President Bush started with a stimulus package of some $800 billion dollars. 3 months later Obama is pushing a $900 billion stimulus package. Is all sounds great in the paper and on television. Everyone jumps at the idea of government spending us out of this recession. But I've noticed a complete lack of questioning, "Where are we going to get this money"? It seems that accountability has completely left the American press. I guess to them, it is just going to appear magically. However, it isn't going to be like that. I hate to break it to you.

I majored in economics. Yes, it is the dismal science. But it teaches you some of the most basic principles that modern society rests on. I won't bore you with the details (if I can help it) but let's start with the basics. Before the government can spend money, it needs to get it. Government can only get money from three places. It can tax it, borrow it or print it. That's it. There isn't any other way. Since the government is not a business, it can't sell a product for a profit. Since it isn't a worker, it can't provide labor for that business to earn an income. No, it can only tax, borrow or print. That being the complete limit of government's ability to raise capital, it is limited in its ability to respond to an economic downturn.

Let's start with the subtlest: Borrowing. Throughout its history, the government has made a habit of borrowing. Getting quick money today that will be paid back tomorrow. All of the current deficit, some $2 trillion has been paid through borrowing. To borrow on the scale the U.S. government has needed, they aren't particular who lends them the money. China, Russia, Europe, Japan, Iran and anyone else who offers up money can buy a bond to loan the U.S. government money. Besides the obvious political ramifications of borrowing from people who hate us, in today's tough times around the world, there are less people willing to lend out the money. They are looking to save their money for the times ahead. It makes sense but it means there isn't enough money in the world to satisfy the loans of which the government needs. There isn't $1.7 trillion dollars in addition to our current deficit available. So these stimulus packages can't rely on loans. The money simply isn't there. Borrowing is out.

When times are tough and people are either out of work or living on reduced income, rasing taxes is also out. Raising taxes means more of a financial burden which results in less people working and less people able to pay taxes because they are out of work. Don't let the "Tax the rich" mantra fool you. The rich are suffering just as much if not more by a percentage compared to average income earners. They also have less money during a recession. Raising taxes would push the economy even deeper into recession. I don't care for Obama but he is even smart enough to see that. taxes aren't going to be raised and Bush's tax cuts, the one thing he did right, will stay.

That leaves printing money. This sounds like an easy fix. Just crank up the printing presses and the government can print its way out of the recession. Unfortunately I have to tell those of you who believe this folly, printing money is probably, no it is, the worst solution of the three. Dumping printed money into the economy via any means, tax rebates, government mass purchases or through other methods, causes prices to rise. It has been disastorous in every economy where it has been done. And it has usually been done as a last resort. When there are too many dollars chasing a finite resource, it will take more of those dollars to purchase it. That's inflation. Take a look at Germany before WWII, Argentina, Mexico, the Confederate States of America or any other country that had to resort to printing money to pay its bills. Inflation skyrocketed. In Germany for example, people would pay for their meals when they ordered food at resturant because the prices of the mail would go up before they were finished eating. And the worsed part is that inflation begets inflation. When your savings are losing value because they are earning 2% but inflation is 10% it is in your best interest (sorry for the pun) to spend it before it becomes worthless. So even more money is dumped into the market. This exaserbates the situation and drives inflation even higher. So at the end of the day, you've lost your savings, prices of products are exceeding your ability to pay and you end up with nothing. Painful but true.

So where are we heading today? President Bush printed a lot of cash. Obama is going to print more. And that means inflation is on its way. And considering the amount they are printing, the inflation that is coming is going to be deadly. Those of you around during the Carter years, when inflation was in the teens and interest rates were around 10% haven't seen anything. It will take a year or two for all this money to work its way into the economy. And when it does, inflation will be out of control and it going to destroy a lot of people. The value of the American dollar, already in decline because of President Bush financial policies, will plumment. It is possible it could become worthless though I don't think it will get that bad. However, that doesn't mean inflation of 20% or higher isn't possible. Think about it. Everything you purchase, from milk, houses, cars, lunch or anything else, will cost 20% or more than it did last year. And with a high unemployment rate, salaries won't follow. So you'll be taking a massive paycut without taking a paycut from your employer. Inflation though is much harder to tame. It will stay and hurt millions. And don't look for the government to curtail spending it.

It is a dark road this tale leads to, but the signs are all there for those who will see. Today's government can't pay for all this stimulus without printing the money but they are so eager to spend it, it doesn't seem to matter. This money will cause inflation which will make today's downturn look like a party. History books will pan the move just as they rightfully pan the proctectist moves during the 30's. Don't look for people in government to learn. They are too busy buying votes.