Posted on 03/18/2009 11:42:41 AM PDT by dynachrome
Inflation is always a monetary phenomenon. Since the printing press, it has in all times and in all places been the inevitable consequence of creating large amounts of money, not backed by any commodity, such as gold.
Now we are in a period of deflation, with falling prices. Government will do what it feels it has to do to fight deflation, because deflation is synonymous with depression, like in the 1930s. But the only way they know how to solve a problem like this is to throw money at it. The amounts are in the trillions; nothing is like it in all of history.
If all of this newly created money does not cause inflation, it will be the first time in the history of fiat money that inflation has not resulted. Based on the lessons of history, that’s the way to bet.
One of the natural consequences of a dominant world-wide currency, like the dollar, being created in vast quantities, is that the dollar will fall versus other currencies. The irony is that right now the dollar is rising against other world currencies. That only means the dollar is the healthiest patient in the hospital. Why? Other currencies are the early victims of the inflationary plague.
You Americans who earn and spend only dollars will soon see the natural consequences of inflation, which are rising dollar prices.
When will we begin to see the consequence of monetary inflation; broad-based price inflation?
(Excerpt) Read more at kitco.com ...
I believe the unknown freeper comic copied and posted this up here somewhere but it may have been deleted by the mods.
How to use ETF’s to counter the upcoming Zer0 inflation:
Thanks.
Inflation is only good if you owe a lot of money and can pay it back with inflated dollars that aren’t worth as much as the dollars you borrowed.
Inflation is not good.
It is easily mistaken for prosperity.
It destroys accumulated savings (something the left would really like to do)
It saps the value of any money that you are saving (the left loves that)
It makes the US more expensive for foreigners, cutting down on tourism to the US.
It makes millions of people poor and dependent on the government (one of the goals of the left)
Inflation helps the left and hurts normal people.
I think he is arguing that the people predicting deflation are wrong. His predictions on inflationary times don’t make me optimistic.
Some cheery news just breaking:
http://www.freerepublic.com/focus/f-bloggers/2209319/posts
“The Federal Reserve said today that it will deploy an additional $1.2 trillion to try to lower interest rates and stimulate the economy, an aggressive move aimed at containing the recession.
The central bank will increase its purchases of mortgage-backed securities by $750 billion, on top of a previously announced $500 billion. It also will double its purchases of debt in Fannie Mae and Freddie Mac to $200 billion. Those steps are intended to lower mortgage rates. The announcement of the previous purchases pushed mortgage rates down a full percentage point.”
Hi Ho Silver away!
Thanks for the site link. TIPS are an especially good inflation hedge since they are tied to CPI, which on average overstates real inflation by about 1%. Thus, you can actually gain 1% a year even though it looks like you are breaking even. Measured against the long-term average real growth in stocks over the last century (6-7%), 1% doesn’t look so good. But measured against a 50% decline in stocks or a steady-state inflation rate of even 2-3%, a real increase in one’s purchasing power during years of retirement especially, may provide comfort while others tighten their belts (a 3% inflation rate implies your nest egg loses half its purchasing power in 27 years).
Of course, all the foregoing assumes there is a U.S. government still around when it comes time to cashing in your TIPS at maturity.
My Krugerrands are looking real good right now.
“One of the natural consequences of a dominant world-wide currency, like the dollar, being created in vast quantities, is that the dollar will fall versus other currencies. The irony is that right now the dollar is rising against other world currencies.”
Not anymore, after that idiot Bernanke’s move today, the dollar is plummeting against foreign currencies. I swear this government and the Fed are hell bent on destroying this country.
Thanks for the input.
http://www.freerepublic.com/focus/news/2209332/posts
Fed to buy Treasurys in latest bid to restore growth
Market Watch.com ^ | March 18, 2009 | Greg Robb
Posted on Wednesday, March 18, 2009 12:20:49 PM by Grampa Dave
Edited on Wednesday, March 18, 2009 12:31:29 PM by Jim Robinson. [history]
The Federal Reserve surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the economy recover. The Fed was more pessimistic about the outlook...
You are correct.
My post arrived a few minutes earlier.
And of course, 300 billion won’t do it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.