"The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago."
Ouch. Plus, the GDP overstates production because it includes services, and our economy has a lot of services. It's more like a calculation of the amount of money that moves around in a year, rather than a measure of production.
The problem with inflation like this is that the companies that are getting the money right away benefit from the inflation - they can pay off whatever in current dollars, because the rest of the economy hasn't had access to that money. Your spending power and mine go down once the money starts flowing around the rest of the economy.
© 2005-2008 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.