THE SOARING INFLATION NOT EVEN GREENSPAN DARES TO TALK ABOUT!
Believe it or not....
The U.S. is Suffering Its Worst Inflation Ever!
You won't hear this from most analysts and economists, because they're looking in all the wrong places. From their narrow viewpoint, inflation begins and ends with a rise in the prices of goods and services.
They seem utterly ignorant of the fact that the Consumer Price Index is just one effect of inflation. And this poor understanding of basic economics can lead to disaster, just as it did in the late 1920's, when consumer price inflation was zero.
Austrian School economists will tell you that true inflation is defined as an expansion of money and credit in excess of economic activity. Plain and simple.
Now, because of the Fed's relatively easy monetary policy, money is as loose as ever. People are borrowing like crazy. Last year alone, ther was $2.33 inn additional debt for every $1 added to GDP!
As a result, prices are rising..dramatically. But not at grocery stores or retail shops where you'd expect. To see the effects of this unfettered money expansion, you have to understand...
Wall Street's Runaway Inflation
Dr. Krut Richebacher, the preeminent Austrian School economist, is one of the few people sounding the warning - the crucial issue today is not consumer price inflation, but asset inflation. What Wall Street calls a bull market is nothing more than an asset price buble.
He explains it this way: In healthy markets, the primary source of investment funds comes from savings. You take money that you've squirreled away and buy some stocks or bonds.
The economy grows. With luck, the companies you bought prosper. And your stock value increases proportionally. But is that that's been happening on Wall Street? Not at all!
When funancial assets are bought with nonsavings - that is, borrowed money - we get an inflationary price increase. Just look at a chart of the U.S. market for the last five years.
It's no accident that during the worst asset bubbles in history, consumer price inflation was near zero. That actually encouraged the loose monetary policies that opened the spigots.
Now, truckloads of money from the current credit expansion are bieng dumped into the stock market every day. Investors are desperately afraid to miss out on the market's runup. So they buy stocks on margin, take out a second mortgage, or max out their credit cards to buy mutual funds.
Do you think Alan Greenspan knows what's going on? No doubt. Is he going to do anything abouth it? Not on your life!
- taken from a Supplement to an investment newsletter. |
