Fed Reserve Officials: Americans Are Saving Too Much Money, We Need To Purposely Generate Inflation

there they go again. First the crush the banks by forcing them to make loans to people who can’t afford them. Now they will crush the banks again by letting those who could afford them pay them off with inflated dollars.

Who hires these nimrods? They never look beyond the desired outcome to see the unintended consequences.

These people working for the Federal Reserve Board must be on drugs.Saving too much,We’re working like hell and scraping for every last dime hoping that our towns don’t steal our homes out from under us by increasing our property tax burden.

Then there is the Tax burden imposed by the Federal Government and the state of Connecticut.

All of the branches of government need to undergo some serious spending reductions.

Hey Nov, I’d like your take on this. My (simplified) take is that it is insane and will lead to the worst of both worlds: Hyperinflation of necessities, and because nobody will have much money left over (besides gov’t connnected uber rich), deflation of non-necessities. The latter will lead to collapse of industries, massive unemployment, etc. IOW, a full on Depression.

What’s your take? What am I missing?

Those who want financial independence and plan well to stay out of debt always end up getting punished ! The tax on houses under ObamaDeathCare is aimed at those who have equity in their houses !

When you are in debt, you are enslaved to the whims of those in charge whether it is the gov’t, your employer or anyone else.

Take my previous employer, my manager had knowledge that I didn’t have a mortgage. It really p*sssed him off since he tried to get me do some questionable things and I could with good conscious say no ! Of course if there was an investigation, I would be the one holding the bag, not him. He told me that someone at my age (late 30’s at the time) should not have my house paid off since society expected people in my age range to be in debt. Of course he is a liberal democrat.

I studied econ in the ‘80’s. They taught us that there is a correlation between inflation and unemployment, so that inflation can lead to more employment. This was being taught even after the late 1970’s demonstrated that the correlation wasn’t there at all. The Fed guys will have studied the same thing, probably in the 70’s or 60’s.

The Fed has allegedly pursued a policy of price stability for decades. They now seem to be saying they will no longer do that, but will instead focus on employment and jobs using the money supply. Inflation is good, it will create jobs.

I’ve read here on FR that the corporations have been holding onto trillions of dollars. So that’s where the real savings in this economy are. If they release that money, ‘velocity’ of money increases, so inflation is a real probability. I have no confidence the Fed can manage it.

I haven’t studied hyperinflations. Gold, silver, land and food are good investments to weather that type of storm if you aren’t paycheck to paycheck and have some money to invest. Investing in assets of countries that aren’t inflationary are also good because currency markets will efficiently devalue an inflating dollar if the country doesn’t peg it’s currency to ours. If you are paycheck to paycheck, necessities will go up and up and your pay will get adjusted annually, so you are screwed.

I personally think that the Austrian school’s analysis (cut spending, let the free market adjust to new conditions) is the best way out of recessions and depressions. This monetary policy easing nonsense is an experiment with our lives and livelyhoods — and one that has been conducted before. I know of no historical example of an economic depression being ended with monetary policy but plenty of examples of hyperinflation.

The Federal Reserve is a bank operated for the benefit of its member banks.

Those member banks own a large amount of distressed mortgages and real estate, and can only be saved from insolvency by a general inflation that will raise the dollar price of real estate along with everything else.

So look for the dollar to lose at least half its value in the next two years. It could get much worse than that.

Thanks. I agree with the Austrian school of thought, too. Problem with it is that it doesn’t increase government power over people, quite the opposite in fact, so the political class doesn’t like it. Until we deal with that issue, namely by dumping big govt type politicians across the board, we won’t see it implemented. (I’m sure you knew that, just wanted to voice it.)

My (simplified) take is that it is insane and will lead to the worst of both worlds: Hyperinflation of necessities, and because nobody will have much money left over (besides gov’t connnected uber rich), deflation of non-necessities. The latter will lead to collapse of industries, massive unemployment, etc. IOW, a full on Depression.
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I've read folks here on FR saying that it's pushing on a string. If the corporations hold the cash you don't get inflation or investment, the money just piles up unlent by banks and invested in government bonds, or held in accounts by the corporations, or spent on mergers, instead of new plant or hiring. Then the money is released and begins circulating more when the businesses get a little confidence and that's when you've got the inflation problem. Stagflation definitely happened but the libs in academia were so wedded to Keynsianism that it wasn't thought through rigorously. I have no idea if the shear volume of money will eventually overwhelm the low velocity of money in a recession.

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