Posted on 10/28/2015 10:27:26 AM PDT by blam
October 27, 2015
Harry_Dent
During World War II, the Fed bought its own bonds to keep interest rates low and demand high enough to finance the war effort.
Back then, the Fed’s efforts did what you’d expect: they caused a modest level of inflation.
So you’d expect the unprecedented stimulus of today to create substantially higher inflation. In fact, with the greatest money printing in history, it wouldn’t be unreasonable to fear hyperinflation.
That’s what most gold bugs fear.
It’s what most everyone seems to fear.
They’re completely wrong.
Inflation is low… will stay low… and there will be no hyperinflation to speak of.
The money the Fed printed has largely gone into financial speculation. It hasn’t performed any real stimulus efforts by expanding the money supply through lending and spending.
So instead of inflation, we’ve seen bubbles pop up all over the financial markets. And they’re just like the ones we’ve seen before when tech stocks blew up. It was the same with real estate to follow… then emerging markets… then commodities… then gold… then junk bonds… then Treasury bonds.
Those bubbles did nothing to create a stronger future.
Instead, they tempted investors to misallocate resources. So when the bubbles inevitably burst, the system they’d stretched and warped with debt fell apart.
So why are gold bugs’ fears of hyperinflation so misplaced?
Because they’re only looking at the amount of new money being created.
I’ll grant them – current printing is unprecedented. There’s a lot of new money.
But what they’re not considering is the velocity of money.
Dr. Lacy Hunt – the only classical economist I like – explains when we invite him to speak at our Irrational Economic Summits.
(snip)
(Excerpt) Read more at marketoracle.co.uk ...
Thx!
I took out a loan.
Thx!
Oh yea! But, but we raised the minimum wage so you can now afford these things! /S
everything they do is set to destroy us...
they don't want prosperous middle class people buying lake cabins, or ranch land, or buying boats to fish or sail or ski...
what they want?....they want a huge mass of people making just "enough" to buy the crap...the TV's..the clothes and shoes...the birthday cards and the Valentines candy...
they want us to keep buying the silly stuff...
why do people suppose they want to give the minimum wage earners more money?....not to enrich them, but to make them bigger consumers...
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.