Some hard logic from Randolph T. Holhut at The Smirking Chimp
We keep hearing statistics about how well the American economy is doing and how it is growing, creating new jobs and shrugging off high energy prices.
We're hearing this despite the aftermath of Hurricane Katrina, one of the worst natural disasters to hit the United States.
We're hearing this, despite seeing energy prices nearly double in the past couple of years.
We're hearing this despite being in the midst of an economy that doesn't seem to generate jobs that pay a living wage.
In the mind of soon-to-be-outgoing Federal Reserve Chairman Alan Greenspan, the biggest threat to the U.S. economy is not the $200 billion or so it's going to cost to rebuild the Gulf Coast.
Nor is it the money being syphoned out of people's wallets every time they fill up their cars with gasoline.
Nor is it the lack of jobs other than those that require you to ask, "Would you like fries with that?"
No, in Greenspan's mind, inflation is the threat. So this week, for the 11th time since June 2004, the Federal Reserve raised its short-term interest rates.
This is turn drives up the cost of credit for consumers - higher credit card interest rates, higher home equity loans, higher mortgages. A nation already overextended in debt gets another kick in the wallet.
But that doesn't matter to Greenspan and the Fed. As long as economic growth is sufficiently restrained to keep wages low and price growth minimal, who cares who gets hurt? Just keep the financial markets safe...
All this adds up to one thing - a major recession next year and a lot of Americans in financial trouble. And the new bankruptcy rules take effect next month, making it harder for people to seek relief from their debts.
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