VodkaPundit

Law of Unintended Consequences

The problem with inflation right now:

Here’s the problems with the solutions we’ve been given: Because costs have gone up so much relative to income, it can be expected that any inflation we will see will fall disproportionately on consumables. Combine that with the assumption that consumption and taxes are probably larger than income minus principal and interest payments for most people, it means default risk will rise with more inflation [until (Income – Tax – Interest – Principal Payment) is > Non-Interest Expenses].

If I’m reading this right, then the Fed’s and Congress’s solution — to throw money at anything that moves or doesn’t — will make the problem worse, not better. And, of course, the poor and the middle class will suffer the most. The poor through increased risk of default, and the middle class by having their savings inflated away. At which point, the middle class become the poor.

Lovely.