Bubbles.....I am reminded of the toy for children that has a few pegs to drive into a wooden stand. When the child drives in one peg with a little wooden hammer, another pops up as a result. This is an early lesson in economics for children!
To create jobs and encourge the public to buy stuff (2/3 of the US economy depends consumer spending), Federal Governments create more money. In the US, Europe and China, this is happening rapidly.
In the US, we are getting ready to print a lot of new US Dollars as the already weak economic turnaround is slowing and we are starting to worry again about deflation and recession. US Dollars and worldwide commodity prices are opposites of the same thing....one goes up and the other goes down and vice versa.
As more money is printed, it takes more of it to buy goods and commodities (such as food, fuel, as well as industrial and precious metals prices). Of course, what this means is that to avoid recession and deflation....we cause inflation. No one is worrying much about inflation now... that is tomorrows problem (up pops another peg in our childrens toy example).
Remember "stagflation"? Inflation without growth....a trap. If we hit the wrong "peg" or hit it too hard a "bad peg" pops up.
In this US Presidential election season, we hear mostly what I think of as chants, cheers and slogans as well as jeers for the other team. Most of these chants will produce very difficult results thank the chants would suggest. Be careful what you wish for... that could lead to a worldwide severe recession.
It sounds great to balance this US Budget (same throughout the world). That is... the slogans sound great when you say it fast but if we quickly did so we would have a worldwide crash.
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