Can one of the board economics gurus put this in plain speak for me?

threexcharm said

Bush is just trying to keep the economy going until after the election. I would hate to be president next term.....

I am no economic expert, but it seems like we may be facing problems that I have never
seen in my 55 years. I know thiings were bad in the Carter administration.

Here we have the devaluation of the dollar. The price of petroleum is causing the price of just about everything to significantly rise. The farmers are raising crops for Ethanol production instead of food. They are scooping up the incentives to do so. This is pushing up the price of food.

It almost seems like we are having a strong financial recession along with fairly strong inflationary price hikes. It is phemomena I can't remember witnessing.

Can someone expand on my observations? What in the world do you think is gonna happen??

Joe

Click to expand...

You pretty much just gave the definition of stagflation.

The only way to get out of this mess without suffering is for the economy to really pick up steam before everything falls apart and if we don't change our ways it will simply delay this mess and give us time to make the problems so much worse we could be looking at a huge economic failure.

The other way to get out of this is for us to take our medicine. The Fed could to come out and state that the inflationary pressures are too much and the dollar can not withstand much more pressure. Then they need to slowly start increasing rates and let the stock markets get hit. This would surely send us into a hard recession but it would fix a lot of our problems for the long run. This may take a decade to really recover but we would have a much stronger economy when we did.


Personally I think the economic problems can be fixed at the political level but it would take drastic changes in foreign and economic policy that would cut off the hands that fed the politicians. On one hand I want to blame the politicians on the other hand the people voting for them are hugely responsible.