Earlier this year, The senate passed a 1.1 trillion dollar increase in government spending, increasing the budget for healthcare, education, law enforcement and defense among others appropriations. If our mounting record budget deficits weren't enough, the proposed increase in our already dangerously large debt ceiling (13.3 Trillion) will most certainly have catastrophic consequences in the near future. The new ceiling is will be approx 14 Trillion, a number that will reached by early to mid 2011 if debt accumulation continues at the rate seen in 2009-2010. We have all but guaranteed a hyperinflationary great depression ( hyperinflation with unemployment exceeding 25%). This is becoming eerily similar to the hyperinflation in Weimar, at least as fiscal recklessness goes. As Far as money printing goes, we will most likely see QE2 announced before year end. Though this will likely differ from QE1, I think it will be many times more dangerous. This time around the FED has hinted at more asset purchases, namely U.S treasuries. Monetizing our debt is nothing short of a pure injection of inflation into the economy. If this is combined with more fiscal stimulus, QE2 could be the straw that brakes the camels back.
Echoes From Weimar:
*- according to the congressional budget office