Inflationomics

Some Things Are Clear, Others Aren’t

While it’s becoming more difficult to see the short-term effects of prior government interventions in the market place

  1. (Fed interest rate manipulation that encourages or discourages people from borrowing money and expanding or contracting their operations,
  2. credit subsidies through governmental organizations such as GNMA, FNMA, and FHLMC,
  3. nationalization of FNMA and FHLMC which is intended to make more funds available to potential home buyers,
  4. bailout of American International Group [AIG] to allow it to meet its credit default swap obligations,
  5. market regulations issued and enforced by the SEC and CFTC, thus raising the costs of conducting business in the United States,
  6. forced bank consolidations that recognize that bank stock prices were overpriced,
  7. taxes which reduce taxpayer cash and market clout and increase government cash and market clout,
  8. tax stimuli which are intended to stimulate business,
  9. wars in Afghanistan and Iraq that cost a lot of money and lives and emphasizes government spending priorities rather than consumer spending priorities,
  10. Social Security; i.e., the world’s largest Ponzi scheme that transfers money from workers to non-workers,
  11. Medicare which increases taxpayer costs directly by imposing a tax on wages and indirectly by driving up health care costs,
  12. expansion of the money supply; i.e., inflation,
  13. forced unionism that has given U.S. auto makers the highest cost labor and pension obligations in the world,
  14. the U.S. Postal System which has a monopoly on first class mail thus allowing it to charge exorbitant rates,
  15. minimum wages which raise unemployment among the less productive people in society,
  16. pension guarantees by the Pension Benefit Guaranty Corporation which is designed to “protect” workers’ pensions,
  17. public schools that indoctrinate students in governmentalism and inflationomics,
  18. legal tender laws which require people to accept ever-depreciating currency for goods and services,
  19. anti-trust laws which punish companies for becoming large even if their growth is the result of superior performance,
  20. environmental restrictions which limit supplies of natural resources thus raising their prices,
  21. immigration laws which limit the supply of legal labor and increase the cost of immigration law enforcement,
  22. homeland security which is costly and ineffectual,
  23. and thousands of people who are dependent on government largess and employment ),

one thing is clear—we’re going to get more of it, and things are going to get worse before they get better. (If you believe that doing more of the same will give you different results, you’re crazy.) It’s also clear that in the long run, the U.S. dollar will continue its slide in value relative to tangible assets (after our current brush with deflation which is the result of an over indulgence in debt because of government encouraged lending and the inevitable bust that follows such a boom).

Robert Jackson Smith

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