We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Recent study in NY Times shows that size of government is smallest in many decades, particularly given the significant growth in population. I believe it documented the size per citizen is the same as five decades ago.
When the housing/mortgage bubble burst it was going to take a lot of banks with it. Some of these banks were huge and if they failed the country would have had sudden and deep economic collapse. The phrase "to big to fail" was thought up by politicians and bureaucrats. In fact had they allowed it to fail we would probably be in the 2nd year of a strong recovery today. Because they chose to fall back on Keynesian economics and borrow money to prop up failing institutions we are today in a far worse place. Today it is impossible to avoid a depression. Arguably we already are in a depression (23% real unemployment, 50 million people needing food stamps, an economy still going South...). This house of cards we built on borrowed money will collapse. The only thing we don't know yet is what will trigger it, when will it happen and how bad will it get. We have three insurmountable problems: 1. We can't ever pay back the $17 trillion we borrowed and this is on track to be $21 by 2016. 2. We can't wean ourselves off borrowing. We are stuck in the mode of spending $1.5 trillion more then we take in from tax revenues. This is serious, more serious probably then the actual debt (because we aren't going to pay it off anyway). 3. We can't afford the payments on our debt. This is especially true once the fed can no longer hold the interest rates near zero. This means we will default sometime soon. Next year or the year after or the year after that but soon. This is inevitable.
The Fed will inflate our way out of it. It works like this: earners will pay it off by our incomes lagging price increases, with a drastically lowered standard of living being the visible result, i.e. the Carter years times 10. The rich will take the hit too by having to knock a dozen or so seats off their next jet, or a few dozen acres off the next island they buy. The 47% (closing on 50%+) will be OK because Congress/Pres will increase benefits to keep pace with inflation.
I think inflation is a given. I also believe an intentional inflation with a behind the scenes effort to use inflated dollars to pay down the debt would work. However that is not how our politicians work. Their first goal is to not be caught with their pants down so inflation or depression or total collapse their answer will always be to tax more, borrow more and spend more. After all you never let a crisis go to waste. SO if you consider Weimer Republic or Zimbabwe level inflation as a "way out" then I think that is what we will see. However, it will not work because we will continue to overspend and incur more debt but it will be in those inflated dollars.
Also I don't disagree that the rich will pay to some extent. But the rich are in the best position to protect their assets and earnings. So ultimately it will be the middle class that will pay for this and it may well wipe out the middle class in this country.