Medary.com

I really, really hate reading things like this. Peter Schiff, writing in Reason magazine:

The Federal Reserve's monetary base statistics show that in the last year the money in circulation has increased far faster than at any other point in American history. Thus, by the dictionary definition, we have inflation. But prices have been relatively stable because downward recessionary pressures are currently counterbalancing the upward pressures of the expanded money supply.

The new money has been largely parked in financial institutions. Thanks to government prodding and aggressive stimuli, it will soon be showered on the economy at large.When the tide rolls in, there will be more money chasing fewer goods. (Recessions reduce the supply of things.) The result: higher prices.

The government clings to the fantasy that it will be able to "mop up" this excess liquidity before the business end of inflation kicks in, effectively taking money back out of circulation. Good luck with that. Recent history clearly shows that the authorities have no political will to dispense tough medicine."Removing liquidity"would require either much higher interest rates or a severe curtailment of credit. But politicians believe that credit is the "lifeblood" of our economy. President Barack Obama himself has said so. If the Fed was unwilling to raise interest rates substantially in the middle years of this decade, when the economy seemed healthy, how can we expect it to do so now?

So, we hear today that the Federal Reserve is keeping interest rates low for now. But in the same breath they say that the economy is improving.

Inflation, here we come.

And who gets hurt by inflation? Everyone--but those at the bottom of the economic ladder most of all, and those on fixed incomes. They are the ones who are least able to pay higher prices, because they are the ones who have the least "discretionary income" and the least ability to move investments (if they even have any investments) into defensive investments against inflation.

The little people, the ones that the Democrats constantly say they want to help, are the ones who get screwed the worst by inflation.

Inflation like Jimmy Carter's in the 1970's. I'm old enough to remember what the 1970's were like. Disco was the least of the problems with that accursed decade.

The time bomb is ticking. Do Obama and his band of merry collectivists know enough basic economics to avoid a replay--or worse--of the "stagflation" of the Carter era? I wouldn't bet on it. Judging from the drunken orgy of deficit spending that Washington has been on since the bank crisis that threw the election to Obama and the disastrous TARP bank bailout, it appears very much like our political leaders--sadly, in both major parties--think that money just appears magically out of nowhere, whenever they want it to appear, and in whatever amount they want to spend.

"Tax the Rich!" they say. Because rich people are too stupid to move their assets around so that they won't have to pay additional taxes!. Yeah, that's a plan. Because stupid people are often the richest ones. If the rich people you know hang out in Hollywood or in Washington, you might come to that conclusion, I guess.

"Wring out the waste and inefficiency in government programs!" they say. Sure. If that was so easy to do, it would have been done by now, don't you think? If Ronald Reagan couldn't manage to disband the Department of Education, and we can't manage to cut PBS, NPR, and the NEA free from the government teat, where exactly will such "savings" come from?

There's only one place where all of that money will come from, one way or another.

It's going to come from the person you look at in the mirror every morning.

How's that hope and change working out for you?

Are you scared yet?

You should be.