Deficit Reduction by borrowing, no tax increases (and free pie too)

The President continued his policy to destroy the financial underpinnings of this country (see “mandate”) more or less unabated, today “taking payroll tax increases off the table” to fund his (insane) social security privatization scam… scheme.
Obviously, if we (1) won’t raise payroll taxes and (2) won’t reduce social security (or medicare) benefits, and (3) won’t increase other federal taxes, then that pretty much leaves (4) massive borrowing as the only available option to fund proposed increased costs of social security administration envisioned by the private account gifts to Wall Street… er, younger workers.
The issue, of course (the real issue) is whether our financial overlords in Beijing (as opposed to our political overlords in Riyadh) are willing to buy another couple of trillion in funny paper. Frankly, fans as they are of a government that puts Mitch McConnell’s wife in the amusing position of Secretary of Labor, there is a limit to the PRC’s indulgence. And two trillion more dollars of unnecessary deficit is almost certainly going to take us to and past that limit.
And therein lies the problem: we have been on borrowed time and money for so long, we think there is no limit. Well, there is a limit. We’re watching it now as the dollar is collapsing in every market in the world (except artificially pegged Beijing, and a few outliers like that). After a while, even though it encourages us to buy Chinese tchotchkes, Beijing will not be able to sustain a yuan at levels that are really several times what a floating or market rate would sustain: they’ll literally be giving us the fruits of their slave labor… and they surely don’t want to do that.
Interest rates, of course, must increase, to draw foreign capital here. This will, automatically and inexorably, reduce home values, and eventually, the vicious cycle of economic contraction will get going. And it won’t be pretty.
The Bush Administration gives us its usual answer to the foreboding economic conditions: “bring it on”.
My financial advice remains pretty much as you’d expect: invest generously in canned goods, bottled water and ammunition.