Back in October, when I was just beginning to write this blog, my second post was “Fix the Mortgage Mess.”  See it here.

I still feel as I did then.  Now seeing that we have turned over billions to Congress and they have happily spent it to no effect, I am more concerned that we turned the chicken coop over to the fox to run it.  

Now what I see happening is a never ending stream of dollars being printed and distributed by our government.  I think it will have little effect on curing what ails our economy, but I do think it will accomplish two very significant things, both very negative in my opinion.

First, I see printing press money driving inflation dramatically.  It makes sense in one way.  The US Government issues treasury bonds in 2009 dollars with a rate of less than one percent interest.  They then pay them off, in the future with, say, 2010 dollars.  though they have had to pay the 1% interest, if inflation has risen by 2%, they end up coming out ahead by 1%.  Not bad.  You (or China or Belgium) lend your money to our Government and then pay for the privilege.  Now inflate our currency at 5% per year or 10% per year.  Pure and simple, the US Government pays back its debt with dollars that are worth a fraction of what they were when they were borrowed.  So printing money helps inflation (and decreases the value of the dollar) so that the Government pays its debt with 90¢ dollars or maybe less.  Only small problem is that an increasing portion of our population is retired and living on a fixed income.  Inflation hurts these people and many others, but not the government and Union employees who have contracts with cost of living allowances.

Second, I see at as yet another fantastic way to increase the power of the incumbency.  In other words, if I am right, everyone now in congress will have even more dollars with which to buy votes, thus making it even more difficult to defeat them.  You can even go further and say that the majority party will have more control of the use of the dollars and will therefore be better able to elect who they want, further increasing their majority.  

I would be very pleased to see President Obama put the brakes on the expenditure of all the “bailout” dollars that are being thrown around.  I would also love to see him understand that Roosevelt and his policies did not pull us out of the Depression.  Only WWII did that, and we have been saddled with many of the failed social programs that Roosevelt started to this day.

Advertisements