The U.S. Government is in the process of running the printing press and debasing our currency. The true definition of inflation is the increase in the money supply... price inflation is just the effect of monetary inflation. Many high profile companies continue to slash dividends and make their stocks not worth holding. The only reason to own a stock is for dividends!
The scandals at AIG should be blamed squarely on the U.S. Government. You cannot just give a heroin addict money and expect them to use it for college and to pay off their debts. AIG is a bad company and they should have gone bankrupt. All the U.S. Government did was pay off their gambling debts to Goldman Sachs, etc. That is taxpayer money that will NEVER BE RECOVERED!!!
There has recently been a big shift away from the U.S. Dollar / U.S. Treasuries into commodities / foreign stocks. I expect this trend to continue and U.S. stocks / real estate to lose value. At the same time, however, I expect consumer good prices to increase. Everything from food, energy, and clothing will become very expensive due to limited inventories. People will continue to lose their jobs putting additional pressure on real estate prices and consumer credit across the country.
Friday, March 20, 2009
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