>>>Of course with rates as low as they are those holding 15, 20 25 years should reasonably be able to expect a return comparable to the historical norm.
>
>If you pick 200% inflation over that period then by my math a trillion $ loan today effectively will become a 300b loan. Pick >1400% over 50years which is the historic property performance and the trillion $ loan effectively becomes 72B.
>
>Don't want to sound like a Dem but maybe now is the time to spend. Bring on the Hoover dams, the freeways, the civic infrastructure to create opportunity for the willing unemployed. Then allow inflation and time to reduce the burden, leaving only appreciating assets and a new generation whose kids get a chance to believe in the American dream.

We don't have time to wait for inflation to work it's magic and we cannot tolerate the risk. While Fitch, Mood'ys and S&P talk about debt downgrade, other ratings agencies and investors have already sent notice. PIMCO got completely out of US treasuries at the beginning of the year. Egan-Jones & Weiss have already downgraded US treasuries, explicitely stating the reasons are due to our massive debt not the debt ceiling fight. The interest hit that's coming if we do not get spending under control reduces or eliminates any theoretical gain from inflation.
http://www.businessinsider.com/pimco-out-of-us-treasuries--3-ways-to-bet-with-bill-gross-2011-3
http://www.ft.com/intl/cms/s/0/b13d5d56-b16a-11e0-9444-00144feab49a.html
http://www.thestreet.com/story/11186657/1/us-downgraded-to-near-junk-by-weiss.html?cm_ven=GOOGLEN

>To those who fret about government debt, consider the Hoover Dam: its mortgage was finally paid off in 1987, all $145M of it, which is > $2B in today's dollars though real construction costs would be *far* greater today. This makes the dam a great asset that provided many thousands of jobs at the time and continues to appreciate and provide cash returns to the taxpayer. Show me the victim.

The victims were the nation's middle class and poor who had to pay more for the various New Deal projects due to a regressive tax system disguised as "soak the rich" progressivism.
New Deal programs were financed by tripling federal taxes from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and so-called "excess profits" taxes all went up.

The most important source of New Deal revenue were excise taxes levied on alcoholic beverages, cigarettes, matches, candy, chewing gum, margarine, fruit juice, soft drinks, cars, tires (including tires on wheelchairs), telephone calls, movie tickets, playing cards, electricity, radios -- these and many other everyday things were subject to New Deal excise taxes, which meant that the New Deal was substantially financed by the middle class and poor people. Yes, to hear FDR's "Fireside Chats," one had to pay FDR excise taxes for a radio and electricity! A Treasury Department report acknowledged that excise taxes "often fell disproportionately on the less affluent."

Until 1937, New Deal revenue from excise taxes exceeded the combined revenue from both personal income taxes and corporate income taxes. It wasn't until 1942, in the midst of World War II, that income taxes exceeded excise taxes for the first time under FDR. Consumers had less money to spend, and employers had less money for growth and jobs.

New Deal taxes were major job destroyers during the 1930s, prolonging unemployment that averaged 17%. Higher business taxes meant that employers had less money for growth and jobs. Social Security excise taxes on payrolls made it more expensive for employers to hire people, which discouraged hiring.

http://www.cato.org/pub_display.php?pub_id=3357

Government in general is terribly inefficient at directing funds and investing. Funding must go through layers of approval and red tape (all costing money) simply to be deployed by a crony favoring system designed to get those in power re-elected rather than efficiently meeting a need or satisfying a consumer want. Those funds will be better and more efficiently allocated by the private sector whose focus is on the bottom line and who doesn't annually fund (with automatic increases) bad investments.