Steve Chapman gave an astute analysis when he said this.
Sometimes bipartisanship is grounds for celebration, but more often it is cause for tears. Last week, congressional leaders from both parties went into a room to hammer out a plan that would put taxpayers on the hook for $700 billion. But they assert that the investment is essential to the health of the economy. And they insist that if we make this investment, we'll get all or most of it back.
This promise would be more believable if the federal government had a long record of using tax dollars responsibly. In fact, it's the equivalent of the guy who raids his kid's piggy bank to feed the slots. The most notable impulse of our leaders is spending money the Treasury doesn't have, piling up bills that future Americans will have to cover.
How do our leaders intend to pay for this massive new outlay? Not by raising taxes. Not by cutting spending in other parts of the budget. No, they will borrow the funds. The Chinese and other foreign investors will lend us money so we can keep the economy humming, which will allow us to make the payments on the money we already owe them.
Now, when the Federal Government creates billions in new government bonds, that is no different than printing money. In fact, Government bonds is the 21st century equivalent of actually printing money. Now, when the Federal government prints money, two things happen. First, they weaken their own currency. Second, they create inflationary pressure in their economy.
Normally, I would say that this action would weaken the dollar except that we have to look at what the consequences of closing down Fortis are. Soon, banks all over the world will begin to fail, and their own governments will have to bail out their banks. Invariably, Socialists all over Europe aren't about to cut spending in order to pay for these bailouts. As such, they will also issue all sorts of new debts. That means, that in an absurd way, currency levels won't change as a result of these bailouts. They will all be equally weaker. Instead, it will usher in a new era of world wide inflation. As governments all over the world need to borrow to bailout their financial institutions, they will begin to print money with no end. As such, the first step in world wide inflation will be ushered in.
Then, as weak economies all over the world face unbridled new inflationary pressures, buying power will be weakened all over the world. Folks will wind up paying more for gas, food, and other everyday items. In a time of an already weak economy, that is almost certain to send the world into a global recession. When we have global recession at the same time we have global inflation, that is called global stagflation. In other words, we have an unmitigated disaster.