keep others from supporting necessary changes. I would fully expect such a commission to raise taxes quite a bit, much to my own displeasure, but ultimately I believe it would be necessary. A liberal and I both used this interactive from the New York Times to balance the budget. Here are his results and mine. Both of us were willing to make sacrifices we otherwise would prefer not to. The tax to spending cuts ratio is fairly similar in both proposals.
But if you need a reason to worry, check off every available cut and tax increase on that interactive. The total savings for 2015 equal a little more than $1 trillion. That would leave us with a $700 billion shortfall in the upcoming year; a $1.7 trillion deficit wasn't even predicted for the year 2030 and this interactive was created four months ago!
If we will not have an educated and virtuous society that respects the property rights of others and forgo redistribution of wealth, extreme measures like this will be necessary in order to prevent hyperinflation.