The Federal government now borrows $40-BILLION per week to pay interest on all the debt they have approved. When someone says there is a $13-TRILLION or so deficit, that means the Feds have sold debt and agreed to pay interest to GET all that money. OR, they PRINTED new money which increases the money supply, which causes inflation. Obama and the Democrats have done both. And, as interest goes up, I am betting much of the debt has cost of living escalators, so interest due to China and other buyers of US bonds and debt instruments will rise as interest rates rise.
I lived through the last great inflation bubble when President Jimmy Carter ran up costs and implemented all those liberal programs that run up inflation. That was when I thought I had a GOOD DEAL buying a house at 9.5% interest rates, and then the rates went up to almost 20% due to inflation.
Recently, I have watched Obama implementing many inflation causing practices, including "printing money", and excessive borrowing money to fund all his social programs. Now, inflation is starting to hit us, not only due to unrest in oil producing countries, but subsidizing food crops like corn to be used for subsidized fuel like Ethanol. Af, food prices are leaping.
To be fair, however, if you do research, you will find that Republicans, including Ronald Reagan also ran up debt - but he did it to finance defense spending so as to bankrupt the soviets, which he did, thus Russia's economy collapsed, the Berlin wall came down, and the cold war ended. Then Bill Clinton came into office, and he apparently understood economics, and reduced the federal deficit to almost nothing. Then it started going up again and Obama has hit new heights in deficit spending which creates debt.
So, below is one of many emails generated by political pundit Dick Morris on the coming inflation. So, each time you pay more for goods and services, be sure to thank the current Democrats and Republicans who also voted for the spending programs for ignoring economics.
Several inflation aspects will hit local governments. One is
During the Carter years, I worked for the County of Los Angeles, and they were making so much money from increased taxes on rising property prices (due to inflation), that we employees were getting annual raises of 10%, etc. However, that was before Proposition 13, which limited tax increases to 2-3%, similar to Florida laws, however Florida only has the limit on residential taxes, and not business taxes, which will jump as people start speculating on commercial land and building purchases.
Don't ever forget, Democrats and Obama caused this most recent inflation bubble with all their recent spending... no one else. Start planting your own personal victory garden now!
Here is an interesting website on problems caused by Federal debt.
vj
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HERE COMES INFLATION
By DICK MORRIS & EILEEN MCGANN
Published on DickMorris.com on April 18, 2011
Printer-Friendly Version
In our book Revolt!, we warn that inflation may well be the dominant legacy of the Obama presidency. While he had Bush's help in creating high unemployment, he has driven us into inflation all on his own.
The latest data indicates that prices soared in March at an annual rate of 6.5 percent, by far the highest increase in decades. Half of the increase was in energy prices and one half point in higher food costs. While the Federal Reserve Board focuses on the "core" inflation rate, that excludes these volatile items, American consumers dip into the same pocketbook to pay for food and fuel that they use to pay other prices.
And there is little likelihood of any leveling off of the prices of either food or fuel. The former is driven by the use of food for energy, diverting corn and other food crops from nutritional use. The later is animated by the instability in the Middle East and North Africa, an international crisis that is likely to worsen in the coming year. Indeed, should the disease that has brought down regimes in Egypt, Tunisia, and Yemen and is fighting to topple them in Bahrain, Syria, and Libya spreads further into Saudi Arabia, we could face huge increases in energy costs.
And don't forget the likely upward pressure on interest rates. The Fed is likely to end its QE-2 (quantitative easing 2) program in June. No longer will it buy mortgage backed and Treasury securities from banks into order to pump more money into the system. Once the printing press stops, the Treasury will have to start borrowing real money from real lenders and pay real interest. It will no longer be able to borrow back the money the Fed prints at nominal interest rates. With Washington needing to borrow $40 billion a week to finance its deficit, the upward pressure on interest rates will be severe.
Then, there are health insurance costs. With the onset of the requirements of Obamacare, the increase in premiums has averaged twenty percent, further raising costs of business.
Faced with these increases in fixed costs, businesses will have to raise prices. But nobody will be able to pay them because the economy is terrible. That will trigger a loss of customers and ever higher prices to make up the gap. This stagflation cycle is now upon us and will wipe out any gains that the so-called recovery may offer.
Annual inflation of 6.5% is just the beginning, just like $5 gas is just the beginning. The inflationary forces Obama has unleashed by his record deficits and his virtual tripling of the money supply will batter the economy with a violence that will make his re-election impossible.
The storm is just starting.
