DAY OF RECKONING
Not too many years ago inflation was considered evil. Today it is a policy goal of the central bank and the government. They want a moderate level of inflation. Through inflating they hope to surreptitiously lower wages and create jobs. They also want inflation to reduce the government’s debt and enable more spending. They hope the new money they create will cause a burst of consumer spending.
This is the end game of a nation on the road to bankruptcy. We can’t pay our bills despite exorbitant levels of taxation so we print new money. Feeble attempts to trim government spending are a failure. This runaway spending can’t be controlled and left wing politicians insure it will never be significantly reduced. The government borrows $.46 of every dollar it spends. That’s so much it must turn to the Federal Reserve for money. They are printing close to $100 billion a month to give to a Treasury that may not be able to borrow elsewhere. Foreigners have become net sellers of our debt thus compounding our borrowing problem. Soon the printing presses will be running 24 hours a day (actually money creation is done by computers within seconds).
Over time the facts about QE, debt, deficits and inflation have become background noise for most Americans. They don’t understand it, they certainly don’t fear it and they really don’t care about it. It’s boring. Furthermore, they believe nothing bad is going to happen and if it does the government will fix it.
Unfortunately time is running out for the dollar. Incessant money creation means the bond market must inevitably roll over and interest rates jump. When you desperately need money you have to pay the going rate even if usurious. A slowing economy means more monetary madness. Eventually the crowd will get a whiff of fear. The politicians and the Keynesians will try to explain it and make promises they cannot keep. Despite what they say and do, the markets are going to move against the dollar.
An era of permanent crisis is coming. The Federal spending mayhem insists we have runaway inflation. The government’s going bust and the repercussions should worry you. How high will they force taxes? What assets will be confiscated? Who will be blamed? What will the welfare recipients do when the subsidies stop? How far will the economy fall? Will our safety be compromised? Will our assets be taken?
A desperate government will do desperate things. They will justify expropriations in the name of the public good. You need to be one of the few that understands that this can happen. We’re long overdue for a comeuppance. The waste, the profligacy and the squandered treasure must be offset by an equivalent penalty. If everyone could see it coming then it would not happen. But nobody does and that’s a requirement of this pending disaster. This plague of economic retributions will soon be on us. There is no avoiding or placating it, though we will try. If you look for it you can see it coming.