33 states out of money to fund unemployment benefits

April 12, 2010 by · Leave a Comment
Filed under: Economic News 

In my opinion on readings on different financial crises, this might be the first sign of how we are going to see a bout of high inflation.  We are looking at about 5 years of high unemployment, at the current pace if we can create 250,000 jobs per month which we have only done once and that was during th go-go 90’s before the dot com bubble bursting.

If we look at the $38.7 billion borrowed so far to shore it up, that could turn into hundreds of billions of dollars between now and 2015.   This along with healthcare and a rising federal deficit equals a large amount of new debt that will be issued to cover those expenditures.  That means more Federal Reserve Notes (U.S. Dollars) in the system and without productive gains at the same time, will equals increased inflation which will make this bad situation a nightmare.

Most economist are talking about the low to zero threat of high inflation.  Whenever we have such a strong consensus, it is wise to really look at the alternative outcome.

CNN – With unemployment still at a severe high, a majority of states have drained their jobless benefit funds, forcing them to borrow billions from the federal government to help out-of-work Americans.

A total of 33 states and the Virgin Islands have depleted their funds and borrowed more than $38.7 billion to provide a safety net, according to a report released Thursday by the National Employment Law Project. Four others are at the brink of insolvency.

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