America is sitting on an inflation time bomb and when it blows, it will have an impact on the global economy. The American government is in a state of denial, denying it's happening but inflation in the US is gathering a head of steam. Let's look at the evidence.
Gold prices have reached a record high and could break $1500 an ounce and that's bad news for the US economy.
The reason gold has been going up so high is because of the weakness of the US dollar which is being driven by the US quantitative easing policies. What's quantitative easing? It 's basically about the Fed printing more money and pumping it into the system.
Quantitive easing is like playing Monopoly with a cheat. You're beating them, they're nearly broke and suddenly they pull out thousands of dollars from underneath the table. What's the point of playing? The game becomes meaningless. That's why the dollar has collapsed.
The big problem is that all the "money" being pumped into the US economy is part of a Ponzi scheme to prop up the banks. The cash is not really going into the consumer economy, it's been going into bank 'reserves' at the Fed. This is the way it works. The banks buy US Treasuries from the feds. The Fed "prints" money: it buys US Treasury debt from the banks. The banks take the cash and use it to build their reserves. The government takes the cash and uses it to cover its deficit spending. The consumers and ordinary people who don't have jobs get nothing.
At the same time, prices are rising around America. And yet the US Federal Reserve is spinning a line that everything is under control. While 87% of Americans say they are paying more for groceries , US Federal Reserve chief Ben Bernanke says any increase in prices in prices is nothing to worry about. It's just transitory.
Anything to keep that Ponzi scheme going. And it will damage the US economy. The Feds will keep putting in a lot more money they don't have and create a lot more credit the US economy doesn't need. But it's unsustainable.
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