Inflation coming our way

 

Henry Thompson

 

Quantitative easing by the Fed increases the money supply.  Over the coming years, the result will be inflation.  The government prints money to cover its deficit spending.  Government debt already exceeds yearly national income and is growing with expanding public spending.  Inflation eases the government debt crisis by decreasing the burden of paying creditors. 

 

After 20 years of 5% inflation every dollar will be worth 38 cents.  Inflation may be much higher as during the oil price controls and debt crisis of the late 1970s and early 1980s.  Stock prices will have to rise to keep up with the coming inflation.  Starting at 12,000 in 2012 the Dow Jones stock average will have to reach 31,000 in 2032 to buy the same goods and services with 5% inflation!  New “milestones” for the DJ will only keep up with inflation.