Letters to the Editor
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Did somebody say "depression"?
There is no combination of tax rebates, handouts, or artificially low rates that can correct the underlying problems in this consumer-led US economy. In fact, the best policy the Federal Reserve could pursue would be to raise rates aggressively while the government immediately halts all foreign aid, ends the war and recalls all troops within the borders, ceases domestic entitlement increases, and eliminates hundreds of billions in discretional activities. The reality of our situation is that the federal government is bankrupt, and has to borrow continuously simply to pay interest on the debt we have already amassed. In addition to the $10 trillion we already owe, another $50 trillion in unfunded entitlements must also be solved. Since this reality is unacceptable to voters, only politicians who deny it are elected.
The Federal Reserve and fiat money system is the root cause of the problems facing us today. As long as the government and bankers have the ability to create money out of thin air, they will use that authority to convince voters to keep them in power. The easy money policies pursued by the government were the cause of the Nasdaq bubble in 1999 - 2000, and their "solution" for this correction caused the subsequent housing bubble. Although the Nasdaq bubble was bad, this housing bubble not only drove up prices making homes less affordable for many, but allowed consumers to borrow much against false home equity wealth to continue overspending. Today, not only are most households in massive debt, but their previous major asset (their home) is now their largest liability. Consumer spending is approaching a hard stop, as there is nothing left to borrow and nowhere left to borrow from.
As the Fed prints more money, this nation runs the risk of entering a hyperinflationary period in which anyone who has saved in dollar denominated investments will lose the buying power of their wealth. Trillions of dollars from years of consumer overspending sits in foreign reserves, and many nations will be eager to get rid of their dollars as our policies now show we have no intention of maintaining the value of these dollar holdings. These reserves are now being returned to us in the form of purchasing the corporate infrastructure of this nation, and will include almost every aspect of the economy. We will be a nation employed by foreign owners.
As the dollar continues its decline against other currencies, expect to see massive amounts of price inflation in food, energy, goods, and services. Since much of the job growth in the last 7 years were in retail jobs and real estate activities, millions employed in these sectors will lose their jobs in 2008. Over time, this nation will be forced to return to actually producing goods to trade with other nations, not just simply issuing IOU"s based on a degrading currency.
Anyone who has saved and wishes to preserve their wealth should begin to shift their holdings to foreign currencies, foreign stocks and bonds, commodities, and gold. While we may see temporary price declines in some consumer goods as retailers seek to sell off inventories in the hopes of seeing a turnaround, our monetary policy tells us that massive price inflation is actually our destiny, as so many of the foreign goods we import will not only get more expensive on a dollar basis but less expensive to the rest of the world. Their demand and ability to pay will more than make up for the lower demand here. The days of $4000 plasma televisions in every bedroom is over regardless of what this stimulus package looks like, and we have barely begun to see and understand the long-term consequences of our policies.