U.S. Policies Will Fail to Avert Hyperinflation

Economics / HyperInflation
Mar 25, 2010 - 06:57 AM

By: FutureOfDollar

The United States send weak economic signals insufficient for a meaningful and sustainable economic expansion required to gain back confidence of national and foreign investors, futureofdollar.com finds in the present research. Political decision-making process is paralyzed by numerous disabilities, while external market constraints obstruct economic recovery. Stagflation is an imminent danger.

SUMMARY

GDP numbers have been significantly influenced by government intervention into the economy and are rather poor at a closer look. Employment data shows rising numbers of discouraged and underemployed workers with the unemployment rate remaining high. Government financial obligations including the national debt, Social Security, Medicare, and other benefits and mandatory programs continue to pile up moving the U.S. to the first place in the world for the highest debt to GDP ratio. Budget deficit is growing with no visible turning point. Low interest rates create a risk of stagflation. The market of Treasuries is about to collapse as investors, including China, are losing confidence in the financial stability of the United States.

Weak economy is accompanied by numerous political disabilities making the recovery almost impossible. The country was unable to create a powerful deficit reducing commission. It is unable to cut growing nonproductive military (security) expenses. It does not follow its own economic advice given to other countries in similar critical situations in the past. In addition, it doesn’t cooperate with countries, which will determine the future of the United States.

Finally, market constraints make the crisis in the U.S. even deeper. High oil prices add to economic slowdown and lead to an increase in core inflation. China’s peg to the dollar prevents export growth and creation of new jobs.

All these factors evidence against the future of the dollar as a global reserve currency. Moreover, altogether they indicate increased likelihood of hyperinflation in the near future. Futureofdollar.com was not satisfied with the government’s reaction to the problem, finding that the U.S. will be unable, or even reluctant, to resist dollar depreciation.

Part I - WEAK ECONOMIC SIGNALS

1. GDP

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