Tornado Alley (PROG)

[SilverSurfer]

As accomplished and knowledgeable a P.K. is,

"Yes, America has long-run budget problems, but what we do on stimulus over the next couple of years has almost no bearing on our ability to deal with these long-run problems."
http://www.nytimes.com/2010/07/02/opinion/02krugman.html?_r=1&ref=paulkrugman

"The point is that there are limits to the amount of real resources that you can extract through seigniorage. When people expect inflation, they become reluctant to hold cash, which drive prices up and means that the government has to print more money to extract a given amount of real resources, which means higher inflation, etc.. Do the math, and it becomes clear that any attempt to extract too much from seigniorage — more than a few percent of GDP, probably — leads to an infinite upward spiral in inflation. In effect, the currency is destroyed. This would not happen, even with the same deficit, if the government can still sell bonds."

http://krugman.blogs.nytimes.com/2011/08/15/mmt-again/

IMHO, if it weren't for Japan, Europe, Brazil, India and even China being even more in hock and unable to contain than we are,,, our bond rates would have already sky rocketed. We have a honeymoon period here to get a grip or print a trip.