Inflation Coming??

The Economic Collapse column has three graphs for you to look at. They have inflation written all over them.

Sadly, we have now gotten to a terminal phase of the debt spiral. The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080. Remember when I used the term "debt spiral" earlier? This is what a debt spiral looks like....

#6 The Federal Reserve system is designed to cause inflation.

As U.S. government debt expands at an exponential pace, it inevitably causes inflation.

Most Americans believe that inflation is a fact of life, but the truth is that the United States has only had a major, ongoing problem with inflation since the Federal Reserve was created back in 1913.

Sadly, the U.S. dollar has lost well over 95 percent of its value since the Federal Reserve was created.

If the Federal Reserve did not exist, it is theoretically conceivable that we could have an economy with little to no inflation. Of course that would greatly depend on the discipline of our government officials (which is not very great at this point), but the sad truth is that our current system is always going to produce inflation. In fact, the Federal Reserve system was originally designed to be inflationary. Just check out the inflation chart posted below. The U.S. never had massive problems with inflation before the Fed was created, but now it is just wildly out of control....

#7 The Federal Reserve has decided to play bizarre games with our money supply.

In a desperate attempt to revive the dying U.S. economy, the Federal Reserve has resorted to chucking gigantic quantities of cash into the financial system.

Remember how earlier I explained that normally whenever new money is created that more debt is created?

Well, lately the Fed has been resorting to a trick called "quantitative easing". What "quantitative easing" means is that the Federal Reserve zaps massive amounts of money into existence out of thin air and starts spending it on anything that it wants to buy. Lately, this has primarily been done to buy up U.S. government debt.

But isn't that "monetizing the debt"?

Of course it is, and it is a blatant Ponzi scheme.

However, what is even more alarming is what this is doing to our money supply.

Just look at what has happened to our monetary base since about mid-2008....

Does anyone in their right mind believe that this is not going to cause horrible inflation?

Right now most of the new cash is tied up in the financial system, but once it gets out into the regular economy watch out!