As if it weren’t enough for you to hear billionaire hedge fund manager John Paulson predict double digit inflation in U.S. by 2012, here’s more evidence that it’s probably on its way:
1) A $100 trillion surge in global credit and debt over the next 10 years. A conclave of central bankers at the World Economic Forum (WEF) in Davos Switzerland announced recently that they think global growth will need to be propped up by $100 trillion in new debt through 2021. The global credit stock has already doubled in recent years, from $57 trillion to $109 trillion between 2000 and 2009, writes Michael Pento at IBTimes. If the central bankers have their way, we’re going to double that rate during the next decade (and we’ve already seen how successful expanding global debt was the first time around). That much excess liquidity will drive up prices for commodities and tangible goods while concurrently putting pressure on supplies. Somehow, the word “stagflation” jumps to mind.
2) Monumental debt. The U.S. government’s $14 trillion debt has just a few possible resolutions (none of which are good): 1) more money printing; 2) a possible debt default; 3) increased borrowing costs; etc. “The U.S. is the largest debtor nation in the world and all the assets are in Asia,” investing guru Jim Rogers said recently. “The largest creditors in the world are China, Korea, Japan, Taiwan, Hong Kong, Singapore – this is where the assets are and the debts are in the West. Those imbalances have to be resolved.” The only clear way for the U.S. to reduce its debt without grinding the economy to a halt is by continuing to print money. The government can then use those cheaper dollars to pay off the debt its issued. Of course, foreign governments aren’t going to sit idly by while getting repaid in cheaper dollars. They’re going to work to devalue their own currencies in turn. The result is inflation not just in the U.S., but in every corner of the world.
3) Food riots. With all the news coming out of Egypt, Tunisia and Yemen, it’s easy to overlook the fact that one of the main causes for the civil unrest there is the surge in food prices. The same pattern is playing out in China and India where food inflation is approaching double digits. Inflation first rears its head in the poorest nations around the world, and the Federal Reserve’s monetary easing policies aren’t without blame.
“The truth of the matter is that when the Federal Reserve moved on the quantitative easing, it did export inflation to a lot of these emerging markets,” Phil Flynn, a senior market analyst for PFG Best in Chicago, tells the Vancouver Sun. “There’s no doubt that one of the side effects of the weak dollar and quantitative easing has been rising commodity prices. It helped create this bullish environment for commodities. This is a very delicate balancing act.”
And right now, it’s a balancing act the rest of the world is losing.
Related
|
IOU
|
SILVER SHEEN
|
|
BE YOUR OWN BOSS
|
GNOME MORE LOSSES
|
|
BE MY FRIEND?
|
GOLDEN ARCHES
|
Tags: inflation
I have a web site where I give investment advise on penny stocks and stocks under five dollars. I would like to comment about double digit inflation. I am very distrubted by the lack of progress on cutting the budget deficit. it will require large tax increases and budget cuts to bring the deficit under control. when nobody will buy the debt obligations of the united states than the buyer of last resort will emerge and who might be that buyer of last resort’ the government itself. in other words the massive money printing will have begun welcome weimar republic two thousand ?