The Downward Spiral
Accelerating downward spiral. That is what I have been predicting for the Obama Administration for over two years. And now it's happening. Events are spinning out of control.
Rising inflation is restricting the Fed's options for keeping the economy high on monetary stimulus crack. The result? Fast developing market chaos.
On account of President Obama's economic policies, the economy never recovered from the last recession. Now it may go back into full scale recession before any recovery occurs. We may soon be living through a reenactment of the 1930s, not the 1970s. If we do not change course, there will be a double dip recession by 2013, directly caused by the economic policies Obama already has in place under current law.
And now we have riots in Obama's Amerika, kept quiet by the media, echoing the violence in London.
Inflation and the Fed
Rapidly increasing producer price inflation is now spilling over into the consumer price index. The CPI soared in July at an eight percent annual rate, up close to four percent over the past year. The Wall Street Journal reported on Friday that these price pressures "could constrain the Federal Reserve from taking more action soon to spur economic growth and hiring." Or, as the Journal quoted J.P. Morgan Chase chief economist Michael Feroli, the budding inflation "could slow the degree to which the Fed provides further monetary stimulus."
Why is that? Because continuing to pump up the money supply could push inflation into double digits. And stopping it then will be even worse, throwing the economy into a bigger recession, just like in the 1970s.
But Rick Perry has it pegged right. The Fed is committed to pumping up the money supply right through the election, to prevent any downturn from darkening Obama's magical Dupe America reelection tour. That is why the Fed is so committed to keeping interest rates near zero until 2013. So to accomplish this, they’re running the printing presses. Inflation may well climb into double digits next year.
That inflation will force the Fed to turn off the spigot right after the election, with the contractionary effect coming in 2013, just when all the tax rate increases from Obamacare and the expiration of the Bush tax cuts will become effective. There will be a whopping recession then unless the voters remove Obama from office next year and quickly replace Obamanomics with Reaganomics, which solved a very similar problem in the early 1980s.
Obama's Strategy: Shut Down Debate
What else is contributing to national events spinning out of control? How about President Obama's abusive, deceptive rhetoric? It was evidenced in his disgraceful speech at Johnson's Controls, Inc. in Michigan on August 11, where he said:
We know there are things we have to do to erase a legacy of debt that hangs over the economy. But time and again, we've seen partisan brinkmanship get in the way -- as if winning the next election is more important than fulfilling our responsibilities to you and to our country. This downgrade you've been reading about could have been entirely avoided if there had been a willingness to compromise in Congress. See, it didn't happen because we don't have the capacity to pay our bills -- it happened because Washington doesn't have the capacity to come together and get things done.
This echoed what Obama said at a press conference soon after America's historic credit rating downgrade:
On Friday, we learned that the United States received a downgrade by one of the credit rating agencies -- not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system's ability to act.
Obama is saying that the downgrade resulted because the Tea Party had the temerity to debate and question his policies. See, it was a Tea Party downgrade, according to the Democrats' silly rhetoric. It wasn't Obama's record smashing national debt and first-time-ever trillion dollar plus deficits every year in office that caused the debt downgrade. No. It was the Tea Party-forced debt limit debate, that "month of wrangling over raising the debt ceiling," that supposedly indicated to the markets that "Washington doesn't have the capacity to come together and get things done."
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