One way not to hit bottom. Yet.

While the Fed continues destroying what’s left of the dollar’s value, Uncle Sam proposes to throw $100 billion at taxpayers in hopes (not unfounded) they’ll spend it, providing a boost to the 70% of our economy that’s based on, well, spending. To further up the ante, a mix of business tax relief measures are also thrown in.

Normally, I consider any kind of tax rebate a good thing. Here’s the problem, though: the “emergency” measures aren’t offset by any kind of spending reduction… which means the deficit hole just got a couple hundred billion dollars bigger. Again. Which means more inflationary pressure on the dollar as we either print the money out of thin air, or sell even more bonds to foreign investors who’ve justifiably grown concerned we’re out of our financial minds over here. At some point, even your best buddies get tired of subsidizing your binges.

The tax rebate plan is simply more of how we built this mess in the first place… failing to prioritize and deciding instead to have our cake and eat it too. Capital is created by saving — the difference between production and consumption. We’ve been negative on that equation for a generation or more, both as a nation and as average individuals/families. In an attempt to keep from hitting the bottom of a very deep hole of our own making, we just keep digging…

Maybe we’ll dig all the way to China. Or maybe we already have, and just don’t know it yet.

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