The Uncomfortable Truth

I am a fairly intelligent person. There are many subjects I know a great deal about. On some subjects, I have pieces of paper hanging on the wall to prove I know it. But alas, I don’t know it all.
Two things I know little about are economics and accounting. They seem a little like voodoo to me (OK, I don’t know too much about voodoo either), very mysterious.
For example, the government—and the so-called liberal media—say that our 2007 budget deficit was around 354 billion dollars. But that doesn’t include “off budget” items, which bring the total closer to 600 billion.
Therein lies the mystery of accounting: How can they not count 250 billion dollars?
That reminds me. When the right-wing blowhards tell you that Bush’s tax cuts are reducing the deficit, they lie. They do not take into account “off budget” items. But, I digress.
The one thing I know about economics is the old joke, “If you laid all the economists in the world end-to-end, they would not reach a conclusion.” So if I get conflicting answers to these ponderables, I suppose I won’t be surprised.
The Dow Jones Industrial Average is at a record high, but the dollar’s value relative to the euro has fallen into the abyss—euros cost almost fifty percent more than they did five years ago. Does that mean that the actual value of the Dow stocks is just two-thirds of what it would be?
The market recently shot up on word that the Fed was lowering interest rates. I know enough about bonds and such to know that if the interest rates go down, the price of them goes up.
In order to finance our deficits, we need to sell American debt instruments. Ideally, we shouldn’t be having deficits, but . . .
If we make those instruments more expensive, we will sell fewer of them—even I know that.
How then, do we keep up our lavish spending? What if no one steps up to buy US bonds? Historically, the Fed has stepped in. When that happens, inflation follows. A sure harbinger of the return of inflation is the price of gold, now trading at prices not seen since the 70s
Are we headed for a return to the 70s? In the 70s, we weren’t nine trillion dollars in debt. Will the next decade be worse? It may seem like a good idea to some people to borrow huge sums of money and pay it back with dollars that are worth less, but to me in just seems crazy.
But then, I’m not an economist.