Fast Forward to New Years Day 2011

Say today is New Year's Day 2011. We've survived the worst recession since the great depression, but at a price. All of the billions and trillions of dollars the government pumped into the economy has caused inflation. Not just your ordinary run of the mill inflation but hyper-inflation. What's hyperinflation? That's when the value of your currency declines by 50% or more in a year. Actually the currency doesn't change, but rather what you can buy changes. The price of goods and services increases by 50% or more.

Think about the implications of it. For example, suppose you have a savings account for your child's college tuition. You started when they were born and saved as much as you could every year. Your child is a freshman in high school, they'll be going to college in 4 short years. You've saved $50,000 in that account. That's about $300 per month - every month. It took will power. You could've had a new fishing boat. Or you could've bought that wave runner or gone on that Disney vacation or any number of great things. But you saved for college so your kid could get a head start on life. You should be proud of an accomplishment like that.

With tuition, room & board at $15,000 per year you figure you're ok. But wait, here comes hyperinflation. Let's see what happens to the value of your savings.

Year Old Tuition 50% increase New Tuition
High School Freshman $15,000 $7,500 $22,500
Sophomore $22,500 $11,250 $33,750
Junior $33,750 $16,875 $50,000
High School Senior $50,000 $25,000 $75,000

Now it's time to pay for college and all that hard earned money that you saved over the years won't even pay for one year of college.

College Freshman $100,000
Sophomore $150,000
Junior $225,000
Senior $400,000

The total cost of college education during hyperinflation? $975,000!! ALMOST $1 million. That's is what this rescue package is really costing the American taxpayer.

Sweet dreams.

The stock market dives

The headlines read, "Worst unemployment since the '40's'. I need to put the blame squarely on Congress. They insisted that our financial institutions were discriminating by not lending to poor people. They penalized them if they didn't make those loans. Then a year ago our fearless leaders get on TV and say there's nothing wrong with those loans, in fact, we should make more of them and the government should buy up any of the bad ones. If it wasn't so sad it would be funny. The housing bubble was driven by too much demand - econ 101 - supply and demand. When demand goes up and supply stays the same the price can only go up. And up it went, up and up and up. Now it is coming down, down, down. We put millions of people to work in the housing market and now they're out of work. When they're out of work they can't buy stuff and so corporate earnings go down. When companies start to lose money the lay off people. Those people can't afford to buy stuff so the cycle continues. It's a sad day when American's trust congress to determine what's best for business. It scares me to think that Americans believe the government is the answer - remember the words - I'm from the government and I'm here to help. Terrifying isn't it. The government isn't the answer, we are. We can do it better, faster, cheaper than the government could ever hope. Don't wait for the government, you won't live that long.