Obama’s spending is effectively defrauding the bond holders

Obama's failure is the garish summation of an even more grandiose failure. We have been running The Great Keynesian Experiment pretty much non-stop since the New Deal. Deficits have been piling up year after year, with virtually no interruption.

The national debt has been monotonically increasing, and for the past three years has been nearly exponential in its growth. In no quarter from 1980 to 2008 did the growth in actual economic output exceeded the increase in the debt, meaning that there has been no real wealth creation, but merely an engorgement of our debt. Since 2008 it has been dramatically worse.

There is reason to believe we are past the point of no return. The Fed has interest rates set at a net negative rate when inflation is taken into account. The incentive to invest with such rates is seriously inhibited. That fact coupled with a business hostile environment means we have no prospect of vigorous economic growth. If the Fed raises interest rates, the federal budget, not to mention several blue state budgets, become untenable because interest expenses will eat up much of revenues. There is no serious proposal on the table from the political class to reduce government spending sufficiently to make a dent in our current fiscal problems related to government.

If governments raise taxes, the economy will further stagnate as people spend more time avoiding taxes than doing business. The only alternative left to the Fed is to hit Ctrl-P, euphemistically called Quantitative Easing, which seals our fate in an inflationary spiral that may be temporarily inhibited by the deflationary effects of economic inactivity. The logic of the exponential function is relentless. But you can bet that the Keynesian bitter-enders will continue to protest that we haven't spent enough, haven't inflated enough. Government in fact Obama’s spending and chronic inflation is a double jeopardy - debt goes up, and it is "repaid" in debased dollars, effectively defrauding the bond holders.