Tags: Dick Morris Fed’s Massive Easing Will Spark Hyperinflation

Dick Morris: Fed’s $600 Billion Plan Will Backfire, Cause Big Inflation

By    |   Friday, 12 Nov 2010 03:14 PM

The Federal Reserve’s 133 percent expansion of its balance sheet over the past three years will ultimately create huge inflation, says Newsmax contributor and ace political strategist Dick Morris.

“The danger is that once the economy begins to come out of this man-made depression that we’re in because of Obama, then everyone will start spending money at once,” he tells Newsmax.TV. “And that means gigantic inflation.”

The Fed’s huge injection of money supply makes inflation a serious threat, Morris says. “(Fed Chairman) Bernanke is right that it’s not going to happen tomorrow or next month, because the economy is half dead,” he says.

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“But once we begin to recover, the Fed will have so much money out there to soak up, that it won’t be able to. Too much money will be chasing too few goods. You’ll have huge inflation akin to what we suffered after World War I and World War II.”

The Fed’s easing has done nothing to stimulate the economy so far, Morris says. “Banks are sitting on more than $800 billion of cash. Consumers have used $300 billion of the new dollars to reduce their debt,” he explains.

“Nobody’s investing and nobody’s spending. The reason is there’s a fundamental terror about the future of the economy – about tax increases that loom, about Obamacare tying up the whole healthcare industry, about financial regulation denying any flexibility to banks for lending.”

The Fed printing money doesn’t solve the problem, Morris says. “You can lead a horse to water, but you can’t make it drink. All the Fed is doing is pouring in water.”

In addition, the Fed stimulus flies in the face of the deficit reduction commission’s recommendation to slash the mortgage interest rate deduction, Morris says. “So they’re stepping on the gas pedal and brakes at the same time.”

The Fed’s easing also is pushing the dollar down. “The weak dollar is part of an effort to hype American exports,” Morris says.

“The problem is you get in a race to zero with other countries. They’re not going to sit by and let the Fed weaken the dollar while their currencies remain strong and their exports are no longer competitive.”

So, “Instead of a trade war, we’re now in a currency inflation war with just as dire consequences,” he says.

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The Federal Reserve s 133 percent expansion of its balance sheet over the past three years will ultimately create huge inflation, says Newsmax contributor and ace political strategist Dick Morris. The danger is that once the economy begins to come out of this man-made...
Dick Morris Fed’s Massive Easing Will Spark Hyperinflation
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2010-14-12
Friday, 12 Nov 2010 03:14 PM
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