100 Days of Economic Damage By: Curtis Ophoven 4/30/2009 - 3 Comments The Obama team has reached 100 days of power amid a major economic failure and is on track to lead the entire world into a massive inflationary cycle, which will complete destroy the worlds’ monetary system. Your Ad Here The monetary policy of zero percent interest rates that the world is following is the way to completely destroy the value of all paper money.  Why isn’t anyone standing up to this pending disaster?  Why is it so easy to look back and say we should have stopped the housing bubble by not allowing the Fed to lower interest rates below market rates, yet so hard to see the pending doom that central banks around the world are engaged in?  Yesterday the Fed kept interest rates on near zero, continuing to flood the market with cheap money.   Cheapening money is only increasing the problem by discouraging investing in production.  Therefore, production is at a standstill.  Once product supplies run out and liquidation prices run their course, inflation is going to take a sharp turn up and it will be too little and too late to change direction. Wealth is created with savings and production.  The longer the government holds down the interest rates, the longer they will continue destroying wealth. GDP Projections The US GDP shrank by 6.1 in the first quarter of 2009 and the economy is still slowing, yet the governments goals and entire budget is based on a small drop in GDP by the end of the year.  For that to happen, the economy would need to immediately reverse course.   It doesn’t look like the GDP will even be close to the governments’ worse case contraction of 3.3 for the year. In other news today, Chrysler filed for bankruptcy with another $8 billion in government loans.  The labor union and the government are now the primary shareholders.  This just about guarantees they will never produce a profitable automobile and the government will have to continue to pump money into this organization forever. Related Articles Central Banks Begin Turning to Gold Geithner Says US will Get Spending Under Control Once Crisis Ends Economists Are Split on Two Primary Views to Revive the Economy, But Politicians Are Only Interested in One Why Spending Now Feels So Right, When It’s So Wrong Will Obama Save the Economy?   Subscribe via RSS Copyright © 2010 PennyJobs.com. All rights reserved. << FREE >> Weekly Newsletter... Signup today and start receiving our free weekly newsletter! Reader Comments Comment 1 Dan o Says: on Thursday, April 30, 2009 5:05:24 PM It seems like we are trying to make a worse case scenario on two fronts. 1. we are headed for a L resession similar to the great depression in which inflation was not a problem because people need jobs to purchase items. If people don't make enough money to purchase a product they can not buy it therefor the price can't rise. Products will push themselves right out of the market. 2. We are also saying we are headed for high inflation in which prices are going to sky rocket. I don't think we can have both of these scenarios. The only way hyper inflation will occur is if the economy takes off booming again. If this happens then our L recession theory has to give way. What do you think? Comment 2 Curt Says: on Friday, May 01, 2009 2:02:18 PM @Dan - This recession is not going to be like the great depression, because the dollar is not based on gold.  Therefore the government can and is flooding the market with cheap money, which they couldn't do in the great depression.  The deflation of the great depression was because they didn't flood the market with cheap money. This time, when people cannot purchase a product, manufactures cannot lower the prices because the cost of supplies are rising. The only option they have is to produce less, which will lead to shortages, which will lead to higher prices. Production is being reduced at almost every manufacture in the world. The only reason we see lower prices in some cases is because of oversupply, like houses are automobles. But, once these products are liquidated the next newer cars and houses will cost a lot more. The cost of living will continue to increase and when the trillions of dollars that the government added to the market begins bidding up the shortage of supplies, we are going to see a major increase in prices. We are headed for an inflationary depression.  Write a Comment Please keep comments civil and on-topic. Abusive or inappropriate comments will be removed without warning.  Name (required)     Email Address (required)     Website URL  Comment

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