Saturday, January 24, 2009

Trillions spent for what?

Obama and his cronies in Washington are going to spend trillions of dollars in "stimulus" in an effort to jump start the economy. Are they for real? These people have no idea what they are doing. The shortsighted outlook of our political leadership is what created this mess to begin with. Now, we are going to invent a bigger problem in the future by making stupid decisions today.

I decided to give you all a bit of a lesson since most seem to be educated by our ineffective school system. I am going to give you a website which I suggest you bookmark and return to frequently. It will allow you to converse about economic and financial matters somewhat intelligently. This will separate you from the masses since most get their economic ideas from the slobbering blowholes on television.

If you think that you are going to have a tough time making ends meet now, wait until we experience an inflation rate in the high teens. This is what we will see as a result of all these bailouts and stimulus packages. The government, in their infinite wisdom, is going to try to spend their way out of this mess. Unfortunately, it does not have the money to do so.

I want you to go to this link and read about inflation.

Notice what it says:

"If the money supply has been increased, this will usually manifest itself in higher price levels - it is simply a matter of time."

Where do you think the government is getting all this money? They are printing it. I imagine the money supply is increasing as quickly as they print it. That is what it means when they say "they are injecting the markets with capital". Simply, they are printing money.

We saw the effects of inflation on our pocketbooks when the gas prices shot up last year. While this was not due to inflationary pressures, the result was the same. People had less purchasing power because they had to spend more on a basic necessity. In effect, it cost people double to drive to work each day. They realized no more benefit for the extra money, only a higher cost.

I am preparing you for what is coming. The policies of those in Washington are going to create a similar situation. The rapidly growing money supply sets the standard for inflation to escalate when the economy does recover. Thus, any recovery will be sabotaged by inflation. This pushes the Fed to combat that animal by raising interest rates which stifles spending. And, we are in the cycle all over again.

People fail to learn from history. I am amazed that Obama is so naive for such an intelligent man. He claims to be a student of men like FDR yet he is following their same failed policies. Huge government investment has never worked in any country around the world. If it did, Russia (or other communist nations) would have economies that are roaring. Instead, their economies topple every couple of years. This is the model that Obama is following.

Now you have no excuse for being naive about these matters. The next time some meathead mentions how the government is going to spend our way out of this, ask him or her what they are going to do about the hyberinflation which will result.

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