Stagflation Continues

It takes a good amount of money printing over time to produce systemic inflation.  Our global economy is being propped up by U.S. Federal Reserve printed dollars. So, what happens when the party is over ?  A soft landing requires that we reduce the federal government deficit gradually.  If we wait too long, it will be too late and we will experience a dollar collapse and hyperinflation.  Prior to QE3, the Fed had increased the money supply by 300%.  Real inflation has been about 10% per year since 2008.  So, at that rate, we will have this inflation built in for the next 26 years, just from QE 1 and QE 2.  QE3 will supply $44 billion a month, forever, and amounts to $528 billion a year. 

So, now we have the global economy floating in cash, rather than reflecting actual demand.  Actual demand, given flat wages, high unemployment and cheap interest rates will continue to decline.  If the Federal Reserve decided not to print any more money, the stock market would quickly fall 30% to reflect the expected decrease in demand.  Nobody wants the party to end and nobody seems to mind that most of federal government’s spending is wasted on bribes and fraud.

Politicians are hiding behind the myth that reducing government spending will throw us into a deep depression.  This is a lie.  Reducing government spending in the right places would result in an increase in our freedom and enhance our chances of returning to a healthy private sector economy with our inalienable rights intact.

Our current economy is stagnant and we have real double digit inflation and unemployment.  This Stagflation will not end by returning interest rates to market the way it did in the early 1980s.  It will take a doubling and redoubling of US oil and natural gas production to refurbish the private economy.  So far, the government has been anything but helpful.  The federal government insists on restricting oil and gas production and keeping legal immigration at all-time highs, creating high unemployment.  Regulatory overreach based on phony science continues to discourage the return of manufacturing to the US and threatens to double our electric power rates and food and water costs.  The federal government seems determined to destroy the US economy.

Norb Leahy, Dunwoody GA Tea Party Leader