Generally WSJ opinion columns tend tot he right, and I suppose by some standard the one I am about to mention would be considered conservative, however in its relentlessly neo-Keynesian perspective, it might as well be a WaPo or NYT op-ed column. And that may be part of our problem, or the problem of our economy, that the right, at least the "establishment right", the right that controls politics and mainstream Republican opinion, has bought into Keynesianism, or Monetarism , which is just Keynesianism Lite, every bit as much as the left. No wonder real monetary reform has been a dead issue since 1934, despite the brief gasp of the early 80's gold commission.

Anyway, to return to my comments, reading a WSJ op ed today, I found a most disturbing thought by the author. While arguing that Biden was right that the economy was worse than Obama thought (which is probably correct), he lamented that the stats will have spent up their bailout money by next year, and will have to cut spending, which he sees as a bad thing.

Now, this is the perfect example of two problems. First, what Bastiat pointed out with his example of the seen and not seen. Second, the unwillingness of our chattering class, and most of us for that matter, to endure any hardship, even when putting it off makes things worse.

The first is simple to explain. Yes, states may have to cut spending. however, in so doing, they return money to the producers in the private sector. For every dollar the state doesn't spend, a dollar is either not taxed, not borrowed, or not printed, in other words, a dollar is available for the more efficient, job creating private sector. I know Keynesians believe the government  makes more jobs by spending than the private sector, but that can be easily dismissed. How? Imagine an economy with 100% government spending, with no private sector. Could you believe that it would be much more efficient than an economy with even a small private sector?

Or, for those who accuse that argument fo being extreme, take this example. Look at your average private school and your average public school. Not in terms of "employment", as the NEA and bureaucrats make sure public schools are nothing but union job mills, but in terms of education per dollar spent. Even if we discount quality, which we should not, the sheer volume of students is higher per dollar in private schools. Public schools, many with 50% or more spent on administrators and other staff, cannot compete with private education. When you factor in quality, as well as other measures, such as student-teacher ratios, it is clear the government just cannot compete in terms of efficiency with the private sector. And no mythical "multiplier" will wish that away.

Government spending takes from the private sector and returns less than it would in private hands.

But a bigger problem is our complete inability to sacrifice, even if not doing so means even worse in the future. We have fully internalized the "apres nous le deluge" mind set.

Just look at the past 16 years, from Clinton through Bush. Whenever the economy lagged, when it was obvious the economy was trying to adjust to the inflation that had been quietly sapping our wealth the whole time, what did we do? Did we adopt Reagan's solution, turn to borrowing on the private market until the currency adjusted, even if ti hurt us in terms of economic growth? Did we simply scale back the pace of inflation and ride out the minor deflationary crisis?

No, we inflated, and inflated some more. And what did it get us? Our current crisis! Every time you inflate your way out of a deflation, one of two things can happen. If you are lucky, you set up a much worse deflationary crisis a few years in the future. At worst, you kick yourself into a hyperinflation, or maybe a full blown monetary crisis, where all confidence in the currency disappears. There is simply no other possible outcome.

But we are unwilling to face that fact. We would rather buy a year or two more of false prosperity, and worry about the crash later rather than take our licks now and start over on sound footing. Even when we know it will be worse in the future, we just go into denial, pretend we will never have to face it and ask for the momentary relief of more inflation.

We are acting like heroin addicts looking for the next fix, even though they know it will make the eventual withdrawal even worse. Except our addiction is to cheap money and false economic booms.

And we are doing it again. The bailout and TARP and the massive budget were nothing but a trillion in bonds which can support about a 30% increase in the money supply. That massive boost of inflation is meant to cover up all the ills, to keep the economic misallocations going, to keep inefficient firms running, and buy the current occupants of political office a few more terms in office. No one really believes it will set us on the course to a stable economy, they think only of the very short  term, and think it might get them through the next election.

Of course they can always point to Keynes who argued "in the long run we're all dead". But with that mindset, consistently applied, we are dead a lot sooner than we need be. There are those who were alive during the dot com bust who are still alive, we have reached the "long term" of that bailout, and we still have to face the music. How much more time will this massive bailout buy us?

We can't continue to do this forever, buying our way out of facing the price of rampant inflation. Sooner or later we have to, at the very least, allow for a Reagan-like adjustment, allowing our currency to settle down once again and return to something approaching a realistic value. Better still, one day we might want to face the problems of our political, managed currency and rethink managed money. But even if we do neither, at some point reality will force us to do something, as we cannot postpone the crash forever.

In fact, we may be facing the music now, and all our efforts at bailouts may be for nothing, throwing bad money after good. Only time will tell. But even if we get out of the crisis we face today, sooner or later we must deal with the problems of inflation and managed money. Why put it off and just make things worse?