Thursday, June 12, 2008

And Pigs Fly

The Fed is printing money as fast as they can. They are lending it out to banks at 2% interest. The government's stated rate of inflation is 4%. Most other governments of developed countries put the inflation rates at 7-10%. If you look at the increase in prices that consumers have been paying over the last couple of years in America, it would not be out of line to suggest that the real rate of inflation is 15-20%.

Bernanke and Paulson believe that the proper way for the dollar to behave in an environment like this is to increase in value. Because they are threatening to raise rates, it is doing just that. Once they print a few more batches of worthless cash and the American public are hit with another round of price increases, maybe the dollar will increase in value some more.

1 comment:

beebs said...

Shadow Government Stats
has the "pre-clinton" CPI at just over seven percent.

The dollar is being destroyed to bail out the big banks and their crappy loans and CDS-CLO-CDO and etc.

Just wait until all the dollars and bonds that China and Japan have on tap come rushing back to the US.