USA is considering to raise the debt ceiling - Will this eventually result in a runaway-inflation?
US public debt will quickly approach and surpass 100% of GDP in the near future. Should we all start bartering because of the fiat $$$$$
Inflation always seems to get a bad rap, sure, there are potential downside effects but also potential benefits as well.
Remember, everything usually "Washes" out with the economy. For instance right now we are in a flat environment just slightly above the "Deflation" line. Some think this is great news but in this type of environment your bank accounts earn an anemic .20% interest on a 6 month CD if your lucky. Sure prices on consumer goods are lower but your income stream is lower too.
The exact opposite occurs with inflation, the cost of consumer goods rises but that same CD now yielding .20% will traditionally yield 4.00 to 5.00%.
Just a matter of perspective I guess.
I think we are already past the point as to whether we can expect inflation of a significant level. Back in the Carter days, the government had a greater demand for money than the consuming public and thus inflation was rampant. We are seeing fuel prices on the increase which in turn will raise the price at the cosumer level which is nothing more than the leading edge of inflation showing up like a cold front from Canada. At the same time, we have elected officials more willing to increase debt ceiling than they are to reduce earmark and pork-barrel spending. America essentially has no fiscal restraint because our political sector has no belief in it. Power is money and they must have it! WB
IMHO: Iraq War inflation will be at least as bad as Vietnam War inflation
"The most consistent short-term economic effect of war is to push up prices, and consequently to reduce living standards. This war-induced inflation was described in ancient China by the strategist Sun Tzu: "Where the army is, prices are high; when prices rise the wealth of the people is exhausted" (Tzu Sun, c.400 BCE) His advice was to keep wars short and have the money in hand before assembling an army."
"Paper money ensures persistant inflation and persistant inflation is the most easily enforcible way to encourage the consumerism and waste that our civilization is based around. " ------
http://www.economicpolicyjournal.com/20 … n-tzu.html
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