Chapter 5
When the economy gets tough it has a continued domino effect on people. For example, there can be a lack if jobs so there are fewer people with money to spend. They aren’t able to pay for basic items that they need, let alone additional items.
As a result, those that offer basic items find they are in a crunch. They don’t have enough money coming in to continue production at such levels. Businesses that offer goods and services that aren’t necessary also going to struggle. It makes sense that no one is going to buy what they want when they can’t afford to pay for what they really need.
Too many people are blaming President Obama for the tough economy, but the truth is that it was in dire straights before he ever stepped into that position. There have been many elements that contribute to it. The government being heavily in debt is one of them.
Huge expenditures on things such as the war in Iraq add up quickly. Now that the government is getting involved with the concerns in Korea there is speculation that there will be war in that direction too. This means more National debt and the country is already trillions of dollars in debt and it continues to grow.
In order for hyperinflation to be prevented or to be ended once it has started, there need to be efforts in place that will stop the rapid growth in terms of the stock of money. Sometimes it takes the government of a country to create a new type of currency.
It isn’t a fast process and there is never a quick solution that can be implemented. As result hyperinflation can last for a very long time. It is something that can really weaken an entire government system and to make them vulnerable.
Complete fiscal reform has to take place from underlying government levels at the same time. This can only be done though by successfully bringing the budget of the government back into balance. As we all know that isn’t going to be an easy feat for the USA to do.
The overall efficiency of the economy of a country is ruined when hyperinflation occurs. It becomes an exhausting game though of people tossing money and choices around.
On the one hand, they want more money because of the mentality that we have been driven by for so long. On the other hand, what they really seek is the overall value associated with all of it.
Unless you have been living under a rock, you are aware of Sarah Palin and the efforts she has been involved with. After losing the Presidential election where she was running for the office of Vice President, she has been very active with the Tea Party.
Many experts believe that such efforts led by her will be a significant influence on hyperinflation occurring. Why? It is based on statistics that show that while there has been a steady rise in inflation, it wasn’t until the Tea Party efforts started that the problem skyrocketed.
According to the statistics that have been kept regarding such data, there is a belief by many that the Tea Party efforts are going to continue to cause inflation to rise to the point where hyperinflation isn’t something that can be sidestepped. It is anticipated that this will occur in 2019.
Who can forget the bailouts for the banks and even for the car dealerships? They have all contributed to problems with our economy in the USA. They have led us down a path of more debt and less value for the dollar. Even though there are structured plans in place for those bailouts, the question is how much with the Federal government actually be out financially with them by the time it is all said and done?
By the same token, you have many citizens that are upset by all of this. They see big corporations and entities getting financial help and bailouts from the Federal government all the time. They also see that the USA government sends funds around the world to help such as with the Iraq War.
However, there are so many people in our own society with piles of debt, living off of their credit cards, and losing their homes. There are people out of work and they are asking who is going to be there to bail them out? They are tired of holding on tight and hoping things will turn around because they just continues to be going in the other direction.
Of course, the response from the Federal government is that they do help citizens in the form of stimulus programs. This includes programs that offer tax breaks, tax stimulus checks, rebates, and even those hefty programs that help first time home buyers to get a rebate check for up to $8,000.
Lower taxes seem to be what everyone is asking for, but there is a reason why we have to pay them. When there are fewer taxes being taken in then it becomes harder for the Federal government to pay down their debt which is a contributing factor to hyperinflation. As you can figure out at this point, it can call quickly become a Catch 22 situation with no simple solution.
This is because the answer isn’t to increase taxes and then to pay off the Federal debt quicker. It all has to be balanced with what people need. They have to have hope that their desperate financial situation isn’t going to control them forever. If the government takes that away it will be chaos.
With hyperinflation, we need to realize that the overall purchasing power of people in the USA will be less than it is right now, and that can lead to the collapse of the US dollar. The reason is that there is still consumption taking place.
What is missing though is investing which is what really balances out the entire process in the world of economics? This lack of faith also encourages people to invest in the currency of other countries rather than that own. That can continue to drive the overall economy of the USA into the ground at an amazing speed.
Added to all of this is the significant factor relating to irresponsible borrowing. It is amazing that people have the ability to borrow so much more than they can repay. It is true that many Americans are only a paycheck or two away from losing everything. They owe so many creditors that each time they get income coming in almost every bit of it goes right back out.
This doesn’t leave much for investing or for saving. It also doesn’t leave much for them to use for future purchases. As a result they continue the cycle of borrowing. There are billions of dollars out there owed to creditors and that is fine for them as long as they are getting paid. Between the principle and the interest, they are making huge sums of money.
Yet when you have a high percentage of people defaulting on those payments you are going to have a huge hit on the economic status and stability of the country. What is ironic is that to help prevent hyperinflation the government often promotes more lending and more spending.