Read This

Fiscal Cat 5 Hurricane Warning

We are not through the worst part of this financial crisis.  In fact, odds are good that the spastic gyrations of the stock markets are just the start of what’s to come.   For the Americans reading this, keep in mind the linked article when you hear political speeches about taxes… specifically who’s going to raise them and who isn’t.   We will all be paying more taxes in the future… the main question is the form those taxes will take.

If we are forced to print more dollars or Treasury bonds, the inflationary affect is more or less the same.   I don’t know about you, but I won’t feel all warm & fuzzy if my income taxes don’t rise, but everything I buy costs 25-50% more.   Inflation is the hidden tax on everyone… and it’s one that doesn’t have to be approved by Congress.

Read the linked article, and if you don’t understand what LIBOR or Treasury spreads are about, break out thy mad google skills and learn up.

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2 Responses to Read This

  1. e4 says:

    I’d actually rather have inflation, since it acts more like a sales (i.e. consumption) tax rather than an income tax. But that’s just me…

  2. Bart says:

    I think we’ll see the inflation eventually. The Fed and Treasury Departments have made the decision to make at least some institutions whole no matter what. The money to do that has to come from somewhere…

    As a holder of a fixed-rate 30-year mortgage, I could see an inflationary scenario having at least a little benefit to me, personally. If things go hyper-inflationary all bets are off, of course.

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