“Bernanke is pulling out all the stops to kick this economy back into a higher gear,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “They are buying everything in sight -- Treasuries, mortgage-backed securities -- and will keep rates low until everyone who wants a job has one.”

Bonds fell yesterday on the prospect of higher inflation after policy makers boosted their main stimulus tool by adding $45 billion of monthly Treasury purchases to an existing program to buy $40 billion in mortgage debt a month. That decision puts the Fed’s $2.86 trillion balance sheet on track to reach almost $4 trillion by the end of next year.

If you want people to look past Obama and Romney, you first need to convince them that the economy is as bad as you say it is. Also, avoid the insulting "you can't spend your way out of debt!" sound bites. No one is claiming that QE or the government's current policies are going to reduce the debt.

In a recent post you claimed inflation was at 20%, a completely ludicrous number that, to a layperson, has absolutely no basis in reality. At best it makes you look like an ivory tower academic and at worst a nutjob conspiracy theorist. I'm fairly certain I would have noticed if the price I pay for things doubled over the past four years. When people claim this, it looks to me like they just looked at the 5-year price of gold and decided to claim that is the inflation rate.

It's like you just listen to the news on the major networks and do no independent examination. This can't be true can it? You know the major media are simply repeater systems for the NYT, the AP, and whomever occupies the Whitehouse.

Yes real unemployment is close to 20%

What is there to admit? A slow recovery with lagging employment and stagnant wages has pretty much been the mainstream consensus prediction for years. I'm pretty sure most reasonably informed Obama voters were fully aware of that and cast their vote for Obama precisely because they think the Dems are better able to manage that situation (and the long-term structural factors that led to it) than the Reps. Or was there some other, counter-consensus prediction you made that has since been borne out?

So tell me, because I really want to know ...

How the **** do you borrow your way out of debt?

And how do you spend yourself into liquidity?

Obviously it's a rather unilluminating tautology to say you can't "borrow your way out of debt", but borrowing can certainly be part of an overall debt-reduction strategy. For instance, if I refi my mortgage at a lower rate, even though the principal remains the same, the total payments over the life of the loan will be reduced. Likewise, borrowing $10k to buy a car so I can accept a more distant job that pays me an extra $20k/yr would reduce my overall debt load after the first 6 months (roughly speaking), which, incidentally, also amounts to "spending myself into liquidity". In addition, every time a company borrows money to fund an expansion that generates revenues in excess of debt service or a refit that generates efficiency gains and cost-savings in excess of debt service, and uses that excess to pay down other debt, that company has "borrowed its way out of debt" and/or has "spent itself into liquidity". Further, if interest rates are expected to rise, it can make sense to borrow now (at a locked-in rate, of course) rather than later, so that your overall debt (principal + interest) will be lower. Similarly, if inflation is going up, borrowing now and repaying with "cheaper" dollars later can certainly make sense too.

Personal/corporate finance isn't always analogous to national economic issues, of course, but there are similar kinds of examples. The US government can borrow at lower rates now than are likely to be available in the coming years; it can set a higher inflation target and pay back debt more cheaply; it can fund programs like education and infrastructure that are expected to generate a higher "return" in the form of a growing economy and increasing tax revenues; it can borrow to fund programs now that reduce expenses later (again, like education or juicing the economy to increase growth and reduce long-term unemployment); and so on.

Now, we can argue about the likelihood of a positive return from various debt-funded expenditures, but like Xeq said, "you can't borrow your way out of debt" and "you can't spend yourself into liquidity" are just soundbites that are rhetorically appealing but substantively hollow and misleading.

Not sure where else to put this but they've been running IBEW ads here and I couldn't figure out why until I listened, "America is making a comeback" which if memory serves was the same message GM delivered pre-election. Have the Unions become defacto PACS for Obama?

Actually, I've been keeping track of what I pay for things over the past few years, because people keep claiming ludicrous rates of inflation. And I've found that the prices on the things I buy go up about 3-4% a year.

The exact same meal I buy a lot at the cafeteria I visit went from $5.27 one year to $5.49 next year to $5.71 the year after that. I pay $655 in rent for a 1-bedroom compared to $540 seven years ago for my first apartment. I have a credit card with a 6.4% APR, why would they even offer this if inflation was 20%? I could max the thing out and make money. When that lady burned herself with her coffee at McDonalds in 1992, that coffee cost 49 cents. Today it's 99 cents, consistent with average inflation of 3.5% over 20 years.

Is all this anecdotal? Sure, but I'm not seeing 20% inflation.