Is Obama Suppressing Deficit Info to Push Healthcare?

From Thenewamerican.com

Obama's Office of Management and Budget (OMB) has decided to delay the congressionally required economic review of his February budget projections until the middle of August, which is after Congress leaves town for its summer recess and after Obama's declared deadline for passage of a healthcare measure. Republicans have suggested that the delay is related to the likelihood that the updated numbers would show a deficit greater than the $1.84 trillion figure the administration acknowledged in May. Obama listed economic assumptions that were rosier than any other public forecast in his February budget. Bloomberg.com noted that “The White House also said the jobless rate would average 8.1 percent this year, though it climbed to 9.5 percent last month.”

Geithner tried to reassure his Chinese counterparts that the federal budget deficit would not be allowed to expand out of control.

From Marketwatch.com

China's central bank holds an estimated $1.2 trillion worth of U.S. dollar assets.

In his opening remarks, Treasury Secretary Timothy Geithner tried to reassure his Chinese counterparts that the federal budget deficit would not be allowed to expand out of control.

"Already savings are up and our external deficit has fallen, and we are committed to taking measures to maintaining greater personal saving and to reducing the federal deficit to a sustainable level by 2013," Geithner said.

Chinese officials have unanimously criticized the buildup in the U.S. deficit and the Federal Reserve's expansionary monetary policy.

Fed chief Ben Bernanke said on Sunday that Fed policy is aimed at maintaining a strong U.S. currency.

Analysts said the talks might make progress is expanding China's role at the International Monetary Fund.

From the U.S. perspective, one goal of the discussions is to open up Chinese consumer markets to U.S. exports.

"China's success in shifting the structure of the economy towards domestic-led growth, including a greater role for spending by China's citizens, will be a huge contribution to more rapid, balanced and sustained global growth," Geithner said.

History Of Gov't-Run Health Care Is A Study In Skyrocketing Costs

From Ibdeditorials.com

In considering whether to expand the government's role in the delivery of health care or in health care insurance, it is worth looking at Medicare and Medicaid.

These two huge programs already make the government the largest player in the health care industry. The profligate nature of these two programs should raise lots of doubt about the Obama program doing anything but "busting" the budget.

In 1968 total spending by the federal government was $178.1 billion dollars. Forty years later in 2007, total spending had risen to $2,728.9 billion dollars. So the budget of the U.S. increased in dollar terms 15.3 times in that 40-year span.

Growing Federal Debt threatens US National Security

From Isria.com

Republican Leader highlights consequences of massive new debt on the future of America’s national security-

‘The national debt threatens our way of life; it threatens the value of our national currency; and it threatens our ability to pay for entitlements that millions of Americans depend on. Yet, just as importantly, the national debt also endangers our position in the world, the long term capabilities of our military, and the long-term viability of the all-volunteer force that is currently serving us so ably and courageously in two very challenging wars’

Entitlement Reform May Begin With Social Security

From tpmdc.talkingpointsmemo.com

"I think we're in a position to be able to, either at the end of this year or early next year, start laying out a broader picture about how we are going to handle entitlements in a serious way," Obama said. "It may start with Social Security because that's, frankly, the easier one."

Obama says debt and deficits are "deep concerns"

From Reuters.com

President Barack Obama said on Wednesday that the national debt and budget deficit were "deep concerns" and that he was very worried about government spending. "The debt and deficit are deep concerns of mine," Obama told reporters during a televised news conference from the White House, explaining why he thinks the cost of healthcare needs to be reined in.

Actions speak louder than words.

National Debt by year

From Seekingalpha.com

Below is the National Debt by year since the creation of our Republic. Since the creation of the Federal Reserve the National Debt has gone up by 400,000%.

The most fascinating period was the Presidency of Andrew Jackson from 1829 to 1837. He inherited a National Debt of $58 million and reduced it to $33,000 by 1835. No wonder the bankers hated him. We've added $10 trillion of debt since 1981.

Date	Dollar Amount
07/22/2009 09/30/2008	11,634,723,000,000.00 10,024,724,896,912.49
09/30/2007	9,007,653,372,262.48
09/30/2006	8,506,973,899,215.23
09/30/2005	7,932,709,661,723.50
09/30/2004	7,379,052,696,330.32
09/30/2003	6,783,231,062,743.62
09/30/2002	6,228,235,965,597.16
09/30/2001	5,807,463,412,200.06
09/30/2000	5,674,178,209,886.86

09/30/1999	5,656,270,901,615.43
09/30/1998	5,526,193,008,897.62
09/30/1997	5,413,146,011,397.34
09/30/1996	5,224,810,939,135.73
09/29/1995	4,973,982,900,709.39
09/30/1994	4,692,749,910,013.32
09/30/1993	4,411,488,883,139.38
09/30/1992	4,064,620,655,521.66
09/30/1991	3,665,303,351,697.03
09/28/1990	3,233,313,451,777.25
09/29/1989	2,857,430,960,187.32
09/30/1988	2,602,337,712,041.16
09/30/1987	2,350,276,890,953.00
09/30/1986	2,125,302,616,658.42
09/30/1985	* 1,823,103,000,000.00
09/30/1984	* 1,572,266,000,000.00
09/30/1983	* 1,377,210,000,000.00
09/30/1982	* 1,142,034,000,000.00
09/30/1981	* 997,855,000,000.00
09/30/1980	* 907,701,000,000.00
09/30/1979	* 826,519,000,000.00
09/30/1978	* 771,544,000,000.00
09/30/1977	* 698,840,000,000.00
06/30/1976	* 620,433,000,000.00
06/30/1975	* 533,189,000,000.00
06/30/1974	475,059,815,731.55
06/30/1973	458,141,605,312.09
06/30/1972	427,260,460,940.50
06/30/1971	398,129,744,455.54
06/30/1970	370,918,706,949.93
06/30/1969	353,720,253,841.41
06/30/1968	347,578,406,425.88
06/30/1967	326,220,937,794.54
06/30/1966	319,907,087,795.48
06/30/1965	317,273,898,983.64
06/30/1964	311,712,899,257.30
06/30/1963	305,859,632,996.41
06/30/1962	298,200,822,720.87
06/30/1961	288,970,938,610.05
06/30/1960	286,330,760,848.37
06/30/1959	284,705,907,078.22
06/30/1958	276,343,217,745.81
06/30/1957	270,527,171,896.43
06/30/1956	272,750,813,649.32
06/30/1955	274,374,222,802.62
06/30/1954	271,259,599,108.46
06/30/1953	266,071,061,638.57
06/30/1952	259,105,178,785.43
06/29/1951	255,221,976,814.93
06/30/1950	257,357,352,351.04

06/30/1949	252,770,359,860.33
06/30/1948	252,292,246,512.99
06/30/1947	258,286,383,108.67
06/28/1946	269,422,099,173.26
06/30/1945	258,682,187,409.93
06/30/1944	201,003,387,221.13
06/30/1943	136,696,090,329.90
06/30/1942	72,422,445,116.22
06/30/1941	48,961,443,535.71
06/29/1940	42,967,531,037.68
06/30/1939	40,439,532,411.11
06/30/1938	37,164,740,315.45
06/30/1937	36,424,613,732.29
06/30/1936	33,778,543,493.73
06/29/1935	28,700,892,624.53
06/30/1934	27,053,141,414.48
06/30/1933	22,538,672,560.15
06/30/1932	19,487,002,444.13
06/30/1931	16,801,281,491.71
06/30/1930	16,185,309,831.43
06/29/1929	16,931,088,484.10
06/30/1928	17,604,293,201.43
06/30/1927	18,511,906,931.85
06/30/1926	19,643,216,315.19
06/30/1925	20,516,193,887.90
06/30/1924	21,250,812,989.49
06/30/1923	22,349,707,365.36
06/30/1922	22,963,381,708.31
06/30/1921	23,977,450,552.54
07/01/1920	25,952,456,406.16
07/01/1919	27,390,970,113.12
07/01/1918	14,592,161,414.00
07/01/1917	5,717,770,279.52
07/01/1916	3,609,244,262.16
07/01/1915	3,058,136,873.16
07/01/1914	2,912,499,269.16
07/01/1913	2,916,204,913.66
07/01/1912	2,868,373,874.16
07/01/1911	2,765,600,606.69
07/01/1910	2,652,665,838.04
07/01/1909	2,639,546,241.04
07/01/1908	2,626,806,271.54
07/01/1907	2,457,188,061.54
07/01/1906	2,337,161,839.04
07/01/1905	2,274,615,063.84
07/01/1904	2,264,003,585.14
07/01/1903	2,202,464,781.89
07/01/1902	2,158,610,445.89
07/01/1901	2,143,326,933.89
07/01/1900	2,136,961,091.67

07/01/1899	1,991,927,306.92
07/01/1898	1,796,531,995.90
07/01/1897	1,817,672,665.90
07/01/1896	1,769,840,323.40
07/01/1895	1,676,120,983.25
07/01/1894	1,632,253,636.68
07/01/1893	1,545,985,686.13
07/01/1892	1,588,464,144.63
07/01/1891	1,545,996,591.61
07/01/1890	1,552,140,204.73
07/01/1889	1,619,052,922.23
07/01/1888	1,692,858,984.58
07/01/1887	1,657,602,592.63
07/01/1886	1,775,063,013.78
07/01/1885	1,863,964,873.14
07/01/1884	1,830,528,923.57
07/01/1883	1,884,171,728.07
07/01/1882	1,918,312,994.03
07/01/1881	2,069,013,569.58
07/01/1880	2,120,415,370.63
07/01/1879	2,349,567,482.04
07/01/1878	2,256,205,892.53
07/01/1877	2,205,301,392.10
07/01/1876	2,180,395,067.15
07/01/1875	2,232,284,531.95
07/01/1874	2,251,690,468.43
07/01/1873	2,234,482,993.20
07/01/1872	2,253,251,328.78
07/01/1871	2,353,211,332.32
07/01/1870	2,480,672,427.81
07/01/1869	2,588,452,213.94
07/01/1868	2,611,687,851.19
07/01/1867	2,678,126,103.87
07/01/1866	2,773,236,173.69
07/01/1865	2,680,647,869.74
07/01/1864	1,815,784,370.57
07/01/1863	1,119,772,138.63
07/01/1862	524,176,412.13
07/01/1861	90,580,873.72
07/01/1860	64,842,287.88
07/01/1859	58,496,837.88
07/01/1858	44,911,881.03
07/01/1857	28,699,831.85
07/01/1856	31,972,537.90
07/01/1855	35,586,956.56
07/01/1854	42,242,222.42
07/01/1853	59,803,117.70
07/01/1852	66,199,341.71
07/01/1851	68,304,796.02
07/01/1850	63,452,773.55

07/01/1849	63,061,858.69
07/01/1848	47,044,862.23
07/01/1847	38,826,534.77
07/01/1846	15,550,202.97
07/01/1845	15,925,303.01
07/01/1844	23,461,652.50
07/01/1843	32,742,922.00
01/01/1843	20,201,226.27
01/01/1842	13,594,480.73
01/01/1841	5,250,875.54
01/01/1840	3,573,343.82
01/01/1839	10,434,221.14
01/01/1838	3,308,124.07
01/01/1837	336,957.83
01/01/1836	37,513.05
01/01/1835	33,733.05
01/01/1834	4,760,082.08
01/01/1833	7,001,698.83
01/01/1832	24,322,235.18
01/01/1831	39,123,191.68
01/01/1830	48,565,406.50
01/01/1829	58,421,413.67
01/01/1828	67,475,043.87
01/01/1827	73,987,357.20
01/01/1826	81,054,059.99
01/01/1825	83,788,432.71
01/01/1824	90,269,777.77
01/01/1823	90,875,877.28
01/01/1822	93,546,676.98
01/01/1821	89,987,427.66
01/01/1820	91,015,566.15
01/01/1819	95,529,648.28
01/01/1818	103,466,633.83
01/01/1817	123,491,965.16
01/01/1816	127,334,933.74
01/01/1815	99,833,660.15
01/01/1814	81,487,846.24
01/01/1813	55,962,827.57
01/01/1812	45,209,737.90
01/01/1811	48,005,587.76
01/01/1810	53,173,217.52
01/01/1809	57,023,192.09
01/01/1808	65,196,317.97
01/01/1807	69,218,398.64
01/01/1806	75,723,270.66
01/01/1805	82,312,150.50
01/01/1804	86,427,120.88
01/01/1803	77,054,686.40
01/01/1802	80,712,632.25
01/01/1801	83,038,050.80
01/01/1800	82,976,294.35
01/01/1799	78,408,669.77
01/01/1798	79,228,529.12
01/01/1797	82,064,479.33
01/01/1796	83,762,172.07
01/01/1795	80,747,587.39
01/01/1794	78,427,404.77
01/01/1793	80,358,634.04
01/01/1792	77,227,924.66
01/01/1791	75,463,476.52

Calif. deficit deal likely just a temporary fix

From AP:

California's deal to close its $26 billion budget gap may end up doing what Gov. Arnold Schwarzenegger had hoped to avoid: kicking the state's problems down the road.

Despite deep cuts to education and social programs, the deal struck late Monday is filled with assumptions and accounting gimmicks. Combined with a persistent recession, it is likely to lead to yet another multibillion-dollar deficit in the next fiscal year.

"Frankly, we may not be done yet," said Senate leader Darrell Steinberg, D-Sacramento. "We pray for better economic news sooner rather than later."

Is Social Security a Giant Ponzi Scheme?

From Fool.com

Jim Cramer has called Social Security the largest Ponzi scheme in history. To an extent, he's making a valid comparison. Like a Ponzi scheme, Social Security pays its benefits out of new contributions, rather than out of investment returns. Also, like a Ponzi scheme, Social Security is in the process of collapsing under its own weight. According to its most recent annual report, the Social Security trust fund is expected to be exhausted by 2037. With similarities like that, it's no wonder Cramer felt he could make the comparison.

White House putting off release of budget update

From AP:

The administration's annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama's budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.

The release of the update — usually scheduled for mid-July — has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town on its August 7 summer recess.

What happened to the transparency promised during the campaign?

What a $1 Trillion Deficit Means to You

From Foxnews.com

You know what? The bottom line is, unfortunately, it means that every single tax that you could imagine you will see a hike in. I hate to tell you, but to be the bearer of bad news this evening, but the likelihood is in order to fund a federal budget deficit that is now north of a trillion dollars, some project could hit $2 trillion in this fiscal year alone, you're going to see taxes go up across the board -- soda, tobacco.

Now, this president, this administration, could suggest that they will not raise taxes on the middle class. The bottom line is, Greta, 44 states are facing $165 billion in state deficits. They will raise taxes, whether we like it or not. And if you do health care and climate change, as well, you're going to see it across the board.

Do We Need Another Stimulus?

From Washingtonpost.com

Senior fellow at the Brookings Institution; founding director of the Congressional Budget Office; director of the Office of Management and Budget, 1994-96

But "stimulus" suggests a hastily crafted emergency measure outside the budget rules -- an invitation to irresponsibility and pork-barrel spending. To ensure a strong, productive economy, we need to make well-planned investments in skills and science, modernize our infrastructure, and increase health system efficiency. But we should use the regular budget process, cumbersome though it may be, to make thoughtful decisions about federal spending and how to pay for it while reducing the long-run deficit. Throwing together everybody's favorite project -- but refusing to pay because it is "stimulus" -- is truly irresponsible.

MARTIN FELDSTEIN

Professor of economics at Harvard University; president emeritus of the nonprofit National Bureau of Economic Research; chairman of the Council of Economic Advisers from 1982 to 1984

It would be wrong to plan a second stimulus package at this time. Increasing the national debt would not only impose a greater burden on future taxpayers but would also run the risk of raising the long-term rate of interest. Such a higher interest rate would depress business investment and housing activity, offsetting the expansionary effect of the proposed stimulus.

The rise in the rate of interest would reflect both the increased domestic competition for funds and the possibility that foreign investors would accelerate their switch from dollar bonds to other currencies.

The Chinese have made it clear that they are nervous that our large fiscal deficits could lead to a U.S. inflation that reduces the value of their vast dollar holdings. They fear that the projected doubling of the U.S. national debt as a share of GDP over the next 10 years would tempt the U.S. government and the Federal Reserve to inflate away some of that debt, especially since more than half of that debt is now held by foreign investors. Adding another large amount to that debt would just increase their fears that we have lost control of our national debt or simply don't care.

We may nevertheless need to use some additional federal borrowing in the next year to fix the banking system and to stop the downward spiral of house prices. That spending would be less popular than another stimulus that gives away money to transfer recipients, low-income taxpayers and state governments. But the federal government should preserve its scarce borrowing power for that more important task.

There is a pretty major division on this issue between the left and right. Its interesting how clear cut the opinions are. The two I quoted above are included because they most closely represent my position on the subject.

Give it Some Time, Obama Says in Defending the Recovery Act

From Abcnews.com

“I realize that when we passed this Recovery Act, there were those who felt that doing nothing was somehow an answer,” the President will say. “Today, some of those same critics are already judging the effort a failure although they have yet to offer a plausible alternative.”

The President says the recovery act was not designed to restore the economy to full health on its own, but to provide the boost necessary to stop the free fall.

The President tries to halt calls for a second stimulus, saying that the recovery plan wasn’t designed to work in four months, but two years, and that it will continue to accelerate as time passes.

“Part of what makes our current economic situation so challenging is that we already had massive deficits as the recession gathered force,” the President will say. “And although the Recovery Act represents just a small fraction of our long term debt, people have legitimate questions as to whether we can afford reform without making our deficits much worse.”

The stimulus is working as it should, the President says and adds that the country is moving in the right direction.

“I am confident that the United States of America will weather this economic storm,” the President will say. “But once we clear away the wreckage, the real question is what we will build in its place. Even as we rescue this economy from a full blown crisis, I have insisted that we must rebuild it better than before.”

Give it Some Time, Obama Says in Defending the Recovery Act

From Abcnews.com

“I realize that when we passed this Recovery Act, there were those who felt that doing nothing was somehow an answer,” the President will say. “Today, some of those same critics are already judging the effort a failure although they have yet to offer a plausible alternative.”

The President says the recovery act was not designed to restore the economy to full health on its own, but to provide the boost necessary to stop the free fall.

The President tries to halt calls for a second stimulus, saying that the recovery plan wasn’t designed to work in four months, but two years, and that it will continue to accelerate as time passes.

“Part of what makes our current economic situation so challenging is that we already had massive deficits as the recession gathered force,” the President will say. “And although the Recovery Act represents just a small fraction of our long term debt, people have legitimate questions as to whether we can afford reform without making our deficits much worse.”

The stimulus is working as it should, the President says and adds that the country is moving in the right direction.

“I am confident that the United States of America will weather this economic storm,” the President will say. “But once we clear away the wreckage, the real question is what we will build in its place. Even as we rescue this economy from a full blown crisis, I have insisted that we must rebuild it better than before.”

Obama Tells G8 Leaders That Health Care Reform Will Lower U.S. Deficit

From Talkradionews.com

Obama said he understands Republicans’ concern for the U.S.’s massive budget deficit, but said “what cannot be denied is that the only way to get a handle on our medium and long term budget deficits is to corral and contain health care costs.” Obama said that while it is not absolutely necessary, he wants to pass a health care reform bill by the August congressional recess.

“My biggest job is to explain to the American people why this is so important and give them confidence that we can do better than we’re doing right now,” said Obama.

I wonder if he really believes this or if it just a sales pitch. The govt is never efficient in terms of controlling costs...and health care will prove to be no diffrent.

Here comes the next fiscal crisis

From Latimes.com

There are two parts to the problem. First, over the next decade or so, even once we recover from the recession, federal revenues will fall far short of federal spending. Under the policies laid out in the Obama administration's recent budget, for example, the annual deficit will be 5.5% of GDP by 2019, an exceptionally high share in normal times. In the meantime, the national debt will accumulate so rapidly that it will stand at 82% of GDP, its highest mark since 1948, when we were paying off our war debts.

And we will be looking ahead to even larger deficits and faster debt accumulation. That's because of the second element of the problem, the rapid growth of our "big three" entitlement programs: Social Security, Medicare and Medicaid. Due to an aging population and ever-increasing medical costs, these programs are growing much faster than the tax revenues we have to pay for them.

Credit Card Debt Reaches All-Time highs

From Digitaljournal.com

The average American consumer spends 43% more than he or she earns and the national credit card debt is $2 trillion. Is there no end in sight to this madness of credit?

In a nation that has the highest amount of national debt in the history of the world, so to do its people have the highest credit card debt. The United States of America holds a $11.5 trillion national debt and not to mention the other trillions of dollars owed to nations around the globe. Credit card debt has risen to all-time highs. The average household credit card debt is $8,000. That statistic is not surprising considering that Americans spend on average 43% more than they annually earn.

Obama Adviser: Deficit Likely Worse Than Planned

From Wsj.com

The U.S. government's budget deficit will likely be wider than expected this year, a top White House adviser said Tuesday.

Speaking at the Nomura Asia Equity Forum in Singapore, Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said the U.S. economy faces a worse situation than previously believed, and the deficit - already the widest since World War II - may surpass a previous projection of around 12% of gross domestic product.

Entitlement Reform Is Necessary for Long-Term Fiscal Stability

From Heritage.org

Attention has focused recently on the explosion of federal borrowing to meet the demands of economic "stimulus," housing market stabilization, and the financial sector crisis. However, even if the United States had been fortunate enough to avoid these crises, the federal government would still face an unsustainable fiscal course.

The most current long-term projections of growth in Social Security, Medicaid, and Medicare (often referred to as entitlements) paint a bleak fiscal picture, which emphasizes the need for reform. Left unchecked, entitlement spending is projected to exceed 20 percent of gross domestic product (GDP) by 2060. Viewed in isolation and from the distance of 50 years, this may not seem altogether daunting--distressing perhaps, but hardly alarming. However, the federal budget would also need to expand to include discretionary spending and the other mandatory outlays. Even more important, mandatory outlays would include spending a crushing 22 percent of GDP to service the debt accumulated from five decades of debt-financed federal spending. The projections beyond 2060 reflect the snowball effect of compounding debt and dwarf the nearer-term estimates. Regardless of the time horizon, addressing U.S. fiscal straits will require increasingly drastic measures.[1]

The projections demonstrate the futility of attempting to finance entitlements with debt. On its present course, this debt and the accompanying interest will swamp the U.S. economy, harm U.S. standing in world capital markets, damage capital formation and productivity growth in the United States, and reduce future standards of living.

The problem needs to be addressed soon, but some proposed solutions will not work. Raising taxes to match the growth in the spending would dramatically harm economic growth and competitiveness. Similarly, it is unrealistic to expect sustained GDP growth sufficient to afford this spending. Instead, addressing the long-term fiscal challenges confronting the United States will require fundamentally reforming entitlement spending.

This paper suggests some possible approaches that Congress should consider when it reforms entitlements to rein in spending and makes broader reforms to the health care and health insurance markets.

As California goes, so will the US

From Contrarianprofits.com

As California goes, so will the US. It is our strong suspicion here at Notes that California’s fiscal crisis (what is really a profligate spending crisis) is but a prelude to the coming national debt crisis.

Last Thursday, ratings agency Fitch dropped the Golden State’s credit rating to A-minus and immediately placed that on negative credit watch. California shares three major problems with the US. It faces:

1. A crippling budget deficit
2. Declining tax revenues
3. A legislature that won’t face up to critical issues.

Over the weekend, we read in wonder that by the non-partisan Congressional Budget Office’s own estimation America’s national debt is now growing so quickly that it will exceed the size of the economy in 2023 – seven years earlier than the projections of the last report just 18 months ago!

This from The Caucus, the politics and government blog at the New York Times:

The culprit is not the huge sum of stimulus spending that President Obama and Congress have injected into the economy this year, the budget office said. Instead, rising health care costs and an aging population together continue to push government spending upward at an unsustainable pace, only faster than the budget office last estimated.

Rising national debt raises prospects of eventual inflation

From Washingtonpost.com

Inflation is as dead as the Wicked Witch of the West in a waterfall. The consumer price index has actually fallen 1.3% in the past 12 months. So why is everyone so worried about soaring prices?

In a word: debt. The government owes the world $11.4 trillion — $37,000 for every person in the U.S. In the next fiscal year, the government will add $1.8 trillion to the deficit.

The government could simply print more dollars to pay off our debts with cheap currency — a tempting but inflationary solution. Politicians wouldn't have to ask citizens to pay for the government's services, and citizens wouldn't have to think about the actual cost of what they demand — until, of course, the currency collapses, interest rates soar and the economy craters. Some on Wall Street are betting on just that scenario. Universa Investments — linked to Nassim Nicholas Taleb, author of Wall Street's biggest book, The Black Swan: The Impact of the Highly Improbable— is adding strategies that will soar if inflation takes off. Respected hedge fund adviser 36 South Investment Managers is raising $100 million for a fund that will bet on soaring price increases. And Marc Faber, editor of the Gloom Boom & Doom Report, a newsletter, predicts that U.S. inflation will someday match Zimbabwe's — that would be 236 million percent a year.

If inflation does hit, it won't be this year, barring a major jump in oil prices or a drastic change in government philosophy. You don't get inflation in an economy that's as slack as this one. And, many economists say, the Federal Reserve has many tools to contain inflation once the economy turns around. But one thing the Fed doesn't have is the ability to control federal spending. And that, ultimately, could be the thing that pushes the inflation rate higher.