There’s been a lot of hoo-ha over the efforts of the Federal Reserve, the Treasury and Congress, all spending trillions of dollars to help the economy and markets stabilize and recover. But let’s spare a thought for those who think this spending, regardless of its good intentions, is excessive and counterproductive. Heresy, you say. Well, read on.

In The Wall Street Journal Thursday, Tim Congdon, chairman of the Institute of International Monetary Research at the University of Buckingham, England, is flat out worried about inflation. I’ll summarize here.

The Fed has poured money into the economy at the fastest rate in the past 200 years in an effort to prevent a collapse in the quantity of money, which caused the Great Depression. Unfortunately, this overreaction could turn out just as poorly; history suggests the U.S. will soon see an inflation boom, he writes. Deposits at U.S. banks have risen 6% in just three weeks, the fastest rate since the Revolutionary War. The problem now becomes financing the much-enlarged budget deficit.

Congdon thinks the deficit could hit $3 trillion and others say $4 trillion. To a large extent the gaps will be financed by the banking system, with monetary financing of the budget deficit adding to the amount of money in the economy.

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