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|Subject: Re: RON PAUL: The Federal Reserve Debt Engine||Date: 4/27/2004 9:53 PM|
|Author: pauleckler||Number: 10044 of 35387|
"Jimmy Carter asked Paul Volker to kill inflation. He did but it was hard on a lot of people."--brucedoe
Let's not forget that those 20% CD rates happened in the midst of the saving and loan crisis. They were paying incredibly high interest--higher than they could afford, higher than their mortgage holder could pay--simply to keep people from pulling out their funds to invest it at higher yields elsewhere. This event would have revealed their lack of assets--before they were ready. The economic trauma could have been very large. So interest rates were pumped up artificially to keep the truth hidden.
"I tend to think we should be in a period of raging inflation, but we aren't except in services. My fear is that the longer inflation is put off, the worse it is going to be."
The weak dollar certainly is inflationary. One fear is that inflation declarations will merely be supressed until after the election. Another is that inflated money will be used to solve the problem of too many promises, too high expectations among retiring baby boomers.
It won't work for Social Security which is already automatically linked to inflation, but various games can be played. It could get bumpy in this new world of economic uncertainty.
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