Either that or someone has their rose colored glasses on.

Since the dollar changes in value, when we look at long term costs, we have to correct current dollar costs by converting them into constant dollars, based on some index year.

Thanks for the alphabet soup correction. The report was noted to be independent, so, I read GAO not CBO. The GAO is independent and the CBO is (IMHO—hasn’t the CBO have vetted what the GAO has warned to be a crisis?) beholden to Congress.

Concerning the risk of deflation, I mostly agree—though I believe the deflation we will experience is due to credit—what our currency is denominated in—continuing to be tight. Supply and demand dynamics will trend us into deflation. Regardless, after deflation comes inflation. My head was in 2020 when crafting my above comment, which I assume will mean we have passed the deflationary period. But I was not explicit. Thanks for making the point you have.

As I evaluate things, a credit derivatives market of $590 trillion which, at best, is severely crippled, at worst, collapsed, constitutes a financial “black hole” that requires filling for the economy of global capitalism to “recover.” With an annual global GDP (PPP) of $65 trillion, the troubled derivatives market equals the entire global economy—before the bubble bust—for 9 years. That the “black hole” has been able to be bridged for almost three years has truly awed me. Even so, the number of rule changes that have happened for this to be so has destroyed what little trust I had left that a rule of law would guide government financial policy; that justice (and karma) will be allowed to do their thing.

In any event, isn’t deflation occurring because major banks; stress testing withstanding, are insolvent? Having all been brought/allowed to be brought under FDIC and government guarantees (and without first meeting leveraging requirements such grantees once required), the US Government is insolvent (but for printing money). Whenever there is a run on the banks and/or the dollar, the consequential mess will be socially cataclysmic. The latter will be effected when BRIC and/or OPEC activities result in a change the reserve currency. Regardless, the line to just printing money has been crossed by the US. Such is an inflationary action and makes the shift in reserve currency more likely and more imminent.

Anyway, a “Republican” awareness, or not, it is good to understand how chaotic things have become so that the hope that is worked for is a hope than can be trusted; be just. Unless the Fed gets its way (and is authorized to issue its own currency—adding insult to injury relative to the Constitution and coining money), inflation is in our future. That future is likely at or before 2020 and relegates this CBO analysis to the role of outhouse paper.

That’s the polar opposite of a stunner.

“But the real reason it is a stunner I’ll address tomorrow.”

I look forward to that. So far I see a fairly standard non-partisan analysis.

A couple of other thoughts — I agree with your second paragraph; David Walker was head of GAO, Not CBO.

As of 6/19 the five year inflation rate was projected to be a very low 1.6%, and the ten year rate to be 1.9%, so the first part of you comment doesn’t seem germane.

Until recently, deflation was more likely than inflation. I know conventional wisdom has always tied deficit spending to inflation, but there is an exception — when productivity increases faster than currency expansion, then there is little danger of inflation. Many of the investments we are making in people and infrastructure improve productivity, and hence, mitigate against inflation.

Have you been listening to Republican talking points, perhaps?

Consumer credit, which the economy has been based on, needs not only jobs to replace those that are gone and going, but at wages that are structured, economically, to increase. The collapsed economy was oriented to make sure wage increases happened as little as possible. Countering this systemic need of raising wages and employment opportunities, the current “recovery” efforts are centered around shoring up the financial institutions who’s abuse of fractional reserve banking has destroyed their value as social institutions.

The CBO under its former chairman, David Walker, tried to do, relative to our deficit spending (and this was before the consumer credit bubble burst), what you are struggling to do, Joe, around klimakatastrophe. I will continue to read this report, but at first blush it looks to me like a white paper that is more whitewashing.

We need a constitutional currency that is coined in CO2e credits whose value equitably resides with—and accrue to—the citizens of this planet, not its central banks.

http://www.pik-potsdam.de/ news/ press-releases/ files/ synthesis-report-web.pdf

[JR: Yes, it isn't stunning to those who follow common sense analysis. But the GOP had been trying to spin CBO as a big setback to the climate bill. But the real reason it is a stunner I'll address tomorrow.]