Stagflation Creates a Dangerous Position for Economy

With inflation rising and GDP forecasts continuing to be revised downward, fears of stagflation have crept back into the economy, with the economy hovering in a dangerous position between two possible outcomes: recovery or crash.

Stagflation is a sort of market purgatory, while we wait for one of two possibilities. Either the economy will recover and we’ll have inflation, or the economy will continue to stagnate, and we’ll end up with deflation.

While we will eventually work our way out of stagflation, inflation is hard to maintain if the global economy goes into a slowdown or decline. When the economy does begin to recover, it will bring inflation.

With QE2, Fed Chairman Bernanke has opened Pandora’s box, and once you open the box, it’s hard to control. When the banks start lending again, it will unleash the reserves that the Fed has pumped into the economy and there will be big inflation.

Source: George Mason University

Today’s Toon

Reunion at the Vietnam Wall of Golf Company, 2nd Battalion, 4th Marines, 1968-69

Mike Castle long time friend of this website put this video together of a reunion with his squad at the Viet Nam Memorial in Washington D.C.

To all who have served this country, We the People owe them a debt of gratitude.

Thank you guys…and God Bless America!

Quote of the Day 6/29/11

“If you look at Washington, you see permanently camped on the banks of the Potomac spread around in concentric circles an army representing thousands of selfish interests. The sole purpose of their presence is to plunder, by hook or crook, the public treasury for the benefit of their particular people or corporations.” – Charlie Reese

What does Jim DeMint know that we don’t? By the Bear

SideBear: I have been hearing a couple of rumors from the pipeline that the GOP is going to cave in on raising the debt ceiling and the following to articles add credence to the rumors.

But first the two articles…

Fighting Words: DeMint Warns Republicans They May Be ‘Gone’ if They Support Debt Ceiling Increase

Conservative firebrand Sen. Jim DeMint has a message to fellow Republicans in Congress: If you support increasing the debt ceiling without first passing a balanced budget amendment and massive across-the-board spending cuts, you’re gone — destined to be swept out of Congress by a wave of voter anger.

“Based on what I can see around the country,” DeMint, R-S.C., said in an interview for the ABC News Subway Series, “not only are those individuals gone, but I would suspect the Republican Party would be set back many years.

Read more here…

The Debt Limit Increase Fix is In

Don’t believe all of the public fighting by Republican and Democrat leaders over the past week on increasing the debt limit. My sources on Capitol Hill tell me that many conservatives believe that the fix may be in on a deal to increase the debt ceiling in a manner that allows both sides to save face.

Here is a theory that many believe on Capitol Hill. The walk out by Senator Jon Kyl (R-Arizona) and Rep. Eric Cantor (R-Virginia) from the Vice President’s debt limit negotiations on Thursday was staged and agreed to by both parties as a means for Republicans to look tough before they cave on increasing the debt limit.

Vice President Biden has been meeting behind closed doors with a bipartisan bicameral group of politicians for weeks in an effort to cut a deal on a package to increase the statutory $14.3 trillion debt limit. These meeting have been extremely secretive and not many specifics of the negotiations have been provided to the public. One of the few details leaked was that liberals were putting tax increases on the table as a means to balance the budget.
[...]
Expect the Obama Administration to cut a deal with these Republicans including cuts to spending and some budget process reform. Also, expect Republicans to declare victory when tax increases are taken off the table. As the theory goes, tax increases were never actually on the table, but merely a means for the Obama Administration to provide Republicans a way to claim victory.

Read more from Big Government

Now for the rumor

This past Sunday I heard Brit Hume on Fox News allude to this, so the rumor is now gaining some momentum.

The August drop dead date of raising the debt ceiling that all the so called pundits in the know are flagging as financial Armageddon is really a scare tactic to frighten the American Public.

BY LAW the treasury is obligated to pay FIRST before anything else is the country’s U.S. Treasury Bonds obligations and there is more than enough money on hand to meet this obligation without raising the debt ceiling and there will be NO DEFAULT.

But here is what has the Republicans wetting their pants.

After the bond obligations are satisfied, it is up to the President to decide who gets paid next and who doesn’t get paid. The rumor is that the White House will hold back and not pay Social Security recipients and Medicare bills and a letter will be sent out by the trustees of these programs advising grandma that she will not receive her monthly benefits..

And of course all hell will break out and the Democrats will go into full campaign mode and BLAME the Republicans. And of course all you will hear from the lame stream media is the sad tails of elderly people starving to death and dying from heat prostration because they can’t pay their electric bills.

The Republicans better get ahead of the curve on this issue and face it NOW by insisting that NO MATTER WHAT that the next order in line for payment after the bond obligations are satisfied is Social Security, Medicare and Military payroll. If anyone has to wait for payment, it should be government employees starting with the White House and Congress.

If the Republican go wobbly on the debt ceiling increase their victory in November of 2010 will be a distant memory and this what DeMint meant when he said … “not only are those individuals gone, but I would suspect the Republican Party would be set back many years.”

I would even suggest that this will signal in … A Third Party political revolution.