America Braces for an Inflationary Hurricane
Its always the calmest before the storm hits
With todays news that the US Treasury will be starting a bond buy back program in 2024, we want to address a critical issue that is sending shockwaves through the United States and is increasingly becoming a cause for concern among economists, financial experts, and everyday Americans alike: the looming threat of an inflationary depression. It's a complex issue with far-reaching consequences that we believe deserves your attention.
The Inflationary Spiral: A Precarious Situation
At the heart of this crisis lies a perfect storm of factors that threaten to plunge the U.S. economy into an unprecedented crisis. The foremost concern is the massive deficits that the government has been running, averaging a staggering $1.7 trillion a year since 2020. These deficits, when left unchecked, can have a cascading effect on rising consumer prices, which we have be experiencing since 2021.
Federal Reserve's Struggle with Interest Rates
Another critical element in this equation is the Federal Reserve's inability to raise interest rates sufficiently to curb consumer spending. As inflation rates rise, the traditional monetary tools to control them become less effective. The current economic landscape is vastly different from that of the 1970s and 1980s when higher interest rates were a more viable solution. Today, the debt-to-GDP ratio stands at 122%, severely limiting the Federal Reserves ability to increase rates without crippling economic growth.
The Debt Dilemma
The national debt continues to soar, rising drastically without corresponding increases in taxation or meaningful spending cuts. This has led to interest payments on the debt alone reaching a staggering $700 billion annually, a number that's only set to grow with higher interest rates. Without a more balanced fiscal approach, the government is resorting to digitally printing money via the Federal Reserve to meet its financial obligations.
Social Welfare Programs Hang in the Balance
Compounding the issue, essential social welfare programs such as Medical at $1.6 trillion, Social Security $1.3 trillion, and income payments like WIC $700 billion are under immense financial. The dire financial landscape puts these programs at risk, threatening the well-being of millions of Americans who rely on them for crucial support as the checks they receive are losing more and more purchasing power as the inflation indexs are not keeping up with real world increases.
Rising Gas Prices: A Glimpse of What's to Come
Gas prices are currently on the rise, again, approaching record highs, even though oil prices hovering around $90 a barrel down from their record high of $145. If oil prices continue to climb, the potential for an oil shock at the gas pump looms large, a development that could easily push the U.S. economy into a recession reminiscent of the late 1970s.
A Call to Action
It's crucial to understand that this conundrum is a complex web of economic challenges. While Americans may still be receiving decent salaries, their quality of life could be drastically affected as inflation erodes the value of their earnings at a faster pace.
We hope to raise awareness of this issue so that we, as a nation, can navigate these treacherous waters. We must advocate for responsible fiscal policies, increased transparency, and informed decision-making to mitigate the risks associated with this growing crisis.
In the face of such potential devaluation of wealth, we encourage you to stay engaged, stay informed, and seek opportunities to protect your financial well-being. The road ahead may be uncertain, but with knowledge and collective effort, we can hope to safeguard our economic future.
**The Coastal Journal encourages you to stay informed, engage in conversations about the implications of monetary policies, and hold our leaders accountable for the betterment of our society.