Who put the lunatics in charge?

As boom- and bust-prone as high finance always has been and remains, the greatest systemic risk to our economy is not Wall Street. It’s the growing federal debt (and weakening dollar) being enacted by those Washington politicians — the ones who want to protect us from Wall Street.

Who will protect us from the fiduciary irresponsibility going on in Washington?

In June, the Congressional Budget Office published “The Long-Term Budget Outlook,” its summary reading in part: “The federal budget is on an unsustainable path — meaning that federal debt will continue to grow much faster than the economy over the long run. … Rising costs for health care and the aging of the U.S. population will cause federal spending to increase rapidly. …

“… Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress income growth. … The accumulation of debt would seriously harm the economy. Alternatively, if spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the United States (highest marginal income tax rate so far: 94 percent, in 1944-45). High tax rates would slow the growth of the economy, making the spending burden harder to bear.”

And yet the same Congress and president who want to stop the banks from taking too much risk cannot stop themselves from ever more deficits. Indeed, so intoxicated — nay, hypnotized! — by debt is the current government that it is not even proposing to try to cut back.

The “loonies” in charge know they can’t increase taxes to the level required to pay back the debt. Instead they’ll weaken the dollar and let inflation take care of it. Think the late 70’s stagflation was fun? Just wait.