When Will That Multi-Trillion Dollar Debt Backfire?

That budget deficit in trillions may take a few years to cause severe problems but it certainly will. That is bound to happen, no matter what reassurances we get from the Obama administration or the Federal Reserve’s Ben Bernanke.

Example: Ten year Treasury bond rates may be relatively low today. Perhaps they truly reflect what interest rates may be ten years from now, Maybe not. But governments that spend so much today cannot unwind obligations drastically in the future. Despite what the White House says, or the Federal Reserve claims it can do manana.

And when economies get out of deep recessions, inflation does take hold. The budget deficit will provide the environment for inflation to get out of hand.