TIME magazine’s Eric Heinrich offers his readers a Hobson’s Choice concerning the mounting federal debt. You accept hyperinflation, or, you pay a lot more taxes. Your choice, but either way you pay. And that’s just one more piece of evidence that proves that today’s legacy media is replete with economic illiterates.

Heinrich’s article entitled “How High Could the U.S. Tax Rate Go?” appears in the magazine’s March 3, 2010, issue.  Here’s a summary of its 633 words offered in 25: The Obama Administration’s “monster deficit” will either result in hyperinflation – by printing money – or higher taxes. The amount and means of levying higher taxes is the question.

Hiking taxes is the less traumatic course, though it will only be accepted as the cost of inaction rises. “Congress only responds to financial crisis or some other external shock,” says Bill Gale, co-director of the Tax Policy Center in Washington. “Nothing will be done in Obama’s first term to substantially increase tax revenue.”

He doesn’t mention the inevitable event of both happening, since they would. When money is worth less the government has to tax more to just keep even. Duh.

In closing, Eric glances toward Britain: (more…)

A February 7th AP article quotes Treasury Secretary Timothy Geithner as saying the U.S. government ‘will never‘ lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops $14 trillion.” The AP report explains:

The cost of borrowing would increase significantly if the ratings service lowered the credit rating, also known as a bond rating, for U.S.

Secretary Geithner reassures ABC’s “This Week” “that will never happen.”

Listening to Geithner use the word “never,” I was reminded of Inigo Montoya from the movie The Princess Bride. Montoya is a Spanish swordsman who calmly listens to his evil leader protest repeated setbacks with exclamations of “that’s inconceivable!”

(more…)