U.S. Austerity Necessary to Prevent Hyperinflation

FORT LEE, N.J., July 6 /PRNewswire/ -- In NIA's latest economic documentary, "Meltup," we said that the simple act of the U.S. government eliminating its $7.25 per hour minimum wage and implementing a new $7.25 per hour maximum wage for government employees, would go a long way in helping rebalance America's unstable economy. NIA is very pleased that California Governor Arnold Schwarzenegger appears to have watched "Meltup." Schwarzenegger last week announced plans to cut pay for over 200,000 state employees down to the minimum wage of $7.25 per hour due to a budget impasse.

Although most expect these salaries to rise back up after California passes a new budget, NIA believes the only way California will be able to survive without a bailout from the Federal Government, is if these wage cuts are made permanent. In fact, if the U.S. government wants to have any hope of preventing and/or delaying hyperinflation from occurring by the year 2015, we believe the Federal Government will need to implement similar wage cuts on a nationwide basis within the next 24 to 36 months.

Both the U.S. dollar and Euro experienced a decline in their share of the world's foreign-exchange reserves during the first quarter of 2010. Meanwhile, central banks reported a 19% increase in the "other currencies" category, which includes currencies like the Canadian dollar and Australian dollar. While many European countries are now making the right choice of implementing tough austerity cuts to counteract weakening demand for Euros, there have been no calls for major austerity cuts in the United States. Before long, NIA expects short-term confidence in the Euro to be restored, which could turn the U.S. dollar short-term bounce into a huge crash, exactly like NIA predicted in its top 10 predictions for 2010.

The U.S. is currently in a death spiral of accelerating national debt growth, endless deficits, and soon to be skyrocketing interest rates and massive price inflation. Beginning in late-2010/early-2011 as confidence is restored in the Euro and the spotlight is put on the U.S. debt crisis, NIA expects to see a dramatic rush out of the U.S. dollar that will accelerate going into 2012. A select group of educated Americans who reach the exit door first will become the wealthiest Americans of the future, while the rest of the country sees the purchasing power of their savings disappear.

Despite what the U.S. government would have you believe, deflation is a good thing. Our country was able to survive the Great Depression of the 1930s because we were lucky enough to have across the board price deflation. Shockingly, even back then the U.S. government took unprecedented measures in order to battle some areas of price deflation, which NIA believes prolonged the Great Depression.

During the Great Depression, the U.S. was faced with overproduction of agricultural commodities due to technological advances made during the Roaring Twenties. The one problem no American should have had at that time was finding food to eat. However, rather than let Americans eat cheap food, our government compounded problems by enacting the Agricultural Adjustment Act, which paid farmers to destroy their crops in an attempt to artificially raise agriculture prices. This led to millions of Americans overpaying for food and nearly starving to death.

The one problem no American should have today is finding shelter. The agriculture overproduction during the early years of the Great Depression pales in comparison to the overproduction of new homes the U.S. experienced this past decade. Rather than let Americans enjoy affordable housing, the U.S. government once again implemented wasteful policies such as the $8,000 home buyer tax credit in an attempt to artificially prop housing prices up. There are now hundreds of thousands of Americans who are "squatting" in homes, by occupying homes they neither own, rent or have permission to use.

Deflation is good for all Americans because it increases the purchasing power of their U.S. dollars. There were no good reasons for Americans to have gone without food during the Great Depression and to be squatting in homes today. These problems were created as a direct result of the government's interference in the free market, as part of their ill-conceived war against deflation. If the government simply got out of the way, food would have been affordable for all Americans during the Great Depression and housing would be affordable for all Americans today.

NIA believes it is important for the government to also get out of the way when it comes to wage controls. NIA frequently tells young people that the best way to start a successful career in the U.S. is not by getting deeply into debt to attend college, but by immediately entering the workforce and gaining first hand knowledge and experience. Without a minimum wage, a recent high school graduate who wants to start a career in the oil drilling industry, could write letters to the CEOs of oil drilling companies offering his/her services for just $5 per hour. Under current labor laws, this would be illegal, even though the high school graduate would be receiving an education that is far superior to what he/she would receive in college.

NIA's biggest fear is that the U.S. government will implement price controls during hyperinflation, by ordering stores to sell goods at government mandated prices. A couple months ago while NIA was producing "Meltup," an event took place just outside of a major U.S. city that demonstrates just how devastating price controls will be on the lives of all Americans during hyperinflation. This story was largely ignored by the mainstream media, but NIA is currently producing a video that will expose the significance of what took place inside of our very own country. We will be releasing this shocking video later this month.

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About us:

The National Inflation Association is an organization that is dedicated to preparing Americans for hyperinflation. The NIA offers free membership at http://www.inflation.us and provides its members with articles about the economy and inflation, news stories, important charts not shown by the mainstream media; YouTube videos featuring Jim Rogers, Marc Faber, Ron Paul, Peter Schiff, and others; and profiles of gold, silver, and agriculture companies that we believe could prosper in an inflationary environment.

Contact: Gerard Adams, 1-888-99-NIA US (1888-996-4287), [email protected]

SOURCE National Inflation Association