Posted on 11/10/2013 12:07:29 PM PST by Zakeet
In his parting act, Federal Reserve Chairman Ben Bernanke has decided to continue printing some $85 billion per month (6 percent of GDP per year) and spend those dollars on government bonds and, in the process, keep interest rates low, stimulate investment, and reduce unemployment.
Trouble is, interest rates have generally been rising, investment remains very low, and unemployment remains very high.
Bernanke’s dangerous policy hasn’t worked and should be ended. Since 2007 the Fed has increased the economy's basic supply of money (the monetary base) by a factor of four! That's enough to sustain, over a relatively short period of time, a four-fold increase in prices. Having prices rise that much over even three years would spell hyperinflation.
The Treasury dance
... When the Treasury prints bonds and sells them to the public for cash and the Fed prints cash and uses it to buy the newly printed bonds back from the public, the Treasury ends up with the extra cash, the public ends up with the same cash it had initially, and the Fed ends up with the new bonds.
Yes, the Treasury pays interest and principal to the Fed on the bonds, but the Fed hands that interest and principal back to the Treasury as profits earned by a government corporation, namely the Fed. So, the outcome of this shell game is no different from having the Treasury simply print money and spend it as it likes.
The fact that the Fed and Treasury dance this financial pas de deux shows how much they want to keep the public in the dark about what they are doing. And what they are doing, these days, is printing, out of thin air, 29 cents of every $1 being spent by the federal government.
(Excerpt) Read more at finance.yahoo.com ...
I'm at a loss to see how the economy can respond as long as we have such high taxes. If the government changes and lowers taxes, inflation will take off like a rocket.
Right now cash is a very wonderful thing to have but once the dam breaks it will become worth only a fraction of what it is now.
As I tell everyone, you must protect your wealth with commodities. You must have precious metals or ownership in companies that produce comodities like oil and gas. Real estate is ok as long as you are prepared to hold it. Once inflation hits the prices of realestate will drop like a rock. No body will have enough money to purchase realestate when they are paying 4 or 5 times as much for food, clothing and fuel. People on fixed incomes will go bankrupt. They won't be able to pay for their property, their taxes and necessities. They might be able to live in a room and eat dog food and survive but that will be it.
People probably think I'm nuts but economics was my major in college and I see no way out of this mess. There was a chance until Obama care and quantative easing, but that takes a huge chunk of money out of the economy.
I'm prepared as well as can be expected and I'm still VERY worried.
Obama has put tons of money in the hands of the banks and other financial institutions of his friends, when inflation hits, and it has to, and when realestate drops like a rock, these same institutions will buy up property for pennies on the dollar. If you own comodities then you may be able to participate in the buy up. I highly recommend you store a lot, a whole lot, of commodity storage. Wouldn't it be nice if you only had to purchase very little for a year or two.
Very interesting times we live in. Mr Obama is doing all he can to crash the economy so that he can take it over and “save” everyone. There will be a lot of people clamoring for this saving, just like there was when Hitler took over.
“Weimar days are here again.”
The skies above are blear again
So lets sing a song of jeer again
Weimar days are here again
Altogether, shout it now, theres no one
Who can doubt it now
So lets tell the world about it now
Weimar days are here again
Your job and savings are all gone
there’ll be no living from now on
Weimar days are here again
If you've ever made an inflation prediction that's actually come about, please share.
Obama has put tons of money in the hands of the banks and other financial institutions of his friends...
Wondering if you've also got a link for some kickback dollar amount to banks any where near what he's given to his fellow union thugs and Marxist activists.
Ah, we don't want tax cuts. Seems like we're seeing these loony left policies pushed a lot lately on Freerepublic threads.
Excellent!
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The stock market is at 108% higher than it was when O took office. That works out to about 25% inflation per year from the time O took office.
The only reason that the O has been able to say inflation is low is that he took the items that cost more out of the basket. Food, energy, health care, education have all been removed from the inflation calculations by the government so that Social Security payments would not rise. The actual inflation has been calculated at about 12% by many economists which I think is very low and is about what the real unemployment figures are.
I absolutely predicted Carters inflation and also Reagan's reduction of inflation.
Just because Obama says we don't have any inflation now does not mean we don't have it. You can't increase the M1 by 4 times and not expect inflation. If you believe that the One won't lie to you, then you just keep your health insurance policy and your doctor.
I certainly did not say we don’t want tax cuts.
When the cuts hit and they will or else there will be a revolution, the people who have savings will be wiped out. People on fixed incomes will be eating dog food for supper if they can afford it.
I am all for the tax cuts, in fact I believe that is the ONLY way the economy can recover. I just feel sorry for all the boomers who will be left holding nothing but an empty bag of promises.
I do not predict when the collapse will occur, but, occur it will. Fiat money has collapsed every society that has tried it since the world began. It will do us in too. The ride is fun for a while but the fiddler will be paid.
The NASDAQ's down 24% since 2000 but that doesn't mean we've been having 2% annual deflation for the past 14 years.
You can't increase the M1 by 4 times and not expect inflation.
Sure we can. Inflation is not a change in any of the measurements of the money supply --it's a change in prices. So we've had an enormous surge in the money supply; we've also had an enormous drop in money velocity because the economy is so bad nobody's doing anything with the money they got. While America's got a serious problem with Marxists wrecking the economy, my theory is that one of their strategies is to tell everyone to just worry about the evil bankers and their fiat money.
The FR seems to be infested with trolls spreading this nonsense.
Inflation is not a change in prices. Inflation is and only is an increase in the money supply, usually M1 is the best indicator, although certainly not the only one. Prices are only an indicator of inflation and not always a good one.
Housing prices are down from 10 years ago, but we don’t have deflation. Actually the stock market is a pretty good indicator of inflation. It is by no means fail safe but secondary indicators never are. Like other prices the stock market is just one of the indicators. Inflation can be measured, you can compare the amount of money in M1 with previous years and determine exactly what it is. The only reason the government has a shopping cart and changes what is in it is because they don’t want you to know what the inflation rate is. They think that everybody is dumb enough to take their word for what it is when they do their comparison shopping. Anybody who has had to purchase gas, insurance, health care, or education knows that there is a tremendous amount of inflation in those items but this administration took those things out of the basket.
Believe me, the only think inflation is, is an increase in the money supply. Prices are affected by an increase in the money supply only when people SPEND the money. In scary times like now people have a tendency to hold on to their money for security, except for people on the dole. When people hold their money there is little pressure on prices. If the government decided to suddenly change the money to another form and limited how much you could convert prices would go sky high because people who had more than the max would try to spend it before the deadline and the prices would shoot through the roof.
Ah, ok. Folks I've heard from it seems (from here) have been using this one:
in·fla·tion inˈflāSHən/
nounEconomicsa general increase in prices and fall in the purchasing value of money."policies aimed at controlling inflation"
--but I like good ol' usually unreliable wikipedia said:
The term "inflation" originally referred to increases in the amount of money in circulation, and some economists still use the word in this way. However, most economists today use the term "inflation" to refer to a rise in the price level. An increase in the money supply may be called monetary inflation, to distinguish it from rising prices, which may also for clarity be called 'price inflation'.[31] Economists generally agree that in the long run, inflation is caused by increases in the money supply.[32]
--so we're seeing together that what we got is monetary inflation but not price inflation, probably like you said "people hold their money there is little pressure on prices".
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