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Edited on Mon Jan-21-08 12:19 PM by Blackhatjack
As more $$$ is issued in the billions by the Fed, the relative value of the dollars in circulation goes down and the price of necessaries goes up.
As people can no longer afford the necessaries they begin living day to day any way they can, converting dollars to useful commodities as quickly as possible.
This will have a negative affect on people paying their mortgages and credit card bills. AS the pool of potential real property buyers shrinks, the inventory of homes for sale will continue to rise --pushing sales prices down. THis will result in deflation of the value of all housing in this country.
Since credit issuers will be suffering from huge defaults in payments from borrowers, if they can find a way to survive, they will just refuse to issue any new credit. THis will destroy the pool of buyers for anything other than necessaries, and result in crashing consumer prices for non-necessaries.
Layoffs and unemployment will spike as the economy comes to a screeching halt. As unemployment rises and prices fall as people sell everything at 'firesale prices' deflation will rule the day AND make it possible for the wealthiest to pick up valuable assets for pennies on the dollar.
So the poor will get poorer, and the ultra rich will get incredibly richer.
THis is an extreme scenario, but it could happen exactly as laid out above --and the worst of it would likely occur under the next Democratic President. More tax cuts are nto the answer. Those who have profitted most under the last 7 years of Bush must be required to participate in the actions necessary to turn the economy around.
Vote accordingly ...
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