> The budget deficit for FY 2018 was $779B, or over $2B/day. It can't “increase to $2B/year”, that would be a ~99.75% reduction, not an increase. Thanks for po

> The budget deficit for FY 2018 was $779B, or over $2B/day. It can't “increase to $2B/year”, that would be a ~99.75% reduction, not an increase. Thanks for pointing this out. It should be 2T of course, in US units. > So, populists supporting the radically insane President have taken over the Fed (enough to direct the FOMC consistently, even though that body consists of a mix of the Board of Governors—wih staggered 14-year terms) and a rotating subset of the Reserve Bank Presidents (who are elected by each Reserve Bank’s directors, who largely come from the banking industry?) as well as Congress? > This scenario is increasingly implausible. QE was used after 2008, and there is a perception that this is not a problem. Hopefully you are right, and the Fed would be able to resist demands to continue QE into hyperinflation. > What now? It can increase minimum wages by legislation, sure, but if it does so to match runaway price inflation not driven by output gains, it just kills employment, which breaks the cycle because no one is going to demand wage increases when they don't have a job. You are right, it does kill employment. Still, it was just done (to some extent) in France (technically not due to inflation, but due to increased costs of living). > It can directly employ people at whatever wages it chooses, of course, or try to force employers to retain employees while paying higher wages, but those each have their own plausibility problems. Populist governments all over the world have been using both approaches for a long time. Anyway, the above is a perfect storm scenario. It is not happening tomorrow, but requires 3 trends to continue, probably for 10 years or so: A: A continued move towards more populist leaders in both parties. B: A continuously increasing pubic deficit C: A major worldwide economic crisis as a trigger. Edit: C is not a trend, only a trigger. And even then, responsible institutions may be able to step in and limit the impact to a 1929-like event. But if not, the US may head down the same path as Argentina or Brasil.