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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: GROUND ZERO™ who wrote (89288)	8/3/2009 9:27:53 AM
From: ayn rand	1 Recommendation Respond to of 94695

Washington is Clueless About Inflation It's unfortunate that nobody in Washington understands what the true definition of inflation is. Inflation is the expansion of money supply from the printing of money, low reserve requirements, and the Federal Reserve's open market operations. The hyperinflation in Germany in the 1920's as well as in Zimbabwe today was caused by the government running their printing presses non-stop, exactly like the U.S. is doing right now. It just so happens that our massive printing of U.S. dollars has come at the same time as the biggest bursting of any bubble in world history. Therefore, nobody will see inflation in the form of rising prices until excess inventories are done being worked off. Eventually there will be too many dollars chasing too few goods. Remember, none of the stimulus dollars are being spent for the increased production of goods. Manufacturing jobs are way down and the only area of rising employment is non-productive government jobs. The U.S. government wants inflation because inflation benefits debtors and harms creditors, with the U.S. being the largest debtor nation in the world. If the U.S. wants price inflation and the Federal Reserve takes every step in their power to create it, like they are doing today, eventually price inflation will arrive but won't be possible to control. If you turn your shower on and the water is cold, and you turn the knob towards hot and the water stays cold, and you keep turning more and more towards hot, eventually burning hot water will come out. That's exactly what's happening today. Because we don't see price inflation, the Federal Reserve thinks they are in the clear to keep interest rates at 0% for an extended period of time while rapidly expanding its balance sheet at an unprecedented rate. They should in fact be raising interest rates right now to counteract the price inflation that will soon arrive. Just like how all you hear on television today from the mainstream media is about the current recession, rising unemployment, foreclosures, etc., all you are going to hear about a few years from now is massive inflation and what must be done to stop the falling U.S. dollar. Well, massive inflation is already here today, just because we don't see it yet in the form of rising prices doesn't mean we don't need to prepare for rising prices now. Do you really believe gold will still be trading below $2,000 per ounce when we start to see rising prices and the media wakes up and begins warning Americans about massive inflation? Bernanke said last week that he had to "hold my nose" and bailout so-called "too big to fail companies" like AIG because he said, "I was not going to be the Federal Reserve chairman who presided over the second Great Depression". By saying this, Bernanke admitted that he is short-sighted, just like everybody else in Washington today. Bernanke's reappointment is coming up and he has destroyed the value of our currency underneath the surface, just so he can keep his job. The Federal Reserve's intervention into the economy is what made the Great Depression great, by increasing the duration of it. Today, Bernanke is injecting the economy with heroin to keep it propped up for now, but eventually we will see a great depression that will be many times worse than the 1930's, combined with massive inflation that will be many times worse than the inflation of the 1970's. Treasury secretary Geithner reassured China last week that we are working to get our budget deficit under control. With a $2 trillion budget deficit likely this year and the government looking to greatly expand its size with socialized health care reform and new "cap and trade" regulations, it will be impossible to reduce the budget deficit. As the dollar begins to collapse, government workers and soldiers will demand higher wages just like what happened in Zimbabwe, and the rate at which we print money will increase. Interest rates will have to go much higher and we will be burdened with massive interest payments on our national debt, which will have to be monetized. There is no good outcome of this situation, but the best way out is to cut government spending and the budget deficit now while increasing interest rates immediately. inflation.us