Quote Originally Posted by bu villain View Post
Actually it doesn't. As long as the debt isn't in circulation, it won't cause inflation. If we tighten the money supply at the same rate as that debt is introduced into the economy assuming it is at all, there will never be any inflation from it. The key here is tightening the money supply (which does mean increasing revenue to spending ratios) but the timing is important. That is the reason the fed is more worried about deflation than inflation right now. So yes, we do need to control our spending and it is a good idea for us to try to bring down our debt. But getting the economy going is a higher priority right now than reducing the deficit.
Where do you think all the money is parked? Once it enters circulation inflation will go up.

What you just described is what has NEVER HAPPENED IN THE HISTORY OF KEYNESIAN ECONOMICS. Its impossible to time it just right, because it never works. Inflation HAS to happen. Youll never gain revenue fast enough to compete with deficits of 16 trillion or 700 billion in INTEREST alone in the next 5 years. The treasury can only gain more revenue by growing the tax payer base. That means people get hired, that means the money parked on the sidelines the FED has been pumping into the market will get spent= inflation explosion.

its going to happen we just dont know when