HYPERINFLATION AND THE STIMULUS PACKAGE

The massive stimulus packages put forward by governments around the world requires the printing of trillions of dollars. If and when the governments are successful in getting a fraction of this money into the hands of the working masses of the world it will surely cause a round if inflation like we have never seen before. With so much money being pumped into the economy, and human nature what it is, there will be billions of dollars siphoned off by companies and individuals in positions of power. When what’s left finally trickles down to those to whom it was originally intended, the cost of the end projects will be horrendous. 

The trillions of dollars now being printed and pumped into the economy will surely devalue the greenback as there is nothing to base the paper money on. The devaluing of the dollar will cause prices of all consumer goods to increase. As prices go up more money will have to be printed and the value of the dollar will decrease accordingly. As the value of the dollar decreases the price of materials quoted in U.S. dollars will spike up again. Inflation will no longer be controllable and hyperinflation will surely occur. A vision of needing a wheelbarrow full of money to buy a loaf of bread is not at all comforting. 

China, one of the main purchasers of American debt has already shown a reluctance to keep buying more of it, having domestic problems to deal with as it is. World economies are not in a position to buy American debt in the proportion required to finance the stimulus. Those with some extra money are opting to purchase gold as a hedge against impending financial disaster.

With little demand for their debt American Leaders will have no other option but to increase interest rates to try and attract buyers. As inflation rises from moderate inflation to hyperinflation and the cost of money rises right along with it, we will all end up in a whole world of hurt.

President Obama is engaging in very dangerous economic policy and if his timing is off just a little bit it will be disastrous. If he manages to pull it off he will be a hero but he has to know it’s a huge gamble. The way I see it, even if he manages to engineer a soft landing, the American taxpaying public will be generations trying to pay off the accumulated debt brought on by this massive stimulus package.

Trivia - California law prohibits a woman from driving a car while dressed in a housecoat.