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By Reuben Torres Host of "Let's Get Real With Reuben Torres"
BLOGTALKRADIO.COM/LETSGETREALWITHREUBENTORRES
The R for recession is the most spoken word by far when it comes to the status of our current economic situation. I cannot escape hearing this from economic experts who represent governments and the corporate world. These so-called economic geniuses are emphasizing that we are in a recession, heading towards one, or not having a recession at all. The definition of a recession is a period of two quarters of negative GDP growth. We have had low growth in our economy, yet the economy has grown. The serious issues that our economy is facing has more to do with inflation than recession. Before I begin explaining the reason why I think economic experts are missing the boat, I will briefly touch on the issues that have been impacting our economy for the last couple of years. Consensus has it that the Subprime crisis was manufactured by the mortgage and financial industry tomake money off the poor and middle-class. These needy individuals lack the education and information to understand the documentation process. In addition, although some did have the financial means to pay for a house, others did not.
This Subprime crisis has had a ripple effect on the US and global economy. For example, major banking and brokerage institutions such as Citi Group, Merrill Lynch, Morgan Stanley and Bank of America have had to write off billions of dollars in Subprime losses. These institutions have fired many workers who are then not able to re-energize the economy.
The Federal Reserve Bank, which has the role of protecting the US economy from inflation, is not doing their job. The FED, as it is called, began to reduce interest rates to curb a recession, but these actions have diminished the value of the US dollar. The printing and circulating of money by the FED into the US economy, has devalued the US dollar. Countries in Latin America were criticized for printing and circulating money and look at what the FED is doing with our currency!
According to an article in the Financial Times of London, the cost increase in agricultural products will have a direct impact on the prices that the consumer will be paying at the supermarket. The price increase in food is not just an issue in the United States, but a global issue as well. It seems that the global communities are heading towards a catastrophic, economic downturn. The impact of inflation will be devastating on the global economies after many years of overspending.
In another article from MoneyNews.com, inflation is beginning to create an upheaval in Middle Eastern countries, due to the increase in food prices. The inflation crisis is creating tension throughout the region with demonstrations and riots, alarming the Arab rulers. The Arab middle-class is becoming poor, while their rulers are getting richer, as the price of oil continues to rise.
Spending in the coming years must become frugal. This inflationary mode is not just a US issue anymore, but a global crisis in the making. Tighten your seat belt because we are heading for a world where inflation will become the norm for its citizens.
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