Easy money and Obama’s hidden tax
Today's Financial News - Posted January 5, 2009
President-elect Obama may be dumping money from the sky, but his so-called “stimulus” will do little to help the nation’s long-term health. If you are not prepared for Washington’s latest secret tax, this may be your last chance.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore—(TFN): If you think Obama’s proposed $300 billion tax cut will ultimately put more money in your pocket, you had better think again. In fact, it would be a good idea to pick up an economics textbook and learn how things really work.
Obama is not even in office yet and he is shaking the foundation of this nation’s monetary system.
Let’s face it. The dynamic and smooth-talking President-elect is desperate to start his reign on a positive note. The best way to do it, at least according to his advisors, is make the average American believe our economy is back on track.
Obama campaigned on the notion of change and hope. Now he is backing up his ideals with a massive stimulus package aimed at quickly fixing the pain of a recessionary economy. In reality, all his plan will do is spread the burden of a broken political system across the back of every working citizen in the country.
This is going to hurt
Obama promises to slash taxes with one hand, while boosting government expenditures at the same time. It simply does not make sense. It is the equivalent of you or me losing our job and going on a spending spree with credit cards in hands.
Putting the whole national debt debate aside (it is not even worth arguing over at this level), Obama’s plans are going to have serious monetary ramifications. If you are not adequately prepared, you are going to be in trouble.
In late January or February, Obama plans to sign a stimulus package that puts nearly a trillion dollars of Uncle Sam’s cash back into the American economy. It does not matter if the money is in the form of tax deductions or if it is freshly minted. What matters is there will be trillions of dollars recklessly flowing through the American economy.
Those of us that have studied the world of economics know what happens when the government introduces hordes of cheap money into the economy. A quick-fix may look good in the headlines, but the ramifications will be felt for a long, long time.
This time around (this is the fourth “stimulus” since Bush took office) inflation is threatening to come roaring back in ways we have yet to witness. With short-term interest rates at all-time lows, the bond market in a bubble of its own and the American dollar starting to show serious weakness, the foundation of the nation’s monetary system is under immense pressure.
How much can it hold?
Once inflation sets in, it will be nearly impossible to counteract, especially in the short-term. The United States will no longer stand high above the crowd as the financial safe haven we have become so dangerously accustomed to. We are already seeing signs of weakness. For proof, just look at the price of gold. It has risen by over $150 per ounce since late October.
Once Obama signs his massive “stimulus” into law, I am positive we will see the Treasury market bubble burst in a wave of liquidity. Combine that once-horded cash with Obama’s and you will have to wade through dollar bills just to find Wall Street.
The only way to protect yourself is to get rid of your cash any way you can. Anything positively correlated to inflation will be a good choice. Equities, gold and corporate debt are all viable options. Just about anything but government debt, for that matter, is a good choice.
Obama may convince the average American that he is lowering taxes and boosting the nation’s economy. But all he is doing is camouflaging one of the largest and most dangerous taxes of them all – inflation.
Take action now before the system spirals dangerously out of control. Do not be caught with cash in hand. That cash may not be worth very much come February.
Next Article: Hold on to Isis Pharmaceuticals (ISIS)
4 Responses to “Easy money and Obama’s hidden tax”
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January 5th, 2009 at 4:24 pm
use the money to create jobs is a better solution for the long run. There is no quick fix to the economy. Reducing $500 or $1000 will not change people’s life or the economy. How many tax cuts had happened with Bush admin. Has the ecomomy better off becuase of that?
January 5th, 2009 at 6:20 pm
Lot of talk
January 8th, 2009 at 5:59 pm
There is no quick fix to our economy problem because the Leaders of our Country were not interested in the truth years ago when they were warned of what is happening now. Get people back to work and quite throwing money out there that is not going to do any good. You’re only going to cause more pain for the American People. Tax Cuts are not going to help – They never helped before.
February 6th, 2009 at 3:48 pm
Simple patriotic solution here, start the draft for those unemployed 18-40 so they have a job, they will contribute to the economy, this also supports the military industry (retool detroit to make military vehicles and planes). Those who are against joining the military can take a longer stint in the healthcare industry taking care of the aging population and those with no health care.