The Role of Government
In my “Too Big to Fail?” post, I talked a little about the unprecedented monetary expansion we have entered. Perhaps it’s time to expand on this topic. In 2007, the federal deficit was 1.2 percent of G.D.P. Two years later, more than a year into a serious economic crisis it is 13% of GDP -- more than twice the size of the next largest deficit since World War II -– the projected deficit is the result of a year when the federal government, at taxpayers' expense, has acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries. The average historical deficit is about 2.5% of GDP. With the ill-conceived government reactions to the financial crises, and the economic downturn that has followed, the unfunded liabilities of various federal programs -- such as Social Security, pensions, Medicare and Medicaid -- are over the $100 trillion mark. With U.S. federal tax receipts at about $2.4 trillion, this level of debt virtually guarantees...