EU: Spanish revolt brews as national economic rearmament begins in Europe

The Telegraph ^ | 2/26/2012 | Ambrose Evans-Pritchard

[Vince Ferrer]

Any government that can print money and inflate, will do so, because to not do that will cause riots and unrest. For us, there is no good alternative between austerity and inflation, although I prefer austerity in order to get it all over with sooner. But from the elite perspective, inflation is always better than austerity, because austerity would cause unrest which could topple the elite out of power. (Which is another good reason to advocate austerity from my perspective) So, inflation it is, and despite the debt ceilings and such, we are not going to seriously make cuts, even though I will still advocate them.

[Mr. Jeeves]

The people will resist.

And they will do so by supporting any authoritarian who promises to hang the bankers and keep the benefits flowing. Europe has been down this road before, not too many decades ago.

[kabar]

Inflation will not solve our problems any more than it did in the Weimar Republic or Argentina. And don't forget that with more than 50% of our budget (and growing) devoted to the entitlement programs, inflation will drive their costs up (COLAs, medical services, etc.) and so will the debt servicing costs on the national debt, which have benefitted by the Fed's holding the interest rates below historical norms. We could be looking at debt servicing costs over a $trillion annually.

We have 54 million on SS, 47 million on Medicare, 60 million on Medicaid (Obamacare will add another 18 million to this total), and 46 million on food stamps. Inflation is not better than austerity when it comes to maintaining social order.

[kabar]

And the question is how do you keep the benefits flowing? The birthrates for most of Europe are below replacement level. There are fewer workers to tax to provide benefits for aging societies.

We are in better position demographically in terms of birth rates (we are at replacement level), but we are aging as well. In 1950 there were 16 workers for every retiree, today there are 3.3, and by 2030 there will be only two. And by 2030, one in five residents of this country will be 65 or older, twice what it is now. How much can we tax our children and grandchildren to keep the benefits flowing?