Inflation, not artful government policy, will pull us out of the financial hole we are in. When Bernanke speaks of a new QE3 don’t flinch. It’s really the only way out and the Fed knows it. When debt is the issue, massive debt, the kind that has been accumulated over the last two administrations kind of debt, taxing the rich and trimming the budget just doesn’t cover the shortfall.
The Fed is not waiting for the rest of government to develop a fiscal policy that can restore financial sanity. Bernanke is expanding monetary policy in an effort to get the nation’s finances at the federal, state and local levels back into balance with expected revenues, including trillions in unfunded entitlements and mandates. Because of the sheer magnitude of this task and a lack of political will to do so, it’s unlikely this can be accomplished through growth and cost-cutting. So the Fed has settled upon inflation as the remedy.
Inflation is well-known for its long-term corrosive effects, but few ever speak of inflation’s short-term benefits. Inflation robs from those with wealth to benefit those with massive debts, such as Uncle Sam and states like California, New York and Illinois.
Inflation is really a necessary evil and it will come as night follows day. So disregard what Ron Paul says and go out and buy some cheap property to rent, investigate some inexpensive stable ETFs and at a minimum buy that painting you have had you eye on.