“Eighty-two percent of Americans said the economy will be extremely or very important to their vote for president.” (CNN, 2008)
With oil prices at over $100 a barrel, health care going through the roof, and the collapse of the real estate market. It’s no wonder. Americans are really feeling the pain. Especially after our two latest booms: The Tech and Real Estate Bubbles. After a long economic growth trends Americans might have to start reeling in their spending habits. That’s no easy task for American’s 700 billion dollar trade deficit. (MSNBC, 2006) Americans are buying up the foreign markets. But it’s getting a little painful lately. As the American trade deficit racks up, so does the price of foreign goods. With a huge trade deficit, dollar’s are in less demand and creates a price increase. And sore Americans are waking up to a pricey situation. A situation that does not have to happen said by leading economists.
The Threat they say: Inflation
But what is inflation? Some may know it as the general rise of prices. But is this true? Economist Peter Schiff explains:
“Inflation means expansion, in the same sense that a balloon expands when you blow air into it. In economics, inflation refers to expansion of the amount of dollars in circulation, called the money supply. When new money or credit is added to an economy, thus diluting the existing supple, the general level of prices (aggregate prices) will rise…But understand the distinction: The money supply expands and contracts. Prices go up and down. Inflation and price increases are not the same thing. One is cause. The other is effect.” (Peter Schiff, 2007)
In summary, more money means your dollars are worth less.
(The size of the money supply over time.)
Painfully, Americans watch as the Federal Reserve prints more money. Thus causing prices to rise. American politicians, like American voters have spent far past what they can afford. Promised too much. As a result, underfunded social programs, entitlements, economic stimulus and wars are left unpaid. Sly politicians, instead of directly taxing the people, to pay their debts politicians increase the money supply. Thus creating inflation, and economic instability.
In the coming election, Americans will rally around their economic doctor. To heal their economic wounds. But America must demand a president of high standards. One who will steady the money supply. Or far worst side effects may way in, possibly depression.
