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Categories - Copywriting - Shopping - Free Online Business Help - Telecommunications Services Articles: Finance - Hold On! Inflation is Coming! When money is created without a corresponding
and equal increase in the GDP, it drops in value. The federal government has been increasing the money supply fairly steadily some time in order to pay for its wars and spending on its favorite pork projects. The increasing national debt is a reflection of this. Fortunately, this increase in the money supply has been largely offset by resulting increases in the GDP as weapons and equipment has been manufactured for the wars, parks, and new buildings. However, the money supply has been increased by over 70% in the past three months while GDP growth has slowed almost to a standstill. This money has gone primarily to the banks that are doing nothing to contribute to the GDP. We have not seen drastic increases in prices yet, even though they are just now starting, because sales of existing inventory have slowed, as a result of the economic downturn, causing the holders of the inventory to have to reduce prices to sell it. This is the deflation cycle.
Next comes the inflation cycle. Once this inventory is gone, manufacturers will have to buy new inventory. Since the value of the dollar will have dropped, the manufacturers and retail outlets that can afford to will have to pay much more for their new inventories. The ones who cannot will have to simply close shop. Your Chinese made toy will suddenly cost twice as much.
Obama has once again increased the money supply with this stimulus. TARP increased the money supply and Geithner is planning on increasing it more with a new $2 trillion bank bailout plan. There has been no increase in the GDP and none is forecasted. Why would we want to give banks, which have proven that they can’t manage money and contribute nothing to the economy, more money to manage?
These two things, along with the increasing budget deficit, will push the money supply past a 100% increase. The additional government spending that is sure to come quickly will only make matters worse. Two years from now when stimulus money hits the streets and bridges, the wages earned from the jobs it creates will be worth half of what they are now and desperate people will be working for slave wages. They will not be able to survive on what the new jobs pay them and, by that time, millions more will be out of work. Nationwide, everyone's money will be worth less than half of what it is now. You will pay at least twice as much as you are paying now but your wages will not have doubled, if the increase at all. People who have been surviving on Social Security, welfare, and low paying jobs will no longer be able to do so. Foreclosures and job losses will be much worse than they are now.
The many states that are already suffering from this money mismanagement will have to take everything that their population earns, put themselves more in debt, secede from the union and create their own money, or cease to exist. The only way that we can preserve the Republic is by letting the banks that have brought this upon us close and by doing things like this that don’t involve creating, borrowing, and spending.
If Obama or anyone else in the government is planning on spending more money that he doesn't have, no matter what he wants to spend it on, it will only make the disaster much worse than it has to be.
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