Finance Q&A: Will the Economy Ever Improve?
- Monday, May 06, 2013
My friends, family and I have been noticing that the cost of food and fuel have been steadily going up. Prices for cereal, beef, coffee, etc. keep getting higher. Sometimes on the news we hear or read that our economy is getting stronger, but we’re not seeing it. We’re wondering if the economy will improve. – Cindi
You, your friends, and family are astute in what you’re observing, which are signs of inflation. As the Federal Reserve continues to print money, the buying power of the dollar is going down. The definition of inflation is “an increase in the volume of money and credit relative to available goods resulting in a substantial rise in the general price level.”
I lived in a large foreign country for many years. I’ve seen what it’s like when the country’s leaders make bad fiscal decisions, accumulating huge amounts of debt without balancing the nation’s budget. These are the same things Washington D.C. continues to do.
Living abroad, I saw how the cost of living increased, getting to the point where it cost five, then ten times more to buy things. This was hyperinflation, causing awful financial pain for the nation’s citizens. Personal liberties were lost in a country that called itself a capitalist country. Its high levels of debt eventually came to a tipping point.
Martin Weiss, founder of Weiss Research, also lived through this disaster when he was in high school. It took place in the world’s third largest country, Brazil. He describes it this way:
The cost of living exploded. Suddenly, everything we needed to buy cost ten times more. Later, in sheer desperation, the government begged the people to donate their gold jewelry and coins to save the economy. Later, the government got so desperate, it summarily froze everyone’s bank accounts. It confiscated their money and replaced it with a new, far-less valuable currency. And that was only the beginning of the people’s suffering” (Money and Markets).
If you think the government today can’t freeze your bank accounts and take money from your bank accounts, think again. In March 2013, when the Cyprus banking crisis first erupted, the Eurozone financial minister commented to the press that “confiscation of part of Cyprus depositors savings (called ‘bail ins’) now represented the template for future euro bank bailouts.” (Cyprus Crises II: Canary in the Global Financial Coalmine?)
Since the big debt crises of 2008, the Fed continues to print unprecedented amounts the money. The result: the buying power of the money is falling.
If the U.S. does not balance its budget, spending only what is Constitutional and sustainable and live within its means, it’s in for a rude awakening.
Steve Forbes, respected chairman of Forbes Media, recently wrote:
“[Fed Chairman] Ben Bernanke has pulled off a neat trick that could well give us the worst of all worlds: a brief commodity deflation, future inflation and a stagnant economy. …The Fed is still doing enormous damage to the economy by distorting the credit markets both in the pricing of credit and in the uncertainty about the future value of the dollar” (Forbes.com).
According to Steve Forbes, Laurence Kotlikoff, and other economists, there is inflation in the future.
Unemployment continues to remain high. A growing number of people are depending on the government for help and benefits. The federal debt is not decreasing, but is increasing considerably under the current president. According to Mike Larson at Money and Markets, “annually the U.S. Government is spending 156% of every dollar it makes. The U.S. runs the risk of becoming like Greece, unless it balances its budget.”
Recently on Planning
Have something to say about this article? Leave your comment via Facebook below!
Listen to Your Favorite Pastors
Add Crosswalk.com content to your siteBrowse available content