A River of Inflation is About to Bust the Dam
Seems like there is a river of money flowing and headed for the falls. Hundreds of billions for corporate welfare. Short term interest rates at record lows. Mortgage rates are still better than any time over the past 30 years.
But foreclosures keep rising and folks just keep going broke. Why should this be happening? Is it not true that cash is being pumped into the economy?
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.
Though some money is starting to trickle out it still seems to dry up before it gets to producers, workers, and spenders. So capitalism as we like it is just plain anemic. Underemployed folks, like Tom Persinger who now makes 24k/yr as a nurses aid, have have pulled significant power from the economy. He used to make 60k/yr for GM before they got bailed out. He is relatively lucky though. Just under one out of ten Americans have no job at all so they cannot contribute earnings so that others have jobs. But the government is also manipulating statistics. Prior to the Clinton administration that 10% would have been closer to 21% unemployment which certainly echoes the Great Depression.
Every state government and most large cities are struggling to stay afloat. Temporary shutdowns, IOU's, and tax hikes - which as you know is counter productive in a recession are rampant. Even the security of working for the government at any level except the federal, is no longer the cushy job it once was.
The stock market has been head faking for quite a while. Just when you think a short rally foretells a recovery it dumps gains back to reality. Every other week you hear reports of the housing market leveling and coming back soon. To tell the truth, at scattered local levels that might be the case but overall the signs still are not solid.
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.
Bankers have decisions to make. Up until now the very large ones have chosen to keep the money you and I gave them to stimulate the economy as they work out their mergers and take overs. They are acting like bankers. Cannot really blame them because they know that during a recession assets take a while to appreciate and there are a lot of people out of work.
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. - 23221
But foreclosures keep rising and folks just keep going broke. Why should this be happening? Is it not true that cash is being pumped into the economy?
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.
Though some money is starting to trickle out it still seems to dry up before it gets to producers, workers, and spenders. So capitalism as we like it is just plain anemic. Underemployed folks, like Tom Persinger who now makes 24k/yr as a nurses aid, have have pulled significant power from the economy. He used to make 60k/yr for GM before they got bailed out. He is relatively lucky though. Just under one out of ten Americans have no job at all so they cannot contribute earnings so that others have jobs. But the government is also manipulating statistics. Prior to the Clinton administration that 10% would have been closer to 21% unemployment which certainly echoes the Great Depression.
Every state government and most large cities are struggling to stay afloat. Temporary shutdowns, IOU's, and tax hikes - which as you know is counter productive in a recession are rampant. Even the security of working for the government at any level except the federal, is no longer the cushy job it once was.
The stock market has been head faking for quite a while. Just when you think a short rally foretells a recovery it dumps gains back to reality. Every other week you hear reports of the housing market leveling and coming back soon. To tell the truth, at scattered local levels that might be the case but overall the signs still are not solid.
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.
Bankers have decisions to make. Up until now the very large ones have chosen to keep the money you and I gave them to stimulate the economy as they work out their mergers and take overs. They are acting like bankers. Cannot really blame them because they know that during a recession assets take a while to appreciate and there are a lot of people out of work.
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. - 23221
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 sign up for his financial advice and newsletter at My Market Friend
posted by X - Men @ 3:53 AM
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