Bernanke’s Viagra and Premature Inflation

Posted: February 8, 2011 in Commentary, Economics, Politics
Tags: , , , , , , , , , ,

The economy is now several months into Bernanke‘s Viagra treatment program otherwise known as QE2.  This misguided program of artificial stimulation claims it will make things grow and the world will be a better for it, nut just like the pharmaceutical it is only a temporary solution.   There is no real growth that will be sustained, only a symptomatic rise and fall with a whole lot of money spent and no lasting growth.  Ben is praying for a return to the days of his youth.    

What can be seen is the kindling catching flame in bottom of the fireplace.  Commodity prices have been skyrocketing over the past year.  These are the raw materials, agricultural products, and energy used in the production of everything.  The producer sector is still selling goods that were produced with lower material cost inputs.  When the inventories of those materials are replaced with higher priced supplies there will be a marked rise in other consumer prices just as there is in food and energy now.

Consumers are already seeing rising prices in food and energy.  Corn, wheat, and cotton prices have nearly doubled in the last year.  Oil is predicted to be heading for $110 per barrel.  The aggressive printing of money by the Fed to fund the government deficit is quickly devaluing the currency already owned by the populace.  That is why that dollar doesn’t buy as much in the produce section as it did last year.  This is the Washington way to shift the cost to the population without raising taxes.

The acceleration in inflation will persist as Bernanke continues to pop the Little Blue Pill into government bonds.  When the bankers finally start more aggressive lending the genie will be out of the bottle.  Inflation, approaching 10% (calculated as it was in 1980) will spike and continue to quickly reduce consumer buying power.  Currency assets will devalue as the government seeks to devalue it outstanding treasury debt without regard for the hardship endured by everyday Americans and, in fact, people all over the world.

Look for Washington and the Fed to continue pumping Viagra down the patient’s throat to make it look like there is not a problem.  The stock markets are rising.  Prices are rising.  Debt is rising.  Deficit spending is rising.  GDP is rising.  Everything is rising.  When the patient finds out that he is impotent the bubble will already have burst.  Make sure you’ve got some extra resources in the sperm bank.  They will be worth the troy ounces that the gold or silver are weighed in.

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