Livinglies's Weblog

The latest reports show that devaluation of the dollar combined with other economic factors has launched what will be the worst round of inflation we have seen in our lifetimes. And it will most probably feed itself into a frenzy despite all efforts to soften the blow. The 1.1% increase in production costs is only the tip of the iceberg.

• All businesses are feeling the pinch of rising “costs” (more dollars) against consumer reluctance to pay higher “prices.” 
• Price baskets that reflect reality (actual impact on the life of an ordinary American family) show something in the range of 15%-25% average. 
• Job growth has been non-existent for years despite data to the contrary: the reports count ANY job to replace a job that paid 4-10 times as much as “job creation.”
• Purchasing power has been declining since before this latest round of hyper-inflation.
• Debt is at an all-time high for the country and for individuals.
• Taxes and other “private taxation” deductions from U.S. individual income  have steadily increased when compared to other nations
• The Fed is stuck between an economy diving into recession and an economy that is virtually ruined by its own currency. If it raises rates to try to curb inflation, it won’t succeed because most of the money supply is created from Wall Street. Raising rates also has the added factor of decreasing confidence in the U.S. economy, which will only deepen the recession. If it lowers rates to counter the recession it won’t succeed for the same reason. Lowering rates has the added factor of creating a new bubble to cover-up the old one. 

When will we finally get the message and bubble and bust is not a very good way to do business?

• Fundamentally, the first line of attack should be on staunching the bleeding and stopping the foreclosures and evictions. Just taking control of that and putting it under management, will have an enormous impact on our currency, our World position, and our financial markets. 
• restoring confidence in the financial markets is the first priority. The ONLY way this can be done is by stopping foreclosures and evictions, restoring value to balance sheets, and providing a path to full recovery, even if it is not totally assured. 
• The perception that the U.S. financial markets cannot be trusted can ONLY be overcome by establishing international oversight, at least for transparency and reporting purposes. In order to retain national sovereignty, obviously, regulation in the United States can only be by U.S. agencies.
• But in the global economy, other countries and economic unions have the same rights we do when it comes to regulating money supply and whether to permit certain actions in their part of the pond. We have now painted ourselves into the corner of submitting our own regulatory authority to the decisions of other nations. It’s fact that we are just going to have to live with.

Our passion for dominance should be replaced with a passion for fairness and stability.

Filed under: bubble, CDO, community banks, CORRUPTION, credit unions, currency, education, Eviction, foreclosure, foreign relations, GTC | Honor, inflation, interest rates, Investor, Mortgage, Obama, politics | Tagged: costs, Federal reserve, inflation, prices, purchasing power |