Take a look at your numbers on this. Currently the federal budget does not calculate the governments currently unfunded long term debt obligations. Taking those numbers of medicare and social security into account, the national debt is actually closer to 52 trillion dollars, give or take a few quintrillion pennies here or there.

As the number of retirees entering the scene increases you have to either (A) inflate the money supply to meet the new obligations, or (B) constantly increase the buying power of the currency. Make no mistake, those obligations will be met on the surface. To meet those obligations long term you need constant growth to drive the machinery. Constant growth requires affordable energy. There is no alternative. We have a national economy that is driven by energy and the unlimited availability of same, or more correctly put, we did. We now have a consumer / service oriented society. A C/S society in contrast with an A/I society, (agrarian / industrial), by it’s very nature must consume to grow. You can do one of two things. (A) decrease the currency supply, so that a nickel has the same buying power as $5.00, which just wouldn’t work. I don’t think we have enough nickels., or (B) inflate the currency supply a little bit at a time to slowly add the new obligations into the picture. An economy or really any closed system still operates under Boyle’s Law. Look at the currency supply as a gas that will expand to fill whatever the size of a container it is placed into. The atoms that make up the gas, or the currency have mass. Call the gas oxygen. Figure you need a certain percentage of the volume of an enclosed area to contain oxygen to support life. The volume of the enclosed area is constantly changing, it contracts or it expands dependent upon a number of variables. Expansion is easy, the contraction part is a little more difficult and the membrane that holds it all together is very much like a balloon when it expands and like a big propane tank when it starts to build up a vacuum at a rate that it is not accustomed to. As the amount of gas increases in the container the pressure and temperature also increase if the container is not allowed to expand or continually grow. Our economy is the container and the way the fed controls the economy is the control of the currency supply, which is kinda a neat balancing act to perform, and it requires the constant borrowing and repayment of borrowed currency to operate, since every dollar that is issued, is issued with debt attached to it we have an economic engine and a society that is driven on a self generating debt structrue to make the whole thing work.

I feel pretty confident, and so do a few other people, such as David Walker, head of the GAO and T. Boone Pickens, that inflation will increase on an logarithimic scale that is inversly proportionate to the available supply of energy. Inflation will go up. You can take that to the bank, as long as there are banks left to take it to that is.

Sorry for being so long winded, I hope this made sense.

Namaste

LOVE NURSEN . . .