Hurricane!

I disagree with this analysis because it does appear that inflation numbers are going up rather steeply right now.

There are many, many misconceptions floating around about deficits, spending, interest rates and inflation. Many are taken as fact, but they have major problems, mainly the historical, empirical evidence just does not back them up. One is the idea that deficits lead to higher interest rates that ultimately ‘crowd out’ investment. You hear this a lot the past few days with talk of budget busting spending after Katrina and Rita as Congress tries to figure out anyway it can not to cut its spending. The liberals want to end the tax cuts, saying if we don’t the deficit will be too high, interest rates will surge, investment will decline, blah, blah, blah. Robert Ruben advocated this and Greenspan does as well . . . DESPITE the historical evidence that shows rates fell during deficits in the 1980’s and rose as deficits turned to surplus in the 1990’s. Rates did the same thing in the latest recovery though the second half (surpluses) has not materialized despite an explosive surge in tax receipts (stronger than any of the Clinton years) because, just as with Reagan, the government cannot stop itself from spending all of that money the tax cuts generated.