Government needs to fill up the gap for consumer spending to delay the collapse

I am not trying to cause panic but telling the truth, so you can protect yourself from the collapse. Also I hope government can really come up with a plan can heal the economy in the long run. Government spending now account for 21%+ of GDP and growing. U.S keep borrowing and spending while a mountain of debts pressure comes from foreign countries. Now U.S secretly printing dollar for interest payments and also inflating the economy with so called “stimulus bills”, $700B and then 787B. It is also came up with 2T from nowhere to aid the banks without disclose anything about it in 2008.

While it is possible the amount the government intends to spend could cause an illusion of growth we still will collapse either this year or next or in 2012.

Remember that our fiscal policy was unsustainable for decades. It got worse each decade with each series of government spending sprees to end a recession. Now, we are to the point where no matter how much we borrow we can’t have real growth. “Inflation – the real threat to sustained recovery”

Inflation is actually about 6% using calculations for CPI the same way we did in 1980. Only with hedonic adjustments and substitutions is CPI reported as being flat. Why is that important? Because even if they say we will have 2% or 3% or 4% growth, it will still be negative and CPI will rise over 10% with any recovery due to the money we have pushed out into the global economy.

This has nothing to do with Bush or Obama. It is decades of bad policies based on Keynesian policies and debt-based-expansion.

We can never return to 70% of GDP coming from consumers unless they are spending more than they earn.

Debt will keep spending down for at least a decade if not more.

However, if this President didn’t do what he is doing as far as stimulus, the people would politically crucify him as would the media and political leaders in both parties.

There is no way out. We can only delay, not avoid, a collapse. If you know of a way, please let your Congressman know what it is.

Related Posts:

• The great depression and this crisis have to be viewed from the perspective of the run up to the crisis.
• GDP is not a good indicator of economic health; We are heading to a CRASH.
• Why people are buying?
• A big rally on toxic asset buying today, the real problem became more severe.
• The stimulus package doesn’t have two years to work. The dollar can’t last that long with this type of borrowing.

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