I think that the key is the fact that dollars aren't backed... at some point, when they were backed, it made a difference. Now, the tax dollars are essentially burnt, as they aren't directly channeled to the projects that are funded. They are immediately credited by keystroke from the central bank and the reverse is also possible (even if it is a bad idea to do it in a big way...).
If tax dollars were actually required to pay for things, then deficits wouldn't be possible... and the entire system would have collapsed a long time ago when it became clear that there is NO way that the United States would ever clear its debt through spending cuts and/or taxation.
Definitely spending too much does contribute to inflation... I had recently read a passage that highlighted for me how the different types of spending the same dollar amount has different effects on inflation (and I also learnt that inflation modelling is already done, but just ignored by politicians in favour of the simpler deficit model). I'll photograph the passage when I get home.
It also highlighted the problem with the deficit model... as spending needed to be offset... but that both spending AND offset could be inflationary, and that wouldn't be taken into account as long as it zeroed out in the deficit model.
Agreed (I think...) about your last point, although, I do wonder if a different model was applied then the inflation effects could have been less severe as it would have affected the different ways of spending.
Anyway, still learning and reading... I am curious, but I'm pretty sure that the deficit model is still too simplistic and doesn't apply in a fiat world. Perhaps it would have worked in a hard-currency world, but we left that behind a long time ago.
I'll drop the photos later... it is interesting.