What is in store for the US economy?
Between 2001 and 2005 an estimated $2.4 trillion in wealth was created from the refinancing of mortgages and home equity loans. This money was only available because of artificially escalating housing prices. And when this easy money spigot was shut off, a private debt crisis was created.
Meanwhile, the Fed does everything it can to give Americans the appearance of a recovery: It bailed out its friends at the banks and automotive companies. It has kept interest rates at historic lows. And, it turned on the printing presses and drastically grew the monetary supply by 300 percent.
And all this has done is delay the inevitable. Inflation will follow.
Once you hit 10 percent inflation, 10-year Treasury bonds lose almost half of their value. And by 20 percent any value is all but gone.
Interest rates would have to be dramatically hiked up at that point, which causes real estate values to collapse. And the stock market will plummet.
So after 10, 20, even 30 percent inflation, a vast amount of damage has been done.
And we could see 100 percent annual inflation for a three-year consecutive stretch.
[Excerpts of an interview with economist Robert A. Wiedemer]