Busted: Bankers and The Global Economy

March 2, 2008

A Toxic Economic Mix?

Some economists predict that “stagflation” may be reappearing after 3-decade hiatus. The United States is facing a toxic economic mix it hasn’t seen in three decades: Prices are speeding upward at the fastest pace in a quarter century, even as the economy loses steam.

The economy clearly stalled in the final three months of last year and probably is barely growing or even shrinking now. That’s the stagnation ingredient. A slowdown tends to quiet inflation, but prices continue to rise. The unique factor in play is the ongoing $12 billion expenditure on the Iraq War coupled with another $4 billion on Afghanistan. This, my friends, is a MONTHLY expenditure.

Nobel-winning economist Joseph Stiglitz says: “To offset that depressing effect, the Fed has flooded the economy with liquidity and the regulators looked the other way when very imprudent lending was going up. We were living on borrowed money and borrowed time and eventually a day of reckoning had to come, and it has now come.”

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