American economy recovery or new deep crash ?

Question

I have this feeling that the american economy will crash again and this one will catastrophic what do you think ? also can you explain how the bailout create the inflation which will ultimately cause a hyperinflation.

Answer 1

Read this, then you decide:



http://www.nytimes.com/2009/07/17/opinion/17krugman.html



The economy is terrible for the ordinary person, but the ultra wealthy high rollers at Goldman Sachs are back to business as usual. They just posted a world record quarterly profit, and they have paid back their TARP bailout so they don't have to follow the rules on exec bonuses anymore.



For them, the economy is right back like it was before the crisis.



Nothing has changed. The Obama administration is not doing anything. The stage is set exactly like it was, all ready for the exact same crash to happen all over again.



When Goldman Sachs says it's "too big to fail" again, how much will they extort from the government this time? $10 trillion?



Why not. They can hold the entire economy hostage all over again.



This is what happened in the Depression. After the initial crash, there was a recovery, Then the same crash happened again. And it kept happening over and over again until Congress passed the Securities Acts that created the SEC and reformed the financial system.



Based on the Obama administration doing nothing to reform the financial world, I'd say they're setting up for another crash by the end of this year.



Bailouts do not cause inflation if they're paid back, like the GS bailout has been. But when the bailout doesn't get paid back, like the GM bailout, now that's money that was put out in circulation and it's staying there. That will cause inflation.



The Obama trillion dollar giveaway has no plan for recipients to repay the money they receive, ever. That sounds like inflation to me.

Answer 2

A crash starting in the fourth quarter of this year.



Economist Harry Dent figured out and wrote in "The Great Boom Ahead" that recessions and depressions are caused by the dominant generation passing it's peak spending years, which is ages 45 to 50. By then their kids are out of the house and out of their wallets. They start saving for retirement. Savers don't boost the economy.



The Great Depression was caused by the Henry Ford generation passing peak spending and it was cured by the Bob Hope generation moving into their peak spending years.



Our current situation is caused by the Baby Boomers passing their peak spending and it will be cured in about 8 to 12 years by the next generation entering their peak spending.



New Deals and stimulus packages have only transitory effects.

Answer 3

The Federal Reserve has already inflated the money supply greatly. As soon as the velocity of money picks up again, that will translate into higher commodity prices and a weaker dollar. At that point the Fed has two choices. It can significantly contract the supply of money like it did in the early 80s, which will trigger another economic contraction. Or it can continue to feed the money supply, in which case you will simply defer the contraction until later.