Concerning the rampant inflation that nearly all mainstream economists expect, we would ask these dismal scientists to predict exactly where it is most likely to surface. Will real estate values finally catch fire again, pushing tract homes into the billion-dollar range?  Will a dozen eggs cost $90?  Will assembly line workers at Ford negotiate a package worth $300 an hour?  Will college tuitions quadruple in the next few years?  Of course not. Where would the money come from?  Surely not from wages, since the businesses that would pay them are doing well merely to survive these days. And not from a massive credit binge either, since the only collateral we could use to borrow up another storm is…our homes. Why can’t economists see this?  And why can’t they understand that the deeper taxpayers go into hock to “stimulate” the economy, the more drag there will be on future growth?

To be clear, let us note that hyper-inflation seems entirely possible, even if mere inflation does not. Hyperinflation will arrive when The Government decides that fiscal stimulus alone cannot ever get us out of debt, given the vast sums of debt that need to be inflated away. No, only a hyperinflation could do the job, albeit at a price that presently seems much too high. Creditors and savers would be wiped out, life insurance policies would become worthless, pension funds would be devastated, and all of the institutional conduits of lending, including the bond markets, would cease to function for a generation.

If you think the decisions Mr. Obama is making now are tough, wait till he figures out that America’s multi-trillion-dollar boondoggle is barely causing a ripple in the economy, much less the kind of boom that would make our debts manageable.

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Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers' initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Wednesday, 1 April 2009 | Digg This Article