PrintMarch 17, 2011
Inflation, Back to the '70s We Go!
Conservatives warned about it, economists predicted it, and now it's here. Inflation has arrived and it's taking off like a rocket. IBD reports that wholesale prices, often a precursor to consumer prices, rose at an yearly rate of 8% in February. The story warns: "Food prices today are the highest on record, rising at double-digit rates (see chart). Meanwhile, gasoline tests the $4-a-gallon level, the dollar is weakening, and gold is near its all-time high."
This ominous surge is attributable to very high energy and food prices driven mostly by our government's reckless spending that's accelerating rather than abating. Combined with Obama's suicidal energy policies, continuing political instability across the Middle East, the government's stifling regulatory hold on our economy, the EPA's assault on manufacturers and energy producers, and the recent catastrophe and devastation in Japan, a dangerous perfect storm of inflationary and destabilizing factors are emerging which will spell disaster for our economy and negatively affect all American consumers' purchasing power and wealth.
Despite the danger signs all around us, Congress and the White House are continuing to fiddle while the country burns. Government deficit spending has increased six-fold since 2008. While our National Debt heads towards $14.3 Trillion, almost 100% of our GDP, and federal deficits of $1.3 Trillion for 2010, $1.5 Trillion for 2011, and coming $1.65 Trillion deficit for 2012, the Democrats offer a ridiculous 0.1% "cut" in spending, while Republicans attempt a tiny 1.6% cut, both of which got rejected by the Senate. Washington is clearly not interested in cutting spending and reducing the corrosive inflationary tsunami they are creating.
Meanwhile, the Obama administration refuses to lift the off-shore oil drilling moratorium, will not allow any new development of Alaska's vast oil reserves, refuses to approve even one nuclear power plant project (of the 21 pending nuclear facilities applications), continues to demonize and hinder coal development, and has empowered and encouraged the EPA to unreasonably expand its stranglehold on US manufacturers and energy producers. As AT commentator Jeffrey Folks has observed, "At the moment when new energy supplies are most needed, there are no plans to increase supplies -- only plans to reduce them. One would almost think that this President wants to bring America to its knees."
Obama's America is starting to look more and more like Jimmy Carter's America. We're quickly regressing to the nightmare scenarios from the 1970s. Inflation has arrived and it looks like it's here to stay. If our politicians don't drastically change course and start acting like mature and responsible leaders things are going to get worse, much worse.
Chris Banescu blogs at chrisbanescu.com.
