A Hurricane Called Inflation

Cost pressures are everywhere due to the Feds insatiable appetite for Printing Money. The prices at the pump have risen dramatically recently, cotton is at its highest level in a decade, copper is the highest its been in 40 years, and the price of corn, sugar, wheat, beef, pork, and coffee are going through the roof as we speak. Just as we have recently witnessed in China's effort to cool inflationary pressures in its own economy, rates will undoubtedly rise here in the U.S. cooling the jets of recovery in the mortgage sector. Corporate earnings will contract due to higher internal costs, welcome to the world of Quantitative Easing. We have borrowed and spent are way into a financial quagmire and according to the Obama administrations latest budget plans, the poor and middle class must absorb the hit. Areas like the student loan market, Medical, Medicaid, home heating for the poor, children's programs, social security, welfare, and everything considered an entitlement will be on the chopping blocks. Is this really the type of people we want to become?. The answers wont be easy, but the line of ethical and moral issues have to be addressed if this Nation is to continue on a successful path.

Double Standard

As the world witnesses history in the making in Egypt, our allies should ponder our seemingly dual standard policy position in aligning ourselves with the people, as opposed to the governmental regimes in such international conflicts. If you are a dictator of a small country, or even a large Communist Nation you just got a real time experiment in how the U.S. will react to such an uprising or revolution. Have we completely lost our minds as far as common sense is concerned?. Why not just fly under the radar, and let them work it out for themselves. Instead we have to instruct others by providing an American blueprint or game plan as big brother to the world. Its no wonder were broke as John Boehner stated in his most recent interview, we pay countries like Egypt over a billion dollars a year with borrowed money from China for God knows what. Now one of the Egyptian military leaders stated on their second day of new found independence that a bailout would be needed to rebuild the peoples job base in Egypt. Sounds like code for tighten your seat belt American taxpayer we need some of that Nation-building cash you people are so adept at doling out. At some point our own people are going to start realizing how this really works and start a FACE BOOK REVOLUTION via GOOGLE EXEC themselves.

Hornet's Nest

Friday Vice President Joe Biden continued to amaze me with his ability to say what he thinks without consideration of the potential ramifications. Speaking at the University of Louisville in Kentucky, he urged Iranians to let your people march, let your people speak, release your people from jail, let them have a voice. By doing such things we only promote the negative perception of a dangerously meddling nation trying to impose our belief systems throughout the globe in the name of Democracy. We portray ourselves as the worlds savior, when in reality we only increase global Anti-American sentiment and hatred with such remarks. There is a key difference between what is occurring in Egypt between demonstrators and the Egyptian military, and potential demonstrations in Iran and its called lethal force, its much more probable under the same conditions that the Iranian military would open fire on its own people and Biden should consider this possibility before he makes such comments. The Muslim brotherhood and others throughout the world view this as an opportunity to continue to market us as president Mohammad Ahmadinejad likes to call us the Great Satan.

Quantitative Easing 2 = Great Recession 2

As Ben Bernanke is questioned by members of congress this week in relation to the Federal Reserves recent Quantitative Easing position and the potential inflationary pressures it could apply here and abroad, one got the feeling old Ben was talking down to those that questioned his strategy and authority. He deflected the notion that policy here in the United States was causing a rise in commodities such as food and energy, and the resulting civil unrest in Tunisia, Egypt, and potentially other nations. The fact is clear that debasing the value of the worlds reserve currency which the dollar is, applies inflationary pressures and commodities rise, the civil unrest usually occurs first in poorer nations where they cannot sustain such increases in the cost of such vital resources. Here in the United States we are better insulated from these increases due to a far greater standard of living, and wealth of its average citizens. Strangely enough the complaints of the Egyptian people of a broadening disparity between the rich and poor are starting to sound like a familiar theme in the U.S. between the middle class and the rich. Such issues as national deficits, unfunded pension liabilities, and the diminished wealth of average Americans will probably increase in the years ahead if comprehensive and effective solutions are not made.

Municipal Meltdown

As state after state continues to take in less tax revenue than is required to float its operating costs, the need for a potential third bailout by the Federal government becomes more imminent than ever, and all taxpayers are justified in asking where does it all end?. The situational thinkers in Washington seem content in continuing with a borrow and spend strategy, and the passing on of the generational buck to future taxpayers. A destabilized foundation is being laid at an alarming rate for our children and grandchildren and it seems that poor and middle class Americans can due little to avert a financial disaster. Thomas Friedman said it well in a recent interview, that America has become as dumb as it wants to be. And in his opinion the only way out of this is to invent our way out, by allowing a thousand cutting edge companies to attract highly innovative talent from around the globe to create the kind of products that other countries demand. This is what made us great in the past and will work again in the future. In my opinion the next twenty four months will be even more pivotal than the last twenty four in deciding our continued direction as a world leader, or a new role as a third world follower.

Ponzimerica

Our government has conducted one of the greatest ponzi schemes for six decades straight, by taking ever larger resources from the young and giving them to the old while promising the young their turn at passing the generational buck. In 1835 Alexis De Tocqueville warned of a time like this in his book entitled Democracy in America when he stated that the American republic will endure until the day when Congress discovers that it can bribe the American people with its own money. Who are we trying to fool when we borrow money from China in the form of U.S. TREASURY'S at a high interest rate and use these funds as bailout money all at the expense of the U.S. taxpayer. Nothing good can come from this inept fiscal policy position. As the Fed described its latest strategy as quantitative easing which we all know is code for printing money and crediting its own account, it will effectively open the floodgates of monetary velocity and the result will be a crushed U.S. dollar. When will the American people realize that an elite class of less than one percent of individuals will benefit from such activities.

Deflationary Spiral

Today's revelation from the Federal Reserve that a continued cooling of economic indicators is to be expected in the near future, and we now have to consider deflation as an equal if not greater threat than inflation. The prospect of falling prices on goods and services, and an unwilling lending environment is not what an already fatigued small business sector needs to hear in this fragile recovery of ours. Negative dialog from the powers that be can only ad volatility to markets that could easily take a turn for the worse and relinquish hard earned and unexpected gains. One meeting they say that economic green shoots are growing everywhere, followed by an austerity like quantitative easing type strategy at today's meeting. This is like following a squirrel down the road not knowing which way its headed. A comprehensive game plan with structure is needed as opposed to lets try this and if it doesn't work we can try that. The only sure thing is that when this whole thing blows over this nation will have one hell of an increase in the national debt. Why not use Japan as a template as what not to do? as they are the most recent example of a recession with these type of conditions, and develop a model accordingly.