Inflation Nation


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Do you remember those old cartoon shorts that were like educational infomercials for kids?  There was one that taught the youngsters about the process of a bill becoming a law.  Then there’s one that I remember from my childhood that went something like “Conjunction junction, what’s your function?”  Well, with all the financial problems our economy’s gone through this year, they may need to do a new one that goes something like “Inflation station, here in our nation”.

Earlier in the year, the economy seemed to be just flying along with nary a problem.  Yes, there were some bumps here and there in the road, but unemployment was low and, for the most part, folks were paying their bills and there appeared to be no storms on the horizon, at least to most of us.

However, to those who were carefully watching the situation, serious problems were evident.  Things like the mortgage crisis, banking fiasco, and the automobile company problems were not a surprise.

Over the last few months, the dollar had actually rallied by about twenty-four percent.  Now even that small bit of good news is most likely running out.  The dollar peaked on November 21.  However, since then, it’s fallen against all sixteen of the most widely traded currencies and it’s likely to fall even further as noted by this quote from John Taylor, chairman of New York-based FX Concepts Inc.:

The dollar will go to new lows as the U.S. attacks its currency.

That’s quite a statement and it makes it sound almost as if this is being done on purpose.  I have my doubts as to whether or not this is an orchestrated thing but it’s not really something that should take anyone by surprise, considering the government has been printing money like it’s going out of style and handing out taxpayer dollars to mortgage companies, financial institutions, and now likely automobile companies.  We are already seeing some fairly serious inflation in the prices of the products that we buy every day.  If this continues down the path that I’m fearful it may go, we may see inflation like we saw during the Carter Administration, possibly worse.

In one of those “Duh!!!!!” moments, Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., said:

The government and the Fed cannot continue to talk about trillions of dollars of financing and expansion of the Fed’s balance sheet without the dollar going south.

What’s happened to our country over the last three months or so is really beginning to make blood shoot out of my eyes.  It seems almost unbelievable that President Bush, along with our elected Senators and Representatives in Washington could be so blatantly stupid.  The bail-out package passed just before the election and the further things they are planning on doing make it appear that is either just that or some kind of suicidal kamikaze run.

It’s time for Americans to wake up.  We are already in the midst of some troubled economic times but it’s time for everyone to wake up and realize just what is happening and what could happen if something is not done about it.  I fear that it may already be too late and that we could be facing some circumstances that this country hasn’t seen in decades.

For more information, please see “Dollar Staggers as U.S. Unleashes Cash Flood, Deficit (Update2)”.

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