Inflation - the new enemy.

A lot of people must be wondering why Australia is taking a hit from the world economic meltdown. Our economy was in good shape. Employment was strong. We actually had a massive economic surplus.

It all started when a few greedy firms in Wall street, USA took advantage of a money surplus to make home loans available to people who lacked the ability to service those loans.

Then they bundled these loans into what they termed " Securities " and duped banks and investment firms into buying them as secure investments. When borrowers began to default it was realised that this was worthless paper. The money market panicked - banks stopped lending - and the world was on it's way to recession !

Governments of all political persuasions are spending money like drunken sailors trying to head off disaster. Most likely Australia has spent that massive surplus and will shortly join the rest of the world in fueling that spending spree by moving into deficit spending.

World government spending has moved off the description graph. We no longer speak of billions and trillions - like Zimbabwe we may need to coin a new word to accommodate this largess - maybe " Squillions " would do ?

Spending our way out of trouble may - or may not work, but one thing is certain - and that is the world is using it's printing presses to generate the money it is throwing at the economy. There simply isn't a source of money of that magnitude from any other source.

Do you remember when the biggest banknote available in Australia was the twenty dollar bill ? The steady march of inflation saw the introduction of the fifty dollar bill - and a few years later the hundred dollar bill.

Have you noticed the creeping inflation, despite the insistence by the government and the economists that inflation is " just mildly " outside the " comfort zone " of three percent.

Have you noticed that buying a single tomato now often costs fifty cents - and that bus and train fares are increasing at double and even treble this supposed inflation rate - and that electricity and gas are predicted to fade beyond the reach of low income earners ?

We are about to see a readjustment of monetary value - and that is called hyper inflation. World government debt incurred to try and head off economic collapse can only decrease the value of money in real terms - and that means your savings and the amount you are counting on for retirement is becoming a shrinking commodity.

This " fact of life " is met by a wall of silence from both the government - and the economists who have the skill to see it coming - because it is far safer to live in a world where we are insulated from bad news.

We will surely survive this world meltdown - but the economy we are accustomed to will be as remote as the days of pounds, shillings and pence way back in 1966.

The day when everyone will be a millionaire is about to dawn !