Another Expressed Economic Fear

In a recent interview, a noted economist opined that it was quite possible for America to be soon facing a 20% inflationary impact on the US dollar. This crushing blow to our economic recovery would arise from only one change in the current status of our international monetary relationships. That change would be the cessation of the purchasing of US Government debt by Communist China and Japan. This reluctance to invest in an Obama led United States may have already begun.



Just over a month ago China made a ground breaking investment when it loaned the International Monetary Fund [IMF] the equivalent of $50 Billion. This single transaction equaled just over 6% of the total amount that China had previously placed in federal government financial obligations. More importantly it represented $50 Billion that did not go into the coffers of Washington. To add to this concern of future Chinese investments in American government debt instruments are the reports that China has opted to buy all the gold that it can locate rather than put that money into the future of America.



On the concern over future Japanese investment, there is no doubt that the voiced desires of that nation's newly elected government are to separate from Washington and concentrate more on Far East Asian relationships. The USA does not qualify as being of the Far East Asian genre.



If there is in fact substantial inflation in America, the chances of a rapid economic recovery become remote. The dollar becomes less valuable; less is spent on consumer items because more has to be spent on food, housing, utilities and gas. With no growth in the economy there is no reduction in the number of unemployed now generally accepted to be at 17%. The bottom line is that 20% inflation would be disastrous to our nation.

The reaction from the Obama Administration is yet again nothing. However, Jeffrey Lacher, the President of the Federal Reserve, announced last week that the "American economic rebound was robust". He must have missed that in September another 263,000 Americans lost their jobs and that official unemployment was now at 9.8% and that 99 banks have failed this year and that 1,046,499 American have already filed bankruptcy in 2009.

Obama may be failing in all aspects of Presidential leadership, particularly on economic matters, but he gets a good mark for effort in procuring Olympic Games. He failed in that category too but he and his wife sure looked good in Copenhagen. Maybe after January of 2013, when he is looking for a job, he could secure a position with the IOC