Get Ready for Inflation and Higher Interest Rates

11. June 2009 by Dan Walkow, CFA, CMT.

Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be “wasted.” Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now.

Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers’ expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.

Noted economist Arthur Laffer confirms my view that economically we are in for a redux of the 1970s. Excellent piece in the Wall Street Journal.

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