We have deflation. That's the reason why Social Security recipients will not be getting a cost of living increase in 2010.
I'm not disputing your assertion, but I do have some questions. I was under the impression that inflation is caused by increases in the money supply, effectively pushing the value of currency down. This, in turn, shows itself by the seeming increase in prices of goods and services. It seems to me, that with the exception of the "burst bubble" in housing, the prices of nearly everything has been increasing, and there are forecasts that energy costs will be going back up, which will, in turn raise the prices of everything again.
Am I missing something?
Thanks!
Mark
You're exactly right. This would be the definition of inflation.
However, the overall money supply in our economy is shrinking, not growing.
Everyone seems to be focused on the "monetary base", where the Fed has been stoking hundreds of billions in excess reserves into the account of various banks.
The thing to keep in mind is that these excess reserves are not actually circulating in the economy. They're just acting as a balance sheet liability entry so that the Fed could purchased hundreds of billios in toxic mortgage-backed security assets.
Our entire monetary system is based on debt. This may sound strange, but money = debt, and debt = money. That $10 bill in your wallet is actually a claim on someone elses future labor. You're the master over a debt slave in the amount of $10 in labor (whatever that value happens to be at a particular moment in time).
You need to focus on the debt destruction going on in our economy. Debt destruction is exactly the same as money destruction. They're equal.
The fact is that there is much more debt destruction happening in our economy than there is debt creation through the Federal government borrowing record amounts.
Anytime that debt destruction is larger than debt creation we get deflation. If the difference is large then we get a depression.
The Federal government is currently trying to create new debt any way it can - trying to keep pace with all of the debt destruction. This is the reason why they offer all of the "cash for clunkers" and "first time homebuyers" programs. The Federal government cannot create new debt fast enough - so they offer programs encouraging the public to create new debt as well.
This is the whole purpose behind the health-care legislation. It has absolutely nothing to do with health-care. It has everything to do with the Federal government seeking to create a new, gigantic "trust fund" where they can be custodians of 18% of our economy.
The Federal government will then do what they did with Social Security and steal the vast amount of money in the trust fund to keep the economic game going a little while longer. This money they steal will be replaced with Treasury security IOU's.
Think about what I just wrote. Let's say that you send the Federal governmen $1,000 for your health care payment. The government will collect everyone's premiums and have a big pile of money. They will then set aside the money necessary to pay the current fiscal year's outlays. Anything left over in the pile of money will be stolen and replaced with Treasury securities!
What does this mean to you? It means that some of your FUTURE taxes will go to repay those Treasury securities - meaning that you're going to be taxed to repay money that you already sent in the first place!
The international bankers are the ones that pulled credit from the economy. They did this on purpose so that they could steal the underlying wealth that the debt represented. Our economy is not run by our Federal government at all. It is completely controlled by the bankers. The Fed is simply a pipeline the bankers use to access the Federal government.
This is probably much more than you cared about - but it's my snippet of what's currently going on with our economy - and an explanation as to why our Federal government is spending like a drunken sailor. They have to, our they risk losing all of their accumulated power structure.