Europe has arrived at where we are headed. In the south of the old continent - Spain, Italy and Greece - the new austerity has begun to imperil the social order. In the north, the disposition to be taxed to pay for other nations' social safety nets is disappearing.

With government in the U.S. at all levels consuming 40 percent of gross domestic product, and taxes 30 percent, taxes will have to rise and government spending be controlled or cut. The alternative is to destroy the debt by depreciating the dollars in which it is denominated - i.e., by Fed-induced inflation.