GREATER DEPRESSION Pt. 3

War

We have been using Doug Casey's article on "Street

Fighting Man , 7.29.09 as a reference for this three part blog.

Readers of this Comncents blog are familiar with the U.S. Military effort in Afghanistan and the ostensible reasons for this war. The Iraq war has not been specifically discussed, nor will it be in this missive.

Obama campaigned loudly and repeatedly against these wars, yet we have seen no results since he took office save a delay in the withdrawal from Iraq and an expansion of the Afghanistan war into Pakistan. Could it be that "they" do not want the wars to cease , since these wars are profitable for present and future.

Though there are many reasons for wars to start and continue, the most favored reason in modern times as a way to mitigate tough economic periods. Thus the deepening economic trough will be

a temptation to Obama and friends to start another conflict. Can anyone say Iran?

How will it begin? Another 9/11; Israel bombing suspected nuclear enrichment sites; Russia attacking Georgia? They don't lack excuses. So as unthinkable as it is, we have to consider the likelihood of another war in the not too distant future. There is of course the possibility of a near term dollar crash and abandonmentby the treasury bond buyers( Japan, China, Saudi Arabia, and Russia) which will obviate the shrinking of the U.S. empire.

Inflation/ Dollar collapse

Inflation is already here, just a little bit more than we've seen recently, but the 13 trillion dollars that have been added to the money supply will have to be reckoned with in the price of goods and services.

Some say there is deflation not inflation in fact there is continuing diatribe about which condition we have. House prices and other asset prices have and are declining, yet food and clothing prices are rising ; you might say that the things we have are declining in value, but the things we need and use are going up while wages and incomes are stagnant or declining.

The Government must sell 3 trillion dollars of bonds this year and the buyers are not stepping up with the cash. The Fed is creating money to buy these bonds .Look for a crashing dollar and a rapidly increasing rate of inflation. 'take a wheelbarrow of dollars to the market to buy a loaf of bread'.

Silver Lining

Not for a while. As long as politicians continue to mess with the free market, the longer and deeper will be the "Greater Depression" This bad spell is going to last 10 to 20 years according to some forecasters.

Take heart. Americans are a resilient and adaptable race, known for their creative and entrepreneur nature and they will survive as they have for more than 200 years, making lemonade from lemons and progressing through difficult sometimes seeming impossible times.

With Love and Kindness,

THE HATMAN