A River of Inflation is About to Bust the Dam
We all know that big corporations - including lots of banks - have gotten millions of taxpayer dollars. Mortgage rates are remaining low and short term interest rates apparently going to stay that way for a while.
It sure sounds like cash is everywhere. So why are so many individuals, businesses, and corporate giants going broke? And American home foreclosures just keep rising.
Billions of dollars - borrowed and printed - have been injected then bottled up behind a dam that is weakening and ready to burst. The people in charge do not seem able to figure out how to regulate the flow as in a proper dam. The obligation for future generations is astonishing. Dams cannot hold higher levels that their design though. When the hole finally breaks through the result is - inflation that rivals 3rd world countries.
Money, right now anyway, is not going anywhere. So cash flow and asset appreciation are dampened. And all the rest of the transactions that keep a capitalist economy oiled just are not happening. Ask Tom Persinger, who went from 60k a year at GM to 24k as a nurses aid. But he is one of the luckier ones. There is a 10 percent unemployment rate so one in ten people arent spending. Take that a step further. If you look at unemployment the way they did before the Clinton era voodoo, it is closer to 21% - sounds like the Great Depression. The loss of spending and thus income is staggering.
California is issuing IOU's, Rhode Island shuts down for a couple of weeks - and all the rest of the states are scrambling to raise taxes and cut spending. Nothing is secure anymore.
Nervous about the stock market? Just when it seems equities are stabilizing you and every other investor gets faked out when they dump again. Real estate, though housing markets seem to no longer be in free fall, is still causing anxiety and hand wringing.
A delicious irony is apparent when you consider that the economies of Germany and France my be recovering faster than America. By any measure they have long been tipping to left with socialism being way more acceptible, for now at least, than the USA. And those cynical professional bond traders are saying that the Fed is ensuring low interest rates by cranking out more money to meet our mind boggling present and future political obligations.
So the bankers are caught in a Hobson's choice where the only logical thing is to do nothing and reap the taxpayers largesse. After all, if they loan out all that money so people can buy assets that are not going to appreciate soon and jobs are still hard to come by then they lose.
The tragic consequence of all of this gross mismanagement is what third world countries usually experience - very, very high inflation. The government has borrowed to oblivion and the money is being printed with abandon. The banks must eventually let that money go. When is does we will be paying dearly. - 23229
It sure sounds like cash is everywhere. So why are so many individuals, businesses, and corporate giants going broke? And American home foreclosures just keep rising.
Billions of dollars - borrowed and printed - have been injected then bottled up behind a dam that is weakening and ready to burst. The people in charge do not seem able to figure out how to regulate the flow as in a proper dam. The obligation for future generations is astonishing. Dams cannot hold higher levels that their design though. When the hole finally breaks through the result is - inflation that rivals 3rd world countries.
Money, right now anyway, is not going anywhere. So cash flow and asset appreciation are dampened. And all the rest of the transactions that keep a capitalist economy oiled just are not happening. Ask Tom Persinger, who went from 60k a year at GM to 24k as a nurses aid. But he is one of the luckier ones. There is a 10 percent unemployment rate so one in ten people arent spending. Take that a step further. If you look at unemployment the way they did before the Clinton era voodoo, it is closer to 21% - sounds like the Great Depression. The loss of spending and thus income is staggering.
California is issuing IOU's, Rhode Island shuts down for a couple of weeks - and all the rest of the states are scrambling to raise taxes and cut spending. Nothing is secure anymore.
Nervous about the stock market? Just when it seems equities are stabilizing you and every other investor gets faked out when they dump again. Real estate, though housing markets seem to no longer be in free fall, is still causing anxiety and hand wringing.
A delicious irony is apparent when you consider that the economies of Germany and France my be recovering faster than America. By any measure they have long been tipping to left with socialism being way more acceptible, for now at least, than the USA. And those cynical professional bond traders are saying that the Fed is ensuring low interest rates by cranking out more money to meet our mind boggling present and future political obligations.
So the bankers are caught in a Hobson's choice where the only logical thing is to do nothing and reap the taxpayers largesse. After all, if they loan out all that money so people can buy assets that are not going to appreciate soon and jobs are still hard to come by then they lose.
The tragic consequence of all of this gross mismanagement is what third world countries usually experience - very, very high inflation. The government has borrowed to oblivion and the money is being printed with abandon. The banks must eventually let that money go. When is does we will be paying dearly. - 23229
About the Author:
My Market Friend is Paul Kluskowskis's blog. It is packedwith up-to-date financial, economic, and market news. He is a managing financial advisorat T/R Financial Management Group. He has been in the business for over 10 years and writes extensively with numerous articles and three ebooks to his credit. Paul also manages the PINGP Work Control Center Mgr at Xcel Energy. You can gethis financial advice and newletter at My Market Friend
posted by X - Men @ 7:12 AM
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