It’s complicated (inflation)

Inflation is a very complicated thing. You would think with the huge deficits that the government has run since the annual surpluses of the late 90’s that inflation would be high but it is now very low. This is because politicians do not finance deficits by printing money, that would increase short term inflation, causing voters to actually pay attention and vote. Deficits are actually covered by the government selling debt, such as 20 year and 30 year T-bills. That way the politicians cut taxes, increase spending to win elections and blame the mess on the next guy (Obama) who takes office. Of course this policy will probably lead to inflation down the road. You can be sure that if Romney wins and lowers the top tax rate to 20%, keeps defense cuts off the table and can’t or won’t end Medicare (I am not endorsing that), the ensuing deficits will make today’s deficits look like chump change.
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