Wednesday, February 27, 2008

What is going on with the Economy?

It looks very much like we are going to see 70's style stagflation soon and perhaps even worse. What is exceedingly frustrating is that we have not been able to learn from our past mistakes.
For the sake a brevity here is what is going on in America. We as a county and individuals are borrowed way beyond what is prudent and what we can repay. Our Federal Reserve refuses to correctly address the problem and we are heading into a full scale inflationary period with high unemployment. What we must understand is that the because of low interest rates the Fed sets, more people borrowed money. Every time we borrow money form the bank, the bank gets to create most of that borrowed money out of thin air. The more money that gets created out of thin air the more price rise. I'm sure you all feel this what trying to budget grocery and gas money. What is really happening is that our dollar is becoming worth less and less. The price of oil has not increased compared to gold. What the Fed does when it lowers interest rates is the *anti*-Robin Hood. That is steeling money from the poor and middle class through inflation to give money through low interest loans to Wall Street. Seniors with CD's are going to see their interest rates drop and at the same time they see their medical bills skyrocket. The middle class is going to see the yearly raises grow less than the cost of living. We are approaching a crisis situation in America, they few of us understand. Ron Paul addressed the Fed today. Listen to what he has to say. What we must realize is that government cannot outsmart to market, we will have to pay for our debts.



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1 comment:

Matsu said...

Speaking of inflation... did you see this story about 100,000% inflation in Africa? You can read the whole story here: http://economictimes.indiatimes.com/Inflation__100000_pc_50_mn_Zimbabwean_dollar_is_1_US_dollar/articleshow/2926846.cms

I saw this on Dr. Bacchus' blog.

Matsu