Economic Outlook

According to shadowstats.com, M3 money supply (=A broad money) has increased by 50 % from the beginning of 2006 until the beginning of 2009.
Also gold price has risen from 600-650 USD/oz range until the range of 880-950 USD/oz. Gold has been considerent to be an excellent indicator of inflation. (kitco.com)

The total Federal obligations (GAAP) has risen roughly speaking by 10 % between 2007 and 2008, being 65,5 trillions USD in 2008!!!!
Fiscal deficit has risen from 1,2 trillion USD to 5,1 trillion USD in the same time. (Shadowstats.com)

And at the same time, the economic growth is - 4% according to shadowstats.com.

It is obvious, that if the federal debt is 218 300 USD per capita in USA, USA is not supposed to recover from this for long time given the fact that the GDP per capita is only 47 000 USD.
The credit default of USA is not a matter of "If" but rather a matter of "when".

According to the people's bank of China, their USD holdings increased from 1 104 billions of USD to 1 528 billions of USD from January 2007 until December 2007 (www.pbc.gov.cn). (More updated statistics weren't available but the trend is clear).
Thus, the interest of China is a strong and stable dollar.
However, the currency of the economy that is technically speaking broke cannot be strong for long run (not to mention that the FED started to print money and buy bonds straigth form the marketplace).
The monetary politics of FED and fiscal politics of USA is leading to hyperinflation and a total collapse of the dollar in just a few years (ceteris paribus).

Yesterday, on Bloomberg's news was a mention that China is willing to get rid of the dollar and proposes a currency basket (same road that lead to Euro). ( http://www.bloomberg.com/apps/news?pid=20601087&sid=aywa1wOFMKmw&refer=home )




Based on these facts, my predictions:

1. Deflation for a short while
2. Hyper inflation for medium long run
3. One world currency for a long run.


- Jarmo V. Viikki