Inflation
during the 2010s
The increasing money supply from the Federal
Reserve will begin to accumulate and lead to 5% to 10% inflation over the
coming decades. Increased money supply
will be the only way to pay for the growing government deficits. The US government will not be able to borrow
to cover its deficits and stay ahead of interest payments. Taxpayer supported benefit programs, retirement,
and medical care will raise government deficits.
Inflation over the coming decade will solve the
mortgage/debt crisis by cutting debt. After
10 years of 10% inflation, every dollar of debt is worth only 38 cents. The lenders and those holding dollars suffer.
The recent stock market collapse was a correction to the speculative
real estate bubble. Given normal
economic returns starting in the 1950s, stock prices fell back to where they
should have been.
Remember that stock prices like all prices will have to rise annually to
keep up with inflation. Starting at
10,000 in 2010, the DJ average will have to reach 26,000 in 2020 with 10%
inflation over the decade. With 7%
inflation, the DJ will have to reach 20,000.
New “milestones” for the DJ will only keep up with inflation.