'DOLLAR CRISIS LOOMS IF U.S. DOESN'T CURB ITS DEBT: EXPERTS'

If you have been reading my blogs you know that my biggest concern in inflation. Having lived in the 1970’s when we wore buttons that said “WIP” (which stood for “whip inflation now”) and having started in business when the interest rate swelled to 21%, I know how devastating inflation can be. Here is an article form CNBC which echo’s my concerns.

(Reuters/CNBC.com) -- Reuters.com reports that a panel of experts last week concluded that "the United States must soon raise taxes or cut government spending to curb its debt," since "failure to act will risk a crippling dollar crisis as investor confidence ebbs." The story notes that "the 24-strong Committee on the Fiscal Future of the United States" conducted a two-year study that found "mounting debt could sap investor confidence in the economy, and the nation's ability to honor its obligations, pushing up interest rates and causing a steep fall in the value of the dollar as international creditors seek safer returns elsewhere." The committee identified curbing Medicare, Medicaid and Social Security spending as the top challenge -- "and had a lukewarm assessment of cost containment in health care reform currently before Congress that Obama hopes to sign soon." See more at http://www.cnbc.com/id/34848783>

HERE COMES INFLATION

According to economists the federal government will not be able to contain inflation because the government has pumped trillions of dollars in stimulus funds into the economy, the Federal Reserve will not be able to keep inflation in check in the next several years. While the central bank's unofficial inflation target is 2%, economists expect the price gauge tracked by the Fed to increase by an average of 3% annually from 2014 through 2018.

"An excessively stimulative fiscal policy and a complicated exit from its quantitative-easing policies over the medium term will result in the Fed tolerating a higher level of inflation than it desires," according to the National Association for Business Economics.

To see the entire article go to Bloomberg.