the increases in (unpublished but obvious) m3 and in the federal debt over the coming years is not a trivial change - the government expects to possibly run a 2 TRILLION dollar deficit this year, and given the party in power, I certainly would expect 1T deficits for the rest of his term.
The US has (has not had since the bush deficits, certainly) any politically possible answer to the federal debt besides inflating, and with the currently monstrosity, it is even worse.
Longer-term this is something I take quite seriously now. As far as I can tell, the US treasury is being looted under the pretext of crisis. These are times that have certainly not been seen in living memory.
It is meaningless shuffling. The government will sustain final demand as everyone else tries to improve their balance sheets by reducing big ticket expenditure and paying down debt - or defaulting, which gets rid of it just the same. And that will happen - the treasury will have more debt outstanding while households and businesses have less; households and businesses will have higher net worth on their own sheets but future taxpayers will have an offsetting liability deferred far into the future at near zero rates of carry.
How is any of that supposed to impoverish the country?
All the houses are still there. They aren't worth what silly people hoped in 2006 but they aren't worth zero either. They go on producing rent-like shelter services for 30 year or more. What is paid for those services can bounce this way and that as the terms change, but that is just people playing poker with each other. The real capital and its real services are there, somebody or other gets them.
After all the money creation or federal cash payments sloshes through the economy this way and that, the folks who wind up with it will not be looters or deadbeats, they will be those who provided useful services to everyone else. Same as it ever was. They will then pay a portion of it in debt service tax payments of course. Much of it to others who provided that useful service, a trickle of it to foreign investors or whatever. None of it can seriously or lastingly change the terms of trade between effective producers and non-producers.
In the end, our productivity has not been seriously changed by any of it so neither will our standard of living be seriously changed. Our prosperity doesn't ride on accounting or gimicry or public anything. It comes simply from our effort and sweat. We will continue to sweat and we will continue to be rich because of it.
None of that means we should excuse profligacy, or put up with dumb policies. But our basic life is not at stake in such things. It is a matter of prudential economy at the edges and about standards and fairness to keep incentives solid for later productive work, and the like.
Conservatives used to pride themselves on their realism and sense of proportion. Get that back. It was always the most adult thing about the party and movement, and this "me too" doom-mongering contest is just plain embarassing.