Skip to comments.Dick Morris: Coming next year: Obama's inflation
Posted on 03/04/2009 1:25:30 PM PST by 2ndDivisionVet
In the last five months, according to the Federal Reserve Board, the money supply in the United States has increased by 271 percent. It has almost tripled.
Have car sales tripled? Home purchases? Consumer spending? Corporate investment? Not only have they not tripled, they have all declined more sharply than they have since at least the recession of 1981-82, and perhaps since the Great Depression.
So where is the money? If it isnt being spent, where is it?
It is being parked, squirreled away. Consumers are using it to pay down their credit card balances, pay off their mortgages, reduce their student loans, make the payments on the car sitting in their driveway not the one in the dealers lot. Businesspeople are buying T-bills, investing the money and saving it. They arent spending, either.
But one day this recession despite Obamas best efforts will end and things will begin to look up again. Then we can expect all of this money to come out of its parking space and get back on the highway of commerce. All at once. The inevitable result will be double-digit hyperinflation.
Since the spending and borrowing splurge is not confined to Washington, but is being mimicked all over the world, the inflation will not strike just one country but will be global in scope. The first global inflation in our history (except, perhaps, right after World Wars I and II), it will confront our policymakers with yet another unprecedented challenge and send them back, once more, to their economics texts. There, they will find that the only remedy for global inflation is global recession, a la Paul Volker. Having just emerged from a ruinous depression, nobody will be in the mood for more unemployment, but that is just what will have to happen to cool off the inflation and break the inflationary psychology that is likely to set in.
The point of this gloom and doom is that all this pain is entirely preventable. It will be caused by Obamas excessive spending and trillion-dollar-plus deficits. This spending, of questionable utility in overcoming the current recession/depression, is so far out of line with what the economy can handle that it will do more harm than good when the inflation hits.
Proof that his spending will have little impact on the depression is the vast increase in money supply with no commensurate improvement in the economy. Providing money, via spending hikes or tax cuts, does not guarantee that the money will be spent. Tax cuts can be saved and spending increases, while surely spent once (on the initial project), can rapidly lose their multiplier effect as wage-earners on the government payroll bank their money just like those who get tax cuts will do. Getting out of this economic mess depends on consumer and business confidence, a faith that Obama is eroding with his looming tax increases as rapidly as he tries to kindle it with his excessive spending.
None of this should come as any news to Obama. He likely knows all this. But he is determined to pass his agenda of bigger government, nationalized healthcare and vastly greater spending even at the price of inflation and subsequent recession. He puts ideology first and the economy a distant second.
The stock market has figured out his priorities and is responding accordingly. One can only hope that voters also eventually realize what is going on.
I’d settle for sleeping in interesting times.
Velocity is way, way down as well.
Agree with others things mean money, but this was specifically cash being dumped in the market by the fed. Beck was talking about it in the vein that the promises made by Nixon for doing away with the gold standard have been tossed out the window.
But hell, there is so much manipulation going on who really knows what is going on.
This we do know — Obama lied, the economy died.
Dick Morris again gets paid for pap.
here's my question: if you have high job security, should you be spending money now in anticipation of this type of inflation?
hey Republican Party stand up for FREEDOM its a all out WAR now
To put it more simply, if you remember Jimmah you remember inflation.
The Wizards of Smart are going to respond that they had to address the first priority, massive unemployment on a global scale, with their Stimulus Maximus. Then they will deal with inflation via monetary policy. They will also claim they are smart enough, and good enough, they can do both with elegance and precision.
Don’t hold your breath!
And you posted this as breaking news?! Yer killin’ me over here
>> boiled frog
You’re not helping! :-)
It’s great as long as your salary is indexed for inflation. Inflation is a destroyer of wealth.
That was the worst of it.
Every time I see a Toe Sucker article on FR, somebody says this :-)
He's absolutely right on this one. And very articulate too.
>> if you have high job security, should you be spending money now in anticipation of this type of inflation?
If you have high job security, you should be sending me a check each month.
But seriously, if I were in your position I would save during deflationary times, like now... and begin “spending” (i.e. investing in inflation proof stuff: commodities, hard goods, land, some equities) “just before” the inflation kicks in.
The trick is knowing when that “just before inflation” time has arrived.
Or, what the hell, blow it all as you get it, you’re not going to live forever anyhoo.
Follow me on this: a 100% increase is doubling; a 200% increase is trebling; and a 271% increase is.... (fill in the blank).
Hopefully preceded by FUBO’s removal from office
if 100% is double, then 200% is quadruple... OMG..
271% means ... we’re all DOOMED!!
I posted this as an editorial, I don’t know who put it as front page news, unless I goofed up somehow...
In retrospect, the Carter years are starting to look like “the good old days”.
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