Don’t Panic, Don’t Snooze

Over at Econolog, Arnold Kling and commenters explore the question of how the government will ultimately deal with the massive level of debt we currently have and the even more massive levels being planned. Will the government default on its bonds? Will it enact some form of wealth tax? Will it simply inflate its way out of trouble? In some ways, this is is a distinction without a difference (for now). The actual policies will become visible slowly over time and the prudent should have plenty of time to make their plans accordingly. What does matter now is that any of these approaches, or any combination, require the massive future destruction of society’s wealth. This sounds like a problem, but it must be remembered that there are other forces pushing toward a massive creation of wealth. What finally matters is the net result of both kinds of forces taken together, and this is a gradually unfolding process. The bottom line: don’t panic, but don’t snooze either.

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