A Rather Grim Scenario For The U.S. Economy In The Coming Years

Economy Episode 1

In the coming year to two years I think there is a very good chance we could see major inflation mainly due to the Feds printing too much money. In the coming six months I think that luxury items like computers, cars, phones and jewelry will continue to stay deflated as bad Christmas and black Friday numbers put a damper on the so called economic recovery. I predict commodities like wheat oil and almost all kinds of food to rise in price and become somewhat inflated. While that happens the fed will still be trying to prop up the economy with quantitative easing and other stimulus, which will result in more potential for inflation. The main question is when if we do get high inflation when will we get it? My guess is some in the coming two to three years possibly as soon as summer 2011.

 Another key question is what would cause the potential for inflation to turn into real inflation? If the scenario I outlined plays out I think the federal stimulus effort will work and the economy will rise and become healthily inflated again. But the Feds will get caught behind the times and continue to try and stimulate the economy. With all that money being printed up inflation is almost inevitable and as I said before would probably set in some time in the next two to three years with hyper inflation as soon as spring or summer 2012 I predict the housing market will bottom out some time in 2014 so we still have a long ways to go in that sector. Another question is how is the Fed going to react to this sudden rise in inflation? they will probably raise interest rates which will further deter investors from the market. In this scenario unemployment will flat line but when inflation sets in it will rise putting further blame on Obamas economic policy. It is my opinion that if the U.S. continues on its current path of major government Debt and economic instability the scenario I just outlined could be reality and might (under extreme circumstances result in the collapse of the dollar and economic woes far worse that a double dip recession.

Now it’s very possible that what I just said won't be the scenario that plays for the U.S. economy at all but the path we are currently on is unsustainable and if we want to jump start the economy in a big way we are going to need a big breakthrough which I will talk about next time. Until then this is Ian Mundy signing out.