We are looking ahead to high inflation and tough politics, the price of huge government spending. That one thing is certain about our future economy. Something you can bet on. Present government spending is bound to result in massive inflation. Sooner or later.
Inflation has been held under wraps primarily because our economy is in a deep recession. As soon as a recovery is underway, more and more inflationary signs will emerge.
When will real inflation actually start? When either there will be an increase in bank lending or the Federal Reserve will increase purchases of massive amounts of accumulating government debt. Or both.
Such action would increase substantial money growth.
Unions and Congress will object to higher interest costs in any attempt to dampen bank lending. Because of the obvious effect on jobs and housing.
Remember the Phillips Curve policy: That aims to stop inflation by causing unemployment. The Fed does has a mandate to prevent inflation and job loss. But it can choose to work on inflation or jobs, not both tasks at any one time.
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