Destination Hyperinflation: America on a high-speed train to poverty?
By Emeka UmeFreelance Reporter, The VOICE
The term Zimbabwean School of Economics was coined by Marc Faber, a well known Swiss economist in describing America's monetary policy. This of course is a spoof of Zimbabwe's militant monetary policy of Print and Spend. A fellow on the Internet coined it the Mugabenomics (Reference to Robert Mugabe, the thug currently ruling Zimbabwe).
For those of us indifferent about global politics, The Nation of Zimbabwe is currently going through a phase known as Hyperinflation or uber-inflation This means that the purchasing power of the Zimbabwean currency is just worthless.
Knowing that, you would think that the wise men and women of Capital Hill, The Central Bankers [US Federal Reserves] and the Obama White House would do the right thing, but I guess not. When the Feds lower interest rates, they are basically printing money. The sad thing is that this printed money is created without value – in other words, there is no asset created that that this money can be linked to. Therefore, the money you have in your pocket has to be devalued to give value to that brand new unearned dollar.
Now, as of August 2008, there was about $7.6 trillion of money in circulation (that includes the $1 note you have in your wallet to what you have in your bank account). Also remember that as of early 2008, the US economy was growing at about 2% a year, so the dollar was quite stable and not prone to hyperinflation.
But between August & December 2008, according to the International Herald Tribune, the Federal Reserve's printed over $1.8 Trillion MORE money to pay for the bailouts. That is $7.6 trillion that was already in the Economy + $1.8Trillion of brand new printed money. Between August 2008 and February 2009, the amount of dollars according to the M2 (Money supply measurements) rose 15%. That's 15% more money pumped into the economy. Remember that this is happening as the US Economy is shrinking For instance, in the 4th quarter of 2008, it shrank by 6.3%. On average, it takes about 9-18 months for the printed money to trickledown to the common folk (i.e. me and you). Imagine a Dollar 15% more worthless than it is today – for instance, in December 2008, you buy a bottle of Gatorade for $1. A couple of months later with the devalued money, a bottle of Gatorade would cost you $1.15. Now put that in context of everything you buy from bread to gas.
But the Central Bankers [Feds] still weren't done.
On March 18th 2009, they [the Feds] announced that they will pump in an extra $1.2 Trillion to bailout even more irresponsible banks and institutions. That's a total of $3 Trillion printed out of thin air in a 7 month period.
Federal Reserve Chairman has found a cure for ALL America's economic problems: If the economy isn't not moving fast enough, Print money. If the Economy slows down, print again. If it comes to a halt, print even more. It if begins to shrink, Print more than ever. Just keep printing.
That is the philosophy of Barack Obama, George W. Bush, Ben Bernanke, Alan Greenspan Henry Paulson and Tim Geithner. They are all from The Zimbabwean School Of Economics. The fact is that these things have been tried before in the Weimar Republic [Post WW1 Germany where The value of the German mark went from 4 reichsmarks to 1 dollar to over 1 trillion reichsmarks to the dollar at the peak of the inflation in 1923] and currently is in Zimbabwe where 500,000 Zimbabwe dollars, which is the equivalent of about 25 U.S. cents
With the Central bank's [Federal Reserves] current policies, America is heading to Zimbabwe on a Ferraris. It's up to you to stop the politicians and the Central bankers [Federal Reserves].
Stop electing idiots. Stop letting them fool you. Educate yourselves. Turn off the TV and read a book.
