10/25/09 Economy Update

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

There is a lot of talk about recovery but the simple truth is you can’t have a recovery without people getting back to work. Consumer spending accounts for 75% of GDP, and consumer spending is not going to increase on the back of record high unemployment figures month after month. Housing prices, which are still in decline, aren’t a big help either. The recovery people talk about these days is simply the result of huge stimulus packages thrown at the economy. Sure enough, these stimulus programs are being paid with money the U.S. government doesn’t have. Since they don’t have the money they simply print it. By printing new money the U.S. government is adding more debt to its already exploding debt levels. In fact the U.S. tries to solve its debt problem by issuing even more debt, and this, of course, is not sustainable and drives down confidence. At one point confidence will reach such a critical low that no one wants to own the dollar anymore, the dollar will crash and then we’re not talking about inflation anymore, but about hyperinflation.

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