Jimmy Carter Graces Cover of Time several times in 1979 - as dollar declined, oil prices rose, unemployement and inflation created the "misery index"
In a speech before the Economic Club of New York, Federal Reserve Chairman, Ben Bernanke, predicted continued unemployment through 2010 yesterday. In addition, Bernanke noted that banks were less likely to release loans, another factor barring economic recovery. This came on the heels of a further weakening dollar and the continued rise of gold prices. Add to the mix, rising oil prices on the fall of the dollar leading 2010 to recap the misery of the late 1970’s. Only one thing is missing from the scenario; inflation.
According to the Bureau of Economic Analysis the PCE inflation rate (personal consumption expenditures) for September was 1.5% , with the next report due in November. One of the biggest factor that contributes to inflation is a weakening dollar. As the dollar weakens, prices rise – hardest hit: those who are unemployed, underemployed and living on a fixed income.
Enter the IRS who will be asking millions of American’s who either work two jobs, or are married (see AP article for all categories )to pay back up to part of the “stimulus” found in paychecks since April. This will increase the burden on those seniors, who are now facing no cost of living increase in Social Security disbursements and a rising Prescription Drug premium (Medicare D).
An interesting article, entitled “The 1923 German Hyperinflation”, was recently re-published by the Philadelphia Bulletin – it is well worth the read (here) Although one does see an increase in Government dependent programs (note: some are still pending, specifically the massive health care reform bill), it is the similarities between the late 70’s rather than the 1920’s Germany which gave rise to Hitler, that are more striking.
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