U.S. ECONOMY FACING FIRE OR ICE: Frozen Economy or Blaze of Inflation- Category:Politics
America's central bank, the Federal Reserve, said recently it currently plans to pump no more stimulus money into a slightly-improving U.S. economy.
U.S. ECONOMY FACING FIRE OR ICE: Frozen Economy or Blaze of Inflation
“The $6 Trillion in stimulus the Fed and Government have already printed out of thin air are mostly unspent, held by banks and other companies or invested into government paper. This is like frozen inflation gasoline, and the Fed has just said that, at least for now, it will stop playing with matches,” says former think tank futurist LOWELL PONTE. “But the Fed really hasn't, and it may already be too late anyway.”
“All that explosive money, despite the bad economy, has begun melting into a spring flood of inflation,” says Ponte, co-author with Craig R. Smith of the widely-discussed 2011 book The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It!
“Key food inflation is already much higher than the government's massaged numbers suggest. Year to year in January, the cost of milk and sugar was up 9.9 percent, hamburger 10.6 percent, chicken 8.2 percent, bacon 7.6 percent, eggs 9.5 percent and cheese 10.3 percent,” says Ponte.
“Gasoline has topped $3.84 a gallon nationwide, is already far above $4 in California and several other states, and could easily top $5 per gallon this summer,” says Ponte.
“Higher fuel costs make everything more expensive,” says Ponte, “and the doubling of gas prices since President Barack Obama drastically restricted drilling on public land now threatens to stall our weak economy back into a recession – or worse.”
“To fight such inflation the Fed needs to raise interest rates,” says Ponte. “But instead, the Fed just reaffirmed that it intends to hold rates near zero until mid-2014. This will keep the casino open, reward speculators, and punish savers with low interest and workers with devalued dollars.”
“We could get the worst of both worlds,” says Ponte, “-- a stagflation frozen economy with high unemployment, higher taxes and near-zero growth, like today, and a blaze of inflation that further debases the Dollar as the Fed expands its money-printing Quantitative Easing 3 through its current gimmicks as mortgage buying and “bond sterilization.”
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