I’ll even lower the deadline from never to 20 years, cause I’m nice like that.

So, yeah. I don’t think that prediction is very likely.

“Hyperinflation is generally associated with paper money because this can easily be used to increase the money supply: add more zeros to the plates and print…”
“While in peacetime the deficit is financed by selling bonds, during a war it is typically difficult and expensive to borrow, especially if the war is going poorly for the government in question.”

Does the latter sound familiar??? Cheers!

@Philip – good points – that is one area where dramatic improvements economically could be made if the powers that be put their mind to it. Although it seems like someone will demonstrate zero point energy before the US ever reins in its military spending.

@FinancialCents – that reminds me; hyperinflation sounds really dramatic but I remember reading or hearing that inflation doesn’t even need to get that high for it to occur. I think the number is seemingly innocuous, like 10% or 9% (someone correct me!). Because it sets off new spirals – initial inflation increases don’t need to be that high to do major damage.

The unfunded liabilities of Social Security were huge back then! In 1981 the forecast was that the trust fund would run dry before the end of 1983. It was bad enough that a special commission—chaired by Alan Greenspan— was created to come up with a solution.

The commission’s solution, enacted in 1983, raised the retirement age for most people to 67 (from 65), raised the tax rate, and indexed the ceiling for inflation.

@MoneyEnergy:

The key to balancing the budget that time was a particular kind of government gridlock. Clinton raised taxes modestly, then a long economic boom took off, spurred by recovery from the recession of the early 1990s, the ongoing effects of free trade, globalization, declining military spending after the fall of communism, etc. (The dotcom bubble came later.)

The boom boosted tax receipts, but the Republicans won Congress, making it impossible to agree on what to do with the money. Clinton blocked tax cuts. The Republicans blocked new spending. The result was a surplus.

There’s no reason to expect another accidental surplus, but we now have a model of how to get to one if we want to: modest tax increases combined with a spending freeze can do the trick, once we get the economy back on track.

It is true that we’re not going to get a fresh boost of free trade and globalization—that string is about played out—but we could certainly benefit from declining military spending again.

Paying down any consumer or variable rate debt most definitely.

@Maria – I’d still want to pay down my mortgage as fast as possible, too. I don’t think there’s any harm in getting out of debt early. Even if there was hyperinflation, your wages wouldn’t necessarily hyperinflate along with it (or not at first). Yes, the coming social security demographic problem seems to be the elephant that just stepped into the room – it wasn’t there in the 80’s.