Posts Tagged ‘inflation’

Government Intervenes Deficit Spending: Will this help?

May 31, 2009
Or will it end all hopes of recovery?

According to CNN, the government has pushed the debt over$9,542,000,000,000 with the intention of stimulating the economy. The large majority of this money is trying to stabilize banks and “make credit more accessible”. The logic behind this is that in times of economic growth, interest rates are low.

However, interest rates cannot sink below inflation rates without massive bank failure. This is because the rate at which the real value of loans decreases due to inflation and the rate at which the real value of loans increase due to interest balance when these rates are equal. So, banks can only make wealth when their interest rates are higher than the inflation rates.

We should now realize that the intervention in our banking industry will NOT help the banks, but rather cause permanent damage. While curing temporary illness, the government has injected a poison: inflation. With an approaching fivefold increase in total currency in circulation and with artificial competition in the banking industry, not only will inflation rates increase rapidly, but banks will not be able to raise interest rates to keep up.

The federal government has already applied regulations that will prevent the banking industry from increasing suddenly and steeply. The result of this will be bank failure, followed by hyper inflation and ridiculous interest rates, and then ultimately the fall of the global economy.

It is a sad thing to predict, but no other result can come from this print-and-spend government and its attempted control of the credit market.

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Obama’s Approval Rating Rather Stagnant

May 12, 2009

Contrary to popular belief, Obama’s approval rating has not fallen much.

According to Real Clear Politics (1), Obama’s approval rating has only fallen from 63.3% on January 27th to 62.2% today.

Perhaps people have became apathetic. Sinse the election, most of the Obama supporters have not changed their minds. However, from the same dates used earlier, his disapproval rating has increase by over 50% (from 20% to 30.4%). Despite this, Obama’s approval rating has not changed. It was only below 60% for one day (March 4th).

We can make several inferences from this data. First, we can conclude that many of the people who had been open to Obama’s policies changed their mind. Second, we can conclude that most of Obama’s supporters are either apathetic towards government and politics or strong followers of his ideology. Finally, we can conclude that the press that most of this majority receives is still proudly endorsing Obama.

These statistics, if nothing else, show that people like to just close their eyes and pretend nothing is happening, even though they’ve been set up for hyperinflation and an evegrowing debt.

(1) http://www.realclearpolitics.com/epolls/other/president_obama_job_approval-1044.html

Inflationary Stimulus

March 26, 2009

According the the Federal Reserve Board, the federal government has nearly quadrupled the money flowing through our economy in the last five months…

While in the short term programs and people can pay down their debts, in the long term price inflation is expected to reach the double digits according to Dick Morris. What does this mean? Well, all those who were saving their money for harder times will see the value of their savings drop quickly. Further, interest rates will rise, making it harder to get a loan and start a business.

So, with diminishing savings and a halt in entrepreneurship, what can we see happening soon? Well, nothing good.

Obama: A Dedicated Follower of Keynes

March 12, 2009

Keynes was a macroeconomist from the 1900s. He lived in a time of deflation and recession. He argued that the solution to both problems was to print money and spend it on infrastructure. This would stimulate the economy and put an end to deflation. Sound familiar?

Well, not really. While Keynesian Economics work in the short term with economies in recession due to deflation. However, we aren’t. The world is in recession for inflation and government failure (when the government intervenes in market failure, creating a vaster mess than before).

So, when Obama believes this policy and defends it publically, we must remember that now is not the time, and while ‘yes we can’, we’d better not.

The Folly of the Euro

March 5, 2009

While giving up one’s sovereignty seems to be a popular idea, it is not a prosperous one.

A while ago, as many as 16 European countries adopted the Euro. This would encourage trade throughout Europe, as all the goods are bought with the same coin. This benefits tourism and is a large step towards globalization.

However, when a nation gives up its sovereignty, other countries often make decisions that ruin it. The current issue at hand is the Euro, which is rapidly inflating (3.9+ % per year compared to the U.S.’s 2007 rate of 2.9% per year).

The European Central Bank was created to control the Euro, now the most used unit of currency in the world. There are mandates to control inflation; however, these mandates are ineffective and inflation is a growing concern in countries that depend on the Euro.

There is little control on the EU’s bank. As inflation rises, so does the price of everything. All of Europe suffers together, not for the first time in history.

Economic Stimulation

March 1, 2009

History has shown us that liberal governmental economic policy does not help the economy (the New Deal, Jimmy Carter). Well, let’s see what it was that they did.

Conservatism was weak in the 1920s and panic lead the nation from recession to depression.

The New Deal (which extended the Great Depression  years) created government jobs, taxed the rich, and tryed to control the economy through central economic planning. He ended the gold standard, forever inflating the dollar. He set minimum wages and prevented people from working more than so many hours a week. He also created the now infamous Fannie Mae.

The result of the New Deal was… nothing. The unemployment rate lurched between 13%. and 24% until WWII.

Carter, on the other hand, tried to control the free market indirectly. He cut imports on foreign oil. His attempts to control the United States energy resulted in the still-remembered fuel-shortages. Carter essentially ruined the economy.

Reagan, on the other hand was successful at economic recovery. With large tax cuts and deregulation, he brought down inflation and unemployment.

History seems to speak against Obama, whose policies (government jobs and central economic planning, as well as regulation) resemble Roosevelt’s and Carter’s. Their policies failed.

As George Santayana once said, “Those who cannot remember the past are condemned to repeat it.”

Remaking Society

February 26, 2009

As we go further into debt, I have a new solution:

The government could just print out money and mail it to people’s houses using government mail. Then the people could use that money at a government supervised store to buy everything they need!

Everyone wins: the shops get money, the manufacturers get money, and the little guy gets money and lives to tell the tale. And the best part is, NO WORK! What a wonderful idea!

But wait a minute. This is a terrible idea! Printed money has no value, and the more money in circulation, the less its value.

Government is the only thing responsible for inflation. Failing to spend less than budgeted, the governent prints money and throws it into the system in packages it believes are stimulus. On the contrary, the government is raising the price of everything and lessening the value of the dollars in the hands of taxpayers and even in the hands of government.

This alone wil negate any possible positive effects any money printed, whether they call it stimulus or something else.

And where is this empty money going again? Well, not even your congressmen know.

Too Late Now.

February 14, 2009

Well, the pork pack passed the senate last night.

Obama will sign the bill in two days.

It is important to point a few things out:

Not one bit of it will permanently help the economy. Parts will not take effect for years. Most of it directs federal money to construction, which of course dumps money into the construction industry, creating  jobs. But these jobs are only temporary. And afterward, we have a bankrupt nation and a bunch of beautiful empty buildings.

When we divide the 789,000,000,000 dollar pork pack between the 15,000,000+ doctors, lawyers, and businessmen that compose the top 5% income group in our country,we notice something: This pork alone costs 1 out of 20 people $52,600 dollars. And this is only the first step. We need to remember that this $52,600 is coming from people that make as little as $250,000 a year. Many of these people are already having trouble paying their mortgage and keeping their business alive.

So, comrades, even though this isn’t directly hurting you and you can now enjoy an extra $8-13 a week, remember: more jobs are going to be cut. Inflation will skyrocket.

But don’t worry. Change is coming.