It's going to be a real disaster...
The current administration's economic strategy will create an unmitigated disaster – not only our country's worst financial calamity, but the greatest economic disaster in recorded history.
I first warned my readers about what was happening last December, in a letter titled The End of America:
The coming great inflation will destroy America's economic leadership. It will lead – eventually – to the return of settling international obligations in gold instead of paper dollars. And this will happen much faster than anyone expects.
By the time Obama leaves office, you will not be able to exchange dollars for any sound currency in the world without permission from the U.S. government. The price of gold will be well over $2,500 per ounce. Most importantly, commodities will no longer be priced in dollars either, but instead in the currencies of the leading producer. Americans haven't experienced anything like this since the Great Depression.
Since I wrote that first warning, I have become much more concerned and much more afraid. What the president has done is actually worse – much worse – than even the dire scenario I had envisioned. Not only is the administration planning on enormous deficit spending this year, but the current plan calls for increasing deficit spending for the next decade – spending that will more than double our entire national debt during his presidency.
At the same time, Obama plans to extend federal control over vast and critical sections of our economy, promulgating new and extensive rules and taxes over both the power industry and the health care business. These are probably the two most important engines of our economic growth. Producing huge amounts of inflation while severely restricting the most productive sectors of our economy is a recipe for catastrophe.
The Congressional Budget Office produced the following graphic, which compares the deficits of the 1980s and 1990s to Obama's current and future budgets. Assuming he remains in power over the next eight years and assuming these deficits aren't actually much larger (which almost always happens), the Congressional Budget office estimates the president's budget will add more than $10 trillion to the total federal debt by 2019 – approximately as much total debt as was outstanding at the beginning of 2007.