600billion dollars – Yay we are poor !
Politics / Campaigning October 12, 2015 admin 1
The american administration has decided to authorize the central bank to print an extra 600billion dollars. Enough for everyone you might think – or, just about it enough to further ruin the american economy. 600billion dollars extra is effectively a devaluation of the dollar in a situation where its already in a position of historic weakness.
The chinese have already complained that the american administration is keeping the dollar artificially and deliberately weak. The reason of course being an attempt to stimulate american exports, as a weak dollar makes american products relatively cheaper to purchase abroad. Now, the dollar was already weak – and it hadnt stimulated any sort of boom in exports, or indeed meant a positive import/export relation.
what this devaluation of the dollar does mean is that ordinary people gets further down into the mud – out on american streets. Letting the money press run wild like this means inflation is inevitable and whats worse, nothing indicates it will boost the economy locally which means it inspires a situation of stagflation – inflation combined with stagnation, the deadliest cocktail of all as you cant get the wheels going by stimulating the economy due to the inflation. So, whilst more money flowing in the streets (or pumped into a wobbly bond market as it may be) may sound good, for ordinary people the likely consequence is that their paycheque buys them less whilst prices shoot up.
Basically, the printing press is good for ultra short-term gains…but its a bit like peeing your pants to keep warm. The benefits are eaten in no time by inflation. And whats worse, it further weakens the trust in american economy and the dollar, thus potentially forcing the interest rates up – which could prove disastrous in a market already shaken by the latest blow to the property market.
Who on earth came up with this as a good idea?
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