The U.S. Government is inflating the money supply with expansionary monetary and fiscal policy.
When President-elect Obama implements his $775 billion "economic stimulus package", there will be $775 billion of additional spending in the economy. President George bush and Federal Reserve Chairman Ben Bernanke have already authorised or spent trillions, and with the Obama administration there appears to be no end in sight. None of this is being paid from savings. The U.S. Government is already running an ever growing deficit. Some of its debts are going to mature soon, and when they do more money will be borrowed. Politicians will call it 'consolidation' though, as if to suggest they have some intention of paying it off.
Bailouts, deficits, Ben Bernanke's secret handouts, low interest rates, and Obama's "economic stimulus package", all are going to create inflation. All these dollars being pumped into the economy are going to be competing with those held by ordinary Americans for scarce goods and services today. Obama does not want you to save, so the government is surreptitiously appropriating the buying power of your dollars and forcing you to spend (and they will not even let you decide what to spend it on).
Ordinary loans create inflation too, but ordinary debtors pay back their loans and offset it with deflation. The U.S. Government is no ordinary debtor. It does not pay off its debts, but rather "consolidates" them endlessly. Government debt is inflationary, and this year is expected to see an additional $2 trillion.
Almost half of the world's dollars are held by foreigners. Foreigners hold dollars because they want to make purchases from the U.S. or store value. Because dollars have historically retained purchasing power, many foreigners exchange or save them in lieu of the own currency (which may have been debased by inflation). Inflation debases a currency by reducing its buying power; it induces less saving and more spending. When foreigners notice inflation in the U.S. they will spend dollars as soon as possible, and swell the money supply.
President-elect Obama will then come on TV. 'After an unexpected rise in prices', he will calmly say, 'the $775 billion economic stimulus package has been depleted too quickly'. He will then go on, 'many programs vital to the future of the American economy have yet to be undertaken', and after a dramatic pause, 'so today a new $1.5 trillion stimulus will be approved by Congress for the sake of ordinary middle-class Americans'. Meanwhile, Ben Bernanke will continue to hold interest rates down, just to spit in the face of any American who might consider saving to rebuild a future.
The cycle will repeat and the U.S. will be saddled with hyperinflation--Weimar Republic style. Hitler was elected after that mess ...
Please tell me I am wrong.