Inflation

I heard one of my favorite financial talking heads on the radio yesterday. A caller was concerned about low interest rates are on his bank CDs and wondered where he could safety earn higher interest.

The answer was not encouraging. Interest rates on safe $ will remain quite low for now and possibly for years. The caller could buy Treasuries but they yield virtually the same.

The talking head went on about inflation. He foresees zero inflation for the next few years with the exception of fuel which should stay relatively low except during peak demand times this summer.

He said that deflation is the worry for now. Deflation is defined as "a contraction in the volume of available money or credit that results in a decline of the general price level."

Things will cost less but as a whole the economy will be in a decline. Our hope is that our new president will lower tax rates and stop the bleeding. The large bailout $ comes not from the vaults but from the printing press.

My concern is our $ will be worth less and less. It would be a worry if our $ can buy less and the prices have eroded. Things could come to a screeching halt.

With all the talk of stimulus, let's remember that most government handouts do not stimulate growth. They may help ease some financial pains and feed families for a season but they will not produce growth in our economy.

'til later