Printing Money Augurs Inflation, Inflation Leads to Higher Interest Rates…

#inflation #money #inflation #stagflation #Fed

$XAU $GLD

The massive printing of money is going to lead to an economic crisis that Washington insiders are ignoring”-– Steven Forbes

There is real danger is printing money, as it leads to inflation and that means higher interest rates, and strains on the economy.

Mr. Biden wants not just the current $19-T aid/relief/stimulus bill, he wants a another bill after that, and then another.

The government’s printing press does not create resources, real people working create resources.

Mr. Forbes did support aid/relief/stimulus checks going to Americans, but added that the payments distorted the labor market as a disincentive for Americans to go back to work.

The Trump economy was reviving, it is still reviving, despite Mr. Biden and his early on attempts to hobble it.

The fact is this economy would be boom without him and printing money will not help it, what is will do is crash it.

Those of us that remember Jimmy Carter know what happens: economic stagnation, higher prices and interest rates, and higher unemployment.

The US economy cannot/will not be socialized and this massive money printing has massive consequences. And it is being ignored.

Okay, a little bit inflation is good, but a lot of inflation is really bad.

The Big Q: Why?

The Big A: Printing money reduces purchasing power and makes people poorer.

Solution: Prepare your portfolio against an economic crash.

The current Administration might take a page out of American History and inflation. During the 125 years that America existed as a Republic without a central bank (1789 to 1914), there was only one serious bout of inflation, and that was in the War Between the States, when President Lincoln printed “Greenbacks,” unbacked by gold or silver (sounds like today), and the Confederate states printed their own currency, just like we are widely doing today with uncontrolled Congressional fiscal management. 

However, in the period from 1979-81 that all changed under the Carter Administration, when inflation averaged  11.7% (11.3%, 13.5%  and 10.3% respectfully). Also, the unemployment rate averaged 5.8% during the first nine months of 1979 and then rose to peak of 7.8% in June 1980  and  changed very little through the end of the year, averaging 7.5% through the first quarter of 1981.

Are you starting to see a similarity and thus a concern if the current Administration taken a lesson from the past?

Now, comes the real problem: one might say that Too Much Money starts to chase too few goods. You might restate it as “an increasing amount of money chasing a fixed amount of goods,” but the point is that when the quantity of money in an economy is increasing faster than its output, the result is inflation.

That is what the prior Administration was trying to accomplish on its higher import tariff policy and bring American manufacturing of its goods back home plus in its focus of Make America Great Again by forcing foreign Governments to pay their share of our  Foreign Aid Gift Budget, i.e. NATO and the United Nations plus reduce their tariffs on our exported goods.

However, all this might reverse itself under the current Administration policies of not focusing more on domestic employment. This is not accomplished by relaxing our Border Security and Immigration Policies  plus reducing our Military Strength.

As Mr. Barren has previously cautioned: That’s what happened in the late 1970s, big time. And perhaps it’s what some economists fear may be happening again today, as the money supply balloons uncontrollably from the various fiscal stimulus (plus with more potentially happens as our unemployment issues are not quickly resolved and taxpayer bailout programs continue,” says respected economist Bruce WD Barren.

Have a healthy weekend, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   
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