The first of every year, we encourage you to look around, set some goals and live intentionally. As a family we meet together early in the year, devour some quality Chinese Food and set our goals for the year.
As part of the process, we look around and take inventory of what we see. Part of the process is our annual predictions column. We have some big predictions for 2012, but first let’s review the record of what we said in early 2011.
Last year we said, “Economic growth will remain sluggish at best. Housing prices have not yet hit bottom and will definitely continue falling. Foreclosures will continue unabated and this will pressure the banking system.”
I don’t think we were far off the mark. We continued with, “The Federal Reserve, under the leadership of Ben Bernanke, has run out of tools to boost the economy. Continued quantitative easing will increase inflation while barely budging the unemployment numbers. ”
Again we hit a bulls-eye. The Fed is out of ammunition. They risk serious inflation if they pump much more cash into the system. The only factor currently protecting us from inflation is the deflation in housing and real estate. All the money destroyed in the housing crisis is being restored by the Fed, but it isn’t circulating with us common folk because it is all being used to rescue insolvent banks and governments.
Our only real clunker of a prediction was, “Gasoline will trend upward to nearly $4.00 a gallon, and could even surpass it. Every additional gallon of oil pumped out of the ground is more costly than ever to produce. Rising gas prices will further drag the economy down.” They are up but not that much.
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