By Tank Murdoch
(TNS) As coronavirus-induced lockdowns spread from state to state, one economic expert is predicting that at some point, thanks to government and congressional policies, AmericansÂ will pay a massive price in terms of inflation.
And, says Michael Maharrey of SchiffGold.com, “it will hurt.”
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The gist of Maharrey’s note on Saturday is this: Though Americans are being told we’re going to have to sacrifice a great deal during a period when coronavirus is sweeping the country in a bid to contain it and slow the spread, we’re actually not being asked to sacrifice much:
Many people have likened the battle against coronavirus to a war and invoked imagery of the US fighting World War II. President Trump has even deemed himself a â€œwartime president.â€
The president told reporters at a White House briefing that fighting the virus would require a sacrificial national effort just like it took to defeat the Axis in the Second World War.
“Every generation of Americans has been called to make shared sacrifices for the good of the nation. To this day, nobody has ever seen like it, what they were able to do during World War II. Now itâ€™s our time,” President Trump said last week.
“We must sacrifice together, because we are all in this together, and we will come through together. Itâ€™s the invisible enemy. Thatâ€™s always the toughest enemy, the invisible enemy,” he added.
However, if the talk emanating from Washington, D.C. is accurate, it sounds like the government is preparing to shower money on everyone:
The government is promising bailouts for everybody. Weâ€™re just weeks into the crisis and there is already an expectation that the government will be sending everybody checks. Peter Schiff called it â€œbailout nation.â€
Apparently, the government wants â€œsacrificeâ€ with no pain.
Unfortunately, thatâ€™s not a thing.
“During WWII middle-class Americas sacrificed to support the US governmentâ€™s war effort,” financial guru Peter Schiff said in a tweet recently.
“They paid much higher taxes, substantially reduced their consumption, and loaned their savings to the government. The people support the government. The government canâ€™t support the people,” he added.
Therein lies the rub, says Maharrey.
While Congress and the Trump administration can bailout one industry after another and “helicopter money” onto the heads of most Americans, “you’re still going to pay, either through higher taxes in the future or through inflation,” says Maharrey because, “in the end, economics always wins.”
Consider: Right now a growing proportion of Americans are being idled from work and forced to stay at home under lockdown orders from governors. That means they’re not producing anything. So yeah, they’ll have government money to spend, allegedly, but on what?
As more people are idled, less goods will be produced. And when that happens, inflation happens; fewer goods mean higher prices.
And it’s always been that way.
The end result will be a lot more dollars chasing a lot fewer goods. That means prices will go up.
When inflation heats up, interest rates rise. Thatâ€™s the proper response. How exactly is that going to work in a world up to its eyeballs in debt?
“All the money the Fed is printing isnâ€™t going to have value. It isnâ€™t going to buy anything,” Schiff predicts.
“Prices are going to skyrocket. And in fact, this coronavirus is accelerating that process because the coronavirus is reducing the supply of goods available to buy.”
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