Posted on 05/21/2013 6:51:57 AM PDT by blam
Inflation Is The Lifeblood Of A Healthy Economy
Stock-Markets / Inflation May 21, 2013 - 08:41 AM GMT
By: I M Vronsky
Inflation Is To An Economy What Blood Pressure Is To The Human Body
It is a well-known medical fact that more people die from LOW BLOOD PRESSURE then from high blood pressure.
Therefore, if one accepts the premise that Inflation is to an Economy what Blood Pressure is to the Human Body, it then logically follows that low inflation rate over a protracted period will eventually and inevitably destroy a heretofore healthy economy.
The best, most effective 'medicine' to combat DEFLATION is inflation. This is what democrat President Franklin D Roosevelt did from 1934 to pull the nation out of the devastating morass of the GREAT DEPRESSION.
We Need More Inflation
It looks like we’ll be stuck in a low-growth, high-unemployment economy for many more years, but there is a way out of our troubles if only we’d be willing to buck 35 years of conventional wisdom that’s taught us that inflation is always and everywhere bad for the economy.
The truth is, right now the U.S. economy needs a little more inflation, not less. It’s sacrilege, I know, but our heretofore slavish devotion to low-inflation policies is keeping us mired in a SLOW GROWTH ECONOMY.
Already, politicians have demanded that the Federal Reserve cease and desist from any recovery efforts, arguing that inflation might explode out of control. Never mind that the dire and immediate emergency is an unacceptably high 7.5% Unemployment Rate.
RECENTLY HOWEVER, we have started to hear more voices characterizing higher inflation as a solution, rather than as a problem. Charles Evans, president of the Federal Reserve Bank of Chicago, spoke recently about the dangers of “fighting the inflation ghosts of the 1970s.” Instead, Evans is worried about “repeating the mistakes of the 1930s.”
As well he should be worried. Our difficulties resemble the depression of the 1930s much more than the stagflation of the 1970s.
Why We Need Inflation
Some economists believe some modest, sustained inflation is just the tonic for our global recessionary hangover.
That’s no typo. Some serious people believe a modest, sustained inflation is just the tonic for our global recessionary hangover, starting with Japan’s new prime minister. After winning last fall, Shinzo Abe has pursued a campaign promise to expand the money supply and trigger higher prices. The markets have applauded: the Nikkei stock index has been galloping, while lenders are rewarding Japan with low interest demands.
HISTORY IS TESTAMENT THAT INFLATION IS GOOD
And what does history have to say? Inflation helped slay both the Great Depression of the 1930s (the worst in history) and the runner-up for worst economic calamity, the depression of the 1890s. Moreover, one must remember President Franklin Roosevelt called for higher prices to fight the deflation of the 1930s. Specifically, it was President FDR's inflationary policies that paved the way for the nation rising out of the depths of the 1930s Great Depression.
US INFLATION FROM 1927 TO 1934
The USA from 1927-1930 was sowing the seeds of its self-destruction by allowing the US Inflation Rate to flat-line below ZERO percent. Subsequent to the Stock Market Crash of 1929, the US government compounded its error by allowing the Inflation rate to ‘feed’ the 1930s Great Depression , when it plummeted to -10% by 1932. See chart:
Finally in 1933 the new democrat President Franklin D Roosevelt made the decision to stimulate the nation’s economy by fostering an accelerating Inflation Rate. Although FDR used several policies to achieve this, by far the most effective was when he decreased the value of the US dollar by increasing the value of gold by 69% from $20.67 to $35.00/oz.
(snip)
Stopped reading right there.
Inflation is the lifeblood of a
DEBT-BASED economy.
I guess, then, that Zimbabwe must be the most prosperous nation on Earth.
We need inflation because old people like to eat dog food. /sarc
I love how the “experts” tell us there is no inflation. I guess experts don’t buy fuel, insurance or educate their kids. Cereal boxes and toilet paper keep getting smaller.
This is BS. During Britain’s ascent to economic greatness in the early 19th Century, she stabilised her currency by introducing the gold standard, which kept inflation/deflation operating within a very narrow, fluctuating band. Fiscal responsibility, innovation and productivity drove Britain to become what was then the greatest, most prosperous country in the world. 100 years later, following WWI, Britain came off the gold standard in order to be able to inflate its currency to pay for the welfarism, and the rest is history.
Inflationary policies are a confidence trick that steals money from people’s bank accounts without them noticing and puts wealth in the pockets of bankers and the government at the expense of ordinary savers...
I'm just a dumba$$ engineer, but I would think that industry, non-intrusive government, sound property rights and fair courts are the lifeblood of a viable economy.
Exactly what a pant load. Had we not got into WW2 we would have languished on.
Beyond stupid.
Inflation is a thief and an invisible tax on thrift and savings.
Bubble Making 101
Because making business decisions based on how much your money is going to be able to buy tomorrow is the most productive use of one’s time. More productive even than spending one’s time making new and better things.
When the prices go up, they change what’s in the “basket”.
>> I’m just a dumba$$ engineer, but I would think that industry, non-intrusive government, sound property rights and fair courts are the lifeblood of a viable economy.
You’re smarter than you think you are, Jack. :-)
Yep. All the big players in the economy were destroyed or had not developed yet.
It’s so crystal clear.
In other words: If we the moneychangers with our puppets in government are not allowed to counterfeit the national currency, we will make you suffer. All debt based currencies ALWAYS end up in total collapse, they are based on Fraud instead of actual Math.
Inflation is a wealth transfer mechanism to the Government and Wall street.
The best currency is a stable one. We won’t see that in our lifetime. To many powerful people benefit from this system.
The best you can do is learn to protect yourself the best you can.
Meh
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