How is it possible that the government can spend almost twice as much as it takes in without having high inflation?

The fact is that over a long period of time, it can't. In the short run, which can be a few years, the government can paper over its fiscal irresponsibility by expropriating most of the productivity gains in the private sector through regulatory and central bank actions.

This is precisely what has been happening in the United States.

The recent gains in productivity growth have been taxed away by government. The increases in taxes are all non-legislated taxes, largely invisible to most people. There are four of these hidden taxes.  All four of them are huge and hugely destructive.

Liberal media journalists are all a-flutter about columnist Armstrong Williams being paid $240,000 by the Department of Education to promote the No Child Left Behind program. They are whipping themselves into a moral dudgeon over a conservative black writer besmirching his journalistic ethics. TMS, the outfit that syndicates Armstrong’s column to papers throughout the country, canceled him.

While they are so morally incensed, maybe now these folks can start investigating their brethren who are taking bribes from Saudi Arabia.

A year ago last January, the editor-in-chief of the prominent Saudi newspaper Al-Riyadh, Turki Al-Sudairi, disclosed that the Saudi government dispenses millions of dollars a year in bribes to journalists around the world to write articles sympathetic to Saudi Arabia and to attack Israel.

French newspapers are virulently anti-Semitic as it is, but Saudi money insures they stay that way. Hundreds of journalists, reporters, commentators, and talking heads from scores of publications and media outlets in dozens of countries are on the Saudi payroll. It’s a very sophisticated operation, and world-wide in scope.

That scope includes America - especially America.

Be careful what you wish for. The euro's founding fathers dreamt of a superpower currency to match the dollar, freeing Europe from US monetary hegemony. Charles de Gaulle grumbled that America enjoyed an "exorbitant privilege" as holder of the world's reserve currency, able to get away with murder. Now they have one themselves, only to discover that it is a curse.

China's central bank has been buying fistfuls of euros as it accumulates a world record $3.7 trillion in foreign reserves, and its motives are not entirely friendly. So have the central banks of Russia, Brazil and the Middle Eastern oil sheikhdoms, all aiming to cut reliance on the US dollar, part of a $9 trillion surge in reserves leaking, with tidal force, into the euro.

In China's case, it is deliberately driving down the yuan to capture export share. You could say China is exporting excess manufacturing capacity to Europe, or, in plain talk, exporting unemployment.

The euro exchange rate is far too high for two-thirds of the euro states, a key reason why unemployment hit an all-time peak of 12.2 per cent in September. It is pushing Europe's crisis states into Thirties-style deflation, making it almost impossible for Italy, Spain and Portugal to dig their way out of debt.

In times past, political leaders would lay out their domestic and foreign policies in clear, coherent terms. President Obama talks about getting our fiscal house in order but fails to propose any meaningful spending cuts.

His proposals to increase the tax rate on the top 2 percent of taxpayers would fund the government for eight days - assuming no behavioral change by those whose feathers are being plucked.

In the real world, we know people will spend a great deal of time and effort to avoid paying high marginal tax rates. In high tax states such as California and New York, high earners will be expected to pay marginal tax rates well over 50 percent.

We only need to look at what happened in Britain after the former Labor government of Gordon Brown increased the top rate to 50 percent. In the tax year 2009-10, more than 16,000 people declared an annual income of more than 1 million British pounds. This number fell to 6,000 after the tax rate was increased, partially because two-thirds of those who earned 1 million pounds or more left Britain to avoid the top rate.

George Osborne, the current finance minister, just announced that the Conservative government will reduce the rate in order to obtain more revenue.  Why can't -- or won't -- Mr. Obama figure this out?