Current U.S. Economic Conditions
I recently co-hosted an event for Tom Campbell with a group of friends last Tuesday to hear what he had to say about the U.S. economy and California’s fiscal situation. Tom is running for governor of California in 2010 and has been a U.S. Congressman, a California State Senator, the Dean of the Haas school of business, earned his Ph.D. economics from the university of Chicago, 1980 (Milton Friedman, advisor), etc. The list of his accomplishments goes long and deep over a carreer in politics and academics. That is why I thought it would be important to share his thoughts on the state of the economy.
Tom’s predictions for inflation and recession were shocking to me. He thinks the recession will end at the end of 2010 and inflation will rise to 12% once the velocity of money takes hold in the economy; velocity of money is how often money changes hands in a year. His thesis is based on the increase in the money supply. In the last year, Federal spending not offset by revenue sources has included 2.779 trillion in the increase of the money supply. Money in the U.S. economy before the additions sttod at 8.275 trillion. In other words, the Federal spending will increase the money supply by one-third! source: http://www.federalreserve.gov/releases/h6/hist/h6hist1.txt
With respect to the recession, Tom states we are only two quarters into it. This was done through a comparison of recent recessions coupled with job losses, mirroring 1980. The biggest problem i see is California’s unemployment is the highest on record, i.e. off the charts.
Time will tell if the green shoots in the media sprout into plants we can eat.
"Greg Gilbert and James Simos" are registered representatives of FINRA member firm, "Infinity Financial Services."
