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I consider that Government spending is ultimately the source of all inflation.

Inflation can be described as a hidden tax that gives the appearance of rising prices due to loss of buying power.

Inflation is caused when there is too much cash chasing the same (or smaller) amount of goods.

So, using those loose corollaries, we have an abundance of government spending, prices are rising and there is an excess of cash.

The most amazing thing is that the inflation is falsely kept low to the US citizen by cleverly being exported in payment to our trading partners for goods and services that make up the trade imbalance.

If there was ever any doubt as to why the current immigration policy (no immigration policy) is in effect, all you have to do is consider how much US Dollars they send out of the economy to bring the next one over the border.

If all of our excess money was contained within the United States, the amount of inflation would be astronomical.

That is why I refer to it as mathematically guaranteed.

If you purchase a fifth of a quality adult beverage, and invite another friend over to share some fellowship (and adult beverage), you would have a fairly good chance for success (great fellowship and a nice glow).

However, if 1000 of your closest friends showed up uninvited, it is doubtful that you would achieve either goal (Fellowship or warm glow).

In fact, if you factored the experience down to what happened to the effects of the adult beverage, you would find that it was diluted far beyond the point that it could be noticed, when shared with the extra 1000 guests.

For this example, consider and the combination of yourself and your friend to be a balanced cash supply; balanced against the fifth of quality adult beverage (perfect mix of gods and services) - both comprising a perfect economical system.

Now, consider the 1000 guests (excess dollars), chasing the same amount goods and services (one fifth of quality adult beverage).

Do you think that this would be the desired situation?

How does it compare with our current situation?

I am familiar with these arguments and many others. The "dollars" you refer to largely exist as various contractual obligations owed to and from bank-like entities, from hedge funds to manufacturing concerns to cities and counties. Banks, too, of course.

This is certainly true of East Asian holdings.

An attempt to "cash out" these holdings would require an avalanche of cash creation by the Fed, or the bankruptcy of the financial system, or both. Severe and instant inflation, severe cash crunch, severe writedown of debt and assets, business failure, loss of faith in the dollar - sure could happen, and is what the Chinese have been threatening for a number of years now.