Monday, June 29, 2009

USA Today: Inflation is the answer to rising national debt

Bet you thought inflation was a bad thing, right?

In an article in USA Today, (you can see it here) the paper notes that inflation is "as dead as the Wicked Witch of the West in a waterfall. The consumer price index has actually fallen 1.3% in the past 12 months. So why is everyone so worried about soaring prices?"

USA Today summarizes the inflation fears in a word: debt.

As readers of this forum are aware, the US government owes the world $11.4 trillion — $37,000 for every person in the U.S.

In the next fiscal year, the US government will add $1.8 trillion to that deficit.

USA Today debates various scenarios that could occur. What is interesting is the conclusion.

After weighing several pros and cons the article states, "as the deficits grow, the threat of inflation — with the problems that it brings — grows, too, if only because the measures the country needs to take to prevent inflation are so difficult. There are only three ways to cut the debt: raising revenue, cutting expenses or inflation."

Axel Merk, portfolio manager of the Merk Hard Currency fund, raises a question that is being asked throughout the United States right now... should the United States cure its debts by raising taxes and cutting spending?

"Sure," answers Merk sarcastically. "And then we will all fly to the moon."

So what should the United States do?

"Inflation is the answer," says Merk.

Watch, dear reader, for more such articles in the months ahead as US media outlets prepare America for 'inflation' as the solution for the nation's problems - a repeat of the 1930s pro-inflation campaign.

Like it or not... inflation is coming.

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5 comments:

  1. The question then is... where do I put my money? It seems that real estate is over valued and heading for a fall, but then what happens to money sitting in a savings account collecting less than the rate of inflation. Any thoughts?

    ReplyDelete
  2. You could buy gold, but probably better yet, buy a piece of arable land, seeds, livestock, tools of every description, solar panels, wind mill, extremely fuel efficient vehicles, 3+ years supply of food and pray. Almost forgot, you might need some form of protection for having prepared so well. Guns!

    ReplyDelete
  3. Where do I put my money. That's the central question of our times, isn't it?

    You want to know what the greatest aspect of all of this is?

    You know the outcome. Inflation is coming.

    What an advantage. You KNOW what lies ahed in the the short term (next decade).

    Research the topic, determine what works best for inflationary times, and then position yourself to take advantage of it.

    ReplyDelete
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  5. Great post… Great info on bounce rates… I’ll have to write an entry about the same topic some day soon… Bounce rates can tell you alot…
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    ReplyDelete