U.S. Inflation to Approach Zimbabwe Level, Dr. Faber Says

May 28, 2009 by · Leave a Comment
Filed under: Opinion 

All this money pumping has to go somewhere and when you hold interest rates so low, you force people to speculate on other more exotic investments than government bonds to get a return that outpaces the inflation rate.  

Inflation is picking up in the commodity arena, just look at the prices on food and energy.  I love how all measures of inflation seem to pull these out of there figures but those costs ate the ones that affect the most amount of the population being that we still have a large wealth distribution gap in the U.S.  Something has to give way at a point and my call is the dollar and inflation on the rise to compensate for our spending and bailout policy.

News (Bloomberg):

The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.”

Federal Reserve Bank of Philadelphia President Charles Plosser said on May 21 inflation may rise to 2.5 percent in 2011. That exceeds the central bank officials’ long-run preferred range of 1.7 percent to 2 percent and contrasts with the concerns of some officials and economists that the economic slump may provoke a broad decline in prices.

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