We have all seen these types of economic warnings for many years now. Yet, the economy has boomed on. This time around, the warning comes from Deutsche Bank.
Their concern?
Inflation!
All due to the massive amount of government spending that has taken place since the COVID pandemic began.
Deutsche Bank explained,
The current fiscal stimulus is more comparable with that seen around WWII. Then, US deficits remained between 15-30% for four years. While there are many significant differences between the pandemic and WWII we would note that annual inflation was 8.4%, 14.6% and 7.7% in 1946, 1947 and 1948 after the economy normalised and pent-up demand was released.
The Hill
If inflation reached anywhere near those levels, we would be in big trouble.
However, what exactly did we expect to happen? How is any of this a surprise since the Federal Reserve doubled its balance sheet during the pandemic to $8 trillion dollars?
Compare that to 2008 when it increased by $1 trillion, and then another $2 trillion over the next six years. So as we all know by now, 2020 brought major record debt to our nation.
I have to tell you, I laughed at the next line in the article that explained, “Any economist will tell you, printing gobs of money over a short period is a key inflation ingredient.” They continue stating, “We have seen this happen many times over the past century. From Weimar Germany to present-day Venezuela, massive money printing never works and always spurs out-of-control inflation.”
So where exactly have the “any economists” been?
I mean, all the kings horses and all the kings men said it was a great idea to print, print, print to the moon to save America! Yet, they now want to play Monday morning quarterback and tell us it was a bad idea. Suddenly, “Modern Monetary Theory” is a bad idea.
If inflation kicks off to those levels this year and into next. It seems most likely that would cause the not so Federal Reserve to raise interest rates. That’s good for your savings account, but bad for people who love debt, (car loans, home loans, everything loans).
At this point, it seems house prices may finally be starting to peak. If interest rates go up, we could finally see prices come down to more realistic levels.
Inflation Numbers From The Horse’s Mouth
Alright, so here is the press release from the Bureau of Labor Statistics (BLS), the horse’s mouth so to speak.
The BLS explains,
Over the last 12 months, the all items index increased 5.0 percent before seasonal adjustment; this was the
largest 12-month increase since a 5.4-percent increase for the period ending August 2008.
The all items index essentially averages out all consumer items which can be found on Table 7. So you read the quote, over the last 12 months, we have had a 5% increase. So as the economy barely emerges from nationwide lockdowns, we are already seeing inflation shoot up…
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Due to… Record government spending.
Now, this is where we get political, you know you love it!
Since government spending during the pandemic is the root cause here.
Who are you going to blame?
A noted conservative website pinned the blame solely on Joe Biden. I really had to laugh at that. The last time I checked, there was a Republican in power when COVID struck, and debt went through the roof.
I find it utterly amazing that grown adults can never objectively look at the facts. Instead, we must always blame the other guy for our problems. Politicians and political pundits always pin the blame on someone else to smear the other side.
That right there is a major, major problem with politics in our nation. We can never take accountability. Therefore, we always come away with the idea that its someone else’s fault. With that kind of attitude, we will never be able to approach a problem and apply real solutions to it.
Christians, read that again and apply that to your daily life. Always take accountability when you mess up in life. People will respect you for it and you will learn from it.
Which brings us to…
Federal Taxes, Spending And Deficit All Set Records Through May
CNSNews reports,
The federal government set new records in the taxes it collected, the spending it engaged in and the deficit it ran through the first eight months of fiscal 2021 (October through May), according to the Monthly Treasury Statement.
Psst… This would account for Trump’s term as well.
Since we started this website, we have ran that phrase for Obama, Trump, and now Biden. It no doubt will continue to be ran for Biden quarter after quarter. No surprises there.
So it all goes back to what we have said over and over again during the years. The new President is the same as the old President. They may have some different policies, one may be a bit better than the other.
Nevertheless, in the end, our nation just gets run into the ground with each new guy promising us some version of hope and change.
Since we like to point fingers and never take accountability for our political party, the enemy just keeps on keeping on.