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A Billion Here, A Trillion There: Calculating the Cost of Wall Street's Rescue - Knowledge@Wharton

Marston and Blume, too, argue that these future costs present an immense problem. Dealing with it will require some combination of raising taxes or cutting benefits -- or "monetizing" the problem. Essentially, that means printing money to raise inflation, which should push tax revenues up (although higher inflation also could raise Social Security and Medicare expenses, offsetting the benefit). "With the liquidity that's being pumped into the system, and the loose credit that the Treasury and Fed are trying to create, down the line we are going to have to worry about inflation," Marston suggests.

Nearly all economists agree entitlements are a looming threat, according to Marston. "It doesn't matter what the political persuasion is. We are much more worried about the entitlement issue than we are about the cyclical deficit and interest rates."
Many experts' faith in the predictive value of interest rates has been shaken over the past two years. Deficits and debt do matter -- if not today, someday, Smetters says.

To economists, the most frightening fact is that the enormous cost of today's financial rescues is just a drop in the bucket.

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