Letter: Fiscal contradiction
The list of recent failures of the U.S. economy includes the first debt downgrade in U.S. history, and the highest budget deficits, federal spending and federal debt as a percentage since World War II.
Four years ago the Federal Reserve commenced its massive program of monetary easing (read: currency creation) to rescue the ailing economy. Obviously the monetary easing is not producing the desired results.
Taking into account all taxes on earnings and consumer spending, including federal, state and local taxes, would indicate that the average marginal effective tax rate is about 40 percent. Rising tax rates have historically been a detriment to stimulating the economy. The continued spending cannot be sustained.
The generally accepted definition of hyperinflation occurs when government debt is over 80 percent of GDP and the deficit is 40 percent of government spending. The U.S. is at or near these parameters at the current time.
Being positive or negative about the current fiscal dilemma is not my intent. Being honest is. Our country and people are approaching a perilous time. The peril may prompt a new awakening to the value of free markets and small government or the beginning of what can be described as a world recession. I hope for the former.
Port Haywood, Va.