It is a fact that if a nation PRINTS trillions of dollars to solve its financial problems, that hyper inflation and collapse will follow.
However.... our US govt is NOT printing any money,...... it is
**issuing electronic credits***, that act as money, and may indeed stimulate the economy....this is assisted by low interest rates so people can afford to buy homes and build businesses etc... little actual money is being printed though.all this is happening as deflation due to tough economic times takes the hot air out of the housing and stock markets etc. the collapsing tax base will also force the bloat out of government... all if tgus us a good thing.
This deflation will be painful and *could lead to total collapse.... unless enough trillions in added *credit are issued into the economy through the banks to keep things afloat... floating on a massive sea of *credit. thats whats happening now...
its all just barely floating on a massive sea of credit... but it is doing this as the housing and stock market bubbles deflate. thats a good and a necessary thing... so far we are deflating these bubbles, and our bloated state governments without total collapse.
With luck that will be continued.
***** again, this sea of funny money **is not actually money*** (just credit), no extra currency is printed for most of it...the US Dollar may very well *regain its value, when the FED raises interest rates again after these bubbles hit bottom... that will be tricky and it remains to be seen how that will be pulled off, especially given the 300 trillion dollars or so in hot air derivitives (insurance policies used to guarantee bad loans).
it may be that as the large insurers, such as AIG go broke, file bankrupcy and defualt that a good percentage of this derivitive mess will simply evaporate (like so many trillions in the worlds pension funds have already evaporated.)
as the work force gets more desperate, and half of the bloated govt work force is laid off, and the rest got their bloated retirements cut by 70% or so, and the social security recipients are unfortunately cut back to starvation levels..... and we start manufacturing in the US again...we will recover...... it will be a nasty next 15 to 20 years (time span directly calculated from life expectancy tables)
all of that is necessary...and will happen on the current path if we are lucky... depends on many things though, luck, oil prices, what we do about nuclear energy, and what other nations do etc..
***when that stabilizes, my guess in 10 or 20 years of tight times, during which time the 80 million social security recipients will all be deader than hell... restoriing the national economy... full recovery will begin, that will take another 15 to 20 years... and we have seen these time frames recently in China and Russia.
then.... interest rates will be raised again, restoring the value of the US dollar in world markets. Investing in the mean time may be problematical. Some high tech areas will pay off well. The best investments will be in ones own operation, skill sets and networks.
imo
***Support for this argument is my observation that the FED is willing to loan 'money' to the banks at 1% or less, and the banks are willing to loan at 4%... that tells you that those in charge have a solution for hyper inflation.. and I believe my memo here describes that solution...
if relatively few actual dollar bills are printed, paying the money back will be difficult and the 4% intrest will provide the banks with a real profit.
why:
(if the the treasury prints the actual bills, in excess of actual GDP, then the banks will lose, and collapse...thats why this thing is being done with credit to the banks... and not by putting dollar bills into peoples hands).
These guys in charge of the money, as corrupt as they are, probably do know what they are doing in this aspect at least...they need to save their own asses as well as ours.
***Predictions:
a lot of folks will go broke in the financual turmoil...especially retailers and people with high overhead and into non essential businesses. actual producers of goods, and essential services with *low overhead will mostly survive imo.
actual producers who extend too much credit to those about to go under, (that is about half the Malls and stores in the US) will get burnt...due to tight money, that will put many contractors etc out of business as we are already seeing.
this is of course avoidable by structuring for low overhead operations...getting a sufficient advance on jobs and progress payments in advance of progress...
I think those contractors will survive ... (this was a memo to one of my contr clients)
Phil scott