First Signs of the Coming Hyper-Inflation

Excerpt Front Page Magazine:

As part of the stimulus/recovery package, the Fed has been buying up massive amounts of Treasurys as well as mortgage-backed securities. But as the grim reality of delusional social-realignment programs and trillion-dollar deficits emerges from the dissipating post-election rapture, it is becoming clear that the government’s printing presses will have to keep spinning at dizzying speeds around the clock to fund both the stimulus as well as future outlays as the government either nationalizes or “reforms” anything that moves or breathes—financial institutions, autos, healthcare, markets, energy, credit cards—the list grows by the day. The money has to come from somewhere, and not even fleecing the “wealthy” will cover the cost of recasting the nation in the Obama vision. No, the government will have to continue to sell massive amounts of Treasury bonds, although it is no longer clear who will be lining up to buy them as the world begins to lose faith in robustness of the dollar and the ability of the U.S. to control unthinkably profligate spending in its quest for a utopian society—or at least one that more resembles Europe’s mildly-modified socialism.

Ah, supply and demand, one of the myriad simple economic laws that for some reason appear to exist beyond the grasp of an Obama administration chock full of Harvard graduates and Nobel laureates: When supply outstrips demand, prices fall. The burgeoning surfeit of Treasury securities is beginning to overwhelm the demand for them, so the price goes down and the yield rises. This will make it even more expensive, of course, to kite this bacchanalia of government growth, influence, and power over its citizens. So investors shun and abandon long-term paper, with its open-ended inflation exposure, and seek safe haven in short-term securities. That’s how the yield curve steepens.

And so the vicious cycle continues: The more the administration proposes to spend, aided and abetted by congressional cohorts, the more funds the government will have to raise at increasingly disadvantageous terms. Higher Treasury rates will, of course, push up interest rates across the board. Attention, Obama acolytes: It’s called inflation, and it is a cancer that eats away at a nation’s economic well-being and social fabric. Go and ask nearly any Latin American or Eastern European country.

I would imagine that when the full effects of Obama's spending and waste are finally realized, inflation will have US paper currency of equal value with toilet paper.

And this what it will feel like.

Posted by Seaspook