The AP is reporting that the Congressional Budget Office will project a $1.2 trillion annual deficit for 2009, more than double the $455 billion record set last year. Yesterday, Barack Obama predicted “trillion-dollar deficits for years to come.” I really wonder when we’re going to start having a serious national debate about inflation. When the Federal Reserve decided to lower interest rates to near zero last month, the FOMC statement said that, “In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.” In their judgment, the main focus should be on jump-starting the economy, and they’ll deal with price stability down the road if they need to. But when the government is simultaneously employing expansionary monetary and fiscal policy, issuing an unprecedented level of debt, and introducing more and more government programs without any plans to pay for them, it will have to print a massive amount of money, and I have a difficult time seeing how serious inflation can be avoided. And historically, inflation has often proved harder to lick than a simple economic downturn. Most recently, we had stagflation in the 1970s, and Paul Volker had to choke us into a major recession in the early 1980s to get inflation under control before the Reagan tax cuts kicked in and the economy was off to the races. People may make counterarguments as to whay we shouldn’t be worried about inflation, but given the potential consequences, it should be a part of the conversation.