http://z6.invisionfree.com/Bill_Still_Reforum/index.php?showtopic=334
If congress balanced the budget, the money supply growth would stop (unless the fed decides to buy something else). If congress maintains a zero deficit, there would be no increase in money supply, inflation would be zero. If congress ran a surplus, then there would be a contraction in money supply. The Fed would probably sell debt and there would be deflation.You have to understand, congress will never run a surplus for a long time. The national debt is directly proportional to the money supply. The fed will always buy about 10% of it. Banks though fractional reserve will create the other 90%, the money to buy all the treasury bonds.
-inflationtax
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