Craig Smith says were heading for massive inflation in a couple of years. I also believe high inflation is inevitable since they will not allow a massive depression and can’t raise taxes or it would cause one. So they will just print all the funny money they need for the massive bail-outs. Then government will put on a lying happy face and tell everyone how our economy is not in a recession and how it is growing at 2 percent a year. Meanwhile, the costs of everything you need to live on will increase twelve percent or more each year for at least the next decade.

Translation: a 10 percent decline in your living standards each year for a decade or by 2020 we will have the living standard that Mexicans have today. Think it can’t happen here? Why not? It is happening in other nations and their debt load is less than ours? The U.S. is not magic-land the bills will come due. No it does not matter who you elect to be President the economic die is already cast. They may try price controls and rationing but we all know from history that just brings more government control, black markets and eventually total collapse of the free economic system. I highly doubt if they will allow you to keep your gold and silver and they will make you sell it to them at their price not the world market price. So what do you do? Learn to live on half of what you live on today, because you will. Think of it as a judgment on America for becoming the greedy godless heathens that we have become, because it will be. And yes, it could even be much even worse in the coming economic storm.

In the eye of an economic storm

Soon our financial leaders like Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson will either have to prepare America for a lot more pain or employ all their resources to bail everyone out of the mess. From commercial banks to homeowners. Credit card users to common businesses. All will look to the Fed and the government for their financial salvation.

Given that we are in an election year, the Fed will not disappoint. It will run the printing press at full speed 24 hours a day, seven days a week to provide the cash necessary to save the system. It will have to choose between doing the right thing and political expediency.

Which will they choose? Will the government stop spending money? Will the Fed stand by and watch a commercial bank or a company like General Motors go bankrupt? I doubt it. They will make piles of freshly printed money to keep the spending orgy afloat.

The Fed has to turn the spigot on and do so fast. Inflation will run well above the current (ridiculous) official rate of 4 percent. Expect to see 8 to 12 percent inflation at minimum until the markets recover from the fresh injection of easy cash they get from the Fed. Creating inflation will ruin the life savings of the many people who did not prepare. We have seen it happen. Yet we ignore the lessons of history. This round of inflation will only put off the day of reckoning yet again, and this time we may not recover.

I hope I am wrong. Believe me when I say I take no pleasure in writing this type of assessment of the current conditions we face, but I can not change the facts. We have overindulged at the trough of debt. Government, business and individuals spent borrowed money like there was no tomorrow. But tomorrow has indeed arrived.