Liberty4me.com

I don't think most people realize what a mess the US dollar is in.

Last year the United States Treasury issued $300 billion in bonds, which were purchased by the Federal Reserve Bank. The Fed paid for the bonds with freshly minted currency. This action essentially means the printing presses are being run to pay for our debts. At the end of this road this action defines lies hyperinflation and the destruction of the dollar.

Our Federal government has had a short period of time to try and correct the fundamental problems which caused the need for the money; instead, our enlightened leaders have been busy expanding the govermnent and its expenses. These expansions have been accompanied by new and reconstituted taxes. There is a problem, however; (1) increasing tax rates above our current level is likely to damage our economy and actually reduce tax revenues, and (2) even if one assumes linear returns from increased tax rates the amount expected is not going to cover the (under-) estimated expense the expansion will require.

The result? Energy prices are rising. The dollar is losing value, falling below the Canadian dollar briefly (but I predict again and more drastically).

With a country full of entitlement whores it is unlikely for our government to be able to cut its expenses to the point where the debt can be paid for without destroying our economy. We are in the beginning stages of a disorderly devaluation of our currency, in the form of hyperinflation. A deliberate devaluation might fix the problem, but only with deep cuts in government.

In the next several years, this situation will lead either to a hyperinflation and the eventual end of our government, or to a takeover and socialized command economy, repudiation of debt, then followed by a hyperinflation and the eventual end of our govermnent.

Batten down the hatches, folks, it's gonna be a doozy.