You can’t cure a bubble by reflating it, says Bill Bonner. But that won’t stop the Obama administration from trying. Bill says we should get ready for trillion-dollar budget deficits, huge infrastructure programs, and bailouts for “brain dead” businesses. But none of this will be able to stop the economic correction that has to happen.
In the current monetary system, the supply of money is not constant and the central banks of this world are free to create as much inflation (money-supply growth) as they want. There is a catch – the central banks can only do so as long as they can keep inflationary fears in check by constantly reminding the public of the threat of deflation.
Inflate or Die! The Federal Reserve has been on the US scenes since 1913. Not even Biblical plagues lasted 95 years. The ultimate effects aren’t much different. The Fed may or may not make it to a centennial commiseration. They are on the ropes.