Sunday, January 25, 2009

Bailout the Bailout---A Prediction

Congress is rushing to spend $1 trillion more of our money on a stimulus package that is supposed to put folks to work and at the same time improve our infrastructure by building roads, repairing bridges, etc. The congressional budget office has already determined that such projects will have very little immediate effect on unemployment and Best View predicts another very likely consequence of this approach. The money will be voted out, projects will be designated for funding, and there will be no repeal of the Davis-Bacon act which stipulates that federal money must be spent on workers as if they were unionized. This will greatly reduce the number of new hires since the wages will be so high. Next, the projects which are chosen will, as they always do, go over budget and experience "unexpected" delays. This means that the time will come when the money is spent, the project is incomplete, and the sponsors will need to come to you for more billions to finish the jobs. This request for more money will come at a time when the economy has largely recovered and the massive increase in the money supply has triggered the inevitable inflation which occurs when too much cash is chasing too few goods. As a result, the added financing will simply exacerbate the inflation and our economic problems will be just as bad as now---only different.

Start buying gold now.

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