Two major financial backers of conservative political causes, Art Pope and David Koch, were feted Thursday afternoon at a reception just blocks from the Republican National Convention.
Pope, a Raleigh retail executive, and Koch, a Kansas industrialist, were honored by Americans for Prosperity, an organization they started and which they both continue to serve as top officers – Pope as chairman and Koch as the foundation's chairman. ...
Both Koch and Pope spoke briefly to the group. ...
Koch said that he was very concerned that the deficit would cause runaway inflation and “this country will see a terrible collapse. I don't want to see this country to collapse like what Greece is doing.''
Actually, a deficit could cause interest rates to rise as the government borrows money. Higher interest rates are likely to decrease investment spending which is likely to lead to lower inflation as aggregate demand falls. While "crowding out" is a concern, current deficits have not yet raised interest rates.
Mr. Koch is probably thinking that the U.S. government might start printing money to pay its bills. While this has a non-zero probability it is not likely. Countries don't start printing money until they are no longer able to borrow it by selling bonds and are unable to raise taxes (because people don't have incomes to tax).
