If deficits get too high then we will see the effects of MUCH higher interest rates, high inflation, and currency devaluation. Yet interest rates and core inflation measures are still very low. (And remember, commodity prices are not a very good indicator of inflation because they are highly volatile. So when you feel a hole burning in your pocket at the gas pump, that's not the inflation I am talking about. Those prices are of great importance and are something to be concerned about, but are not a good indication of inflation).
Fear of these things has had drastic consequences for millions of American citizens and the country as a whole (which also has a major impact on the rest of the world).
From Krugman:
Unemployment isn’t just blighting the lives of millions, it’s undermining America’s future. The longer this goes on, the more workers will find it impossible ever to return to employment, the more young people will find their prospects destroyed because they can’t find a decent starting job. It may not create excited chatter on cable TV, but the unemployment crisis is real, and it’s eating away at our society.
The problem in our economy right now isn't the deficit, inflation, or a weakening dollar, it is underutilized resources and high unemployment. These fears have frozen our ability to improve the economy and help those in need, especially the unemployed. This has drastic consequences on the health of our economy, but even worse implications for the health of our society and the fulfilment and development of persons within our society (as I wrote about in this post).
Why should we fear that which is not happening? or that which no matter how many times it is predicted (without solid reasoning) still hasn't happened?
David wrote in Psalm 27: "The LORD is my light and my salvation; whom do I fear? The LORD is my life's refuge; of whom am I afraid?"
I believe he meant that no matter what we face here on earth, we have nothing to fear for God is always with us and because we "believe [we] shall enjoy the LORD'S goodness in the land of the living."
Unemployment IS happening and it is making life unnecessarily difficult for many millions of people. We CAN do something about, but we aren't. Having a job and developing as person are too important to let them be vanquished by fear.
Despite all the suffering caused by unmeployment (and the fears that perpetuate it), David is right, the Lord is always with us, of what should we be afraid?
