Hyperinflation coming to U.S.
Many analysts are now guessing that hyperinflation, inflation of a rate that is totally unimaginable in this country, could be coming in future years. The biggest problem that may cause this dire prediction to come true is the enormous debt that the country has taken on in an effort to get out of an economic recession.
Imagine America being on the same league table
as some third world country that has to devalue its currency and ration everything, including food, to its citizens just because they borrowed more than they could. Many examples of this have occurred in the past, with Zimbabwe being just the most recent example of a country that has seen the ravages of inflation, with food shortages, and diseases running rampant. So, is that the fate of America? Many think so.
Most economists think that the fed will not do what it takes to get inflation under control. With rates hovering near zero, of course people will be
biting at the bit to borrow money at these
incredible rates, further exacerbating the already enormous debt we have as a society.
The problem with government debt growing so fast is that the time will come when the government should increase
interest rates as the economy improves, or the money simply runs out. Unfortunately, they will be very reluctant to increase rates at that point and inflation will probably increase dramatically.
Hopefully, we won?t quite have the third world scenario envisioned by many prognosticators, however, hyperinflation has occurred already in America in the past. Look at the 1970?s, inflation was in the double digits for many years and the interest rates on bonds neared 20%. That inflation was a result of the debt the government got in order
to persecute the Vietnam war.
Now, we have two wars, economic collapse, and hundreds of companies on the verge of bankruptcy, the need is even more urgent to put money into the economy, and that is exactly what is being done. Unfortunately, we never look to the future and think only about increasing the employment rate in the near term. Right now, new money is only compensating for a reduction in the private sector, global trade and consumer spending. But, it is far more difficult to take money out of the economy when it is there than to put it in. Look at the past.
Almost any time the government has grown, it is followed just by more growth. No one wants their budget cut year over year, so the problem just gets worse. So, what happens? The debt just keeps growing , the deficits keep increasing year over year, yet if the current economy can?t keep up and start to grow as fast of the deficits pile up, we will just be condemning ourselves to a bad
future. Eventually, the foreign countries that own all our bonds are going to loose faith in us, will stop buying and we will be in a tough position. The government will just have to start printing money like those banana republics and we will have a similar fate.
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