A presentation on "New Perspectives on the U.S. and Connecticut Economies" made by Don Klepper-Smith, Chief Economist & Director of Research at Data Core Partners LLC, on March 24, 2009, to the Rell administration in Connecticut projected an economic recovery as early as the second half of 2009.
Certainly this is good news. Credit should loosen up and many of us will keep our jobs who might otherwise lose them were it not for the economic stimulus. Perhaps there will be some more jobs created. But, the early recovery and the dissipation of the housing crisis and credit crunch come with a price. That price is hyperinflation. "At some point, inflation returns with a vengeance," the report states.
The trillions of dollars being pumped into the economy by the Federal Reserve and the projected spending by the Obama administration in Washington will cause a diminution of the dollar's purchasing power and effectively give a pay cut to all working and fixed income people.
The report also states the weakened dollar will make U.S. assets appear cheaper to foreigners, thereby giving greater control of U.S. assets to foreign interests. So hang on to your hat because we will be working for China soon.
The inflation raises the price of housing at the expense of people with money in the bank. When we get a raise that pushes us into the next tax bracket, it most likely will not offset the decrease in buying power caused by inflation. With a progressive tax system like ours, inflation is a way to raise our taxes without passing a law to do so . Inflation also allows debtors to pay off their debts with cheaper dollars, so the lenders get cheated in the process.
This is all very clever on the part of our leadership. Inflate the dollar by increasing the money supply, spend a lot of money on your constituents/special interests, sell the country to foreign interests, keep people borrowing money on their home's equity for a few more years, get re-elected in 4 years and then watch it all fall apart.
The Democrats were - and continue to be - a major contributor to our economic woes. Despite this fact, they were elected by a land slide. So far the Democrats have gotten away with their fiscal irresponsibility. This out of control spending is setting us up for an even bigger fall down the road. So folks, buy gold now because those green backs in your wallet will not be worth much soon.
http://historyofrepublicanparty.blogspot.com
http://www.pippoproducts.com
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