Inflation
- Thread starter Gary K
- Start date
The principles of economics found on that page are correct. It is deficit spending, the printing of money that has no relationship to the creation of real, physical, wealth, that are the prime causes of inflation. This has been demonstrated time and time again. In fact, this has been known since monks studying economic issues in Spain around 1000 A.D discovered that prices for food were higher in areas of Spain where gold was more plentiful and lower in areas of Spain where it was less plentiful.
In other words, one of the big reasons for the growing disparity in wealth between the lower income levels and high income levels is deficit spending by the government. Why? Because the poor lose out big time on price increases for they do not have the disposable income to absorb the rise in prices that the wealthier people have. Thus, when Obama printed $85 billion a month for 6 years under his "quantitative easing" policy he was screwing the poor over to the benefit of the rich. Why? Because he printed $6 trillion that went directly to supporting the stock and bond market prices. The Fed now owns trillions of dollars worth of stocks, bonds, and worthless home mortgages. This transferred money directly to the fat cats on Wall Street and wealthy investors for it drove up the prices of stocks and bonds due the Fed's purchases with money based upon nothing but debt. In fact the US dollar is based upon nothing more than debt. If everyone paid off all of their debts there would be no money to circulate. That's how insane and out of balance our economic system is right now.
Obama being a "friend" of the poor and middle class is one of the most outrageous lies ever told.
Agreed.
SUTG
New member
I prefer the old classical definition of inflation, which is just an increase (or inflation) in the size of the money supply. Nowadays people use the term to simply mean an increase in the general prices of goods and services. Of course, the former is often a cause of the latter, but not always.
The new money created by the central bank(s) represents a claim on wealth, but the central banks do not generate any new wealth so, ceteris paribus, more dollars, pounds or pesos will be available to purchase the same quantity of goods and services, thereby putting upwards pressure on prices. However, if there is alot of production in the economy at the time, prices will rise less, stay more or less the same, or can even fall. Of course, they would have fallen even faster without that extra money being put into circulation.
Also agreed.
The new money created by the central bank(s) represents a claim on wealth, but the central banks do not generate any new wealth so, ceteris paribus, more dollars, pounds or pesos will be available to purchase the same quantity of goods and services, thereby putting upwards pressure on prices. However, if there is alot of production in the economy at the time, prices will rise less, stay more or less the same, or can even fall. Of course, they would have fallen even faster without that extra money being put into circulation.
Also agreed.
SUTG
New member
Rapid wage increases/rapid rise of the costs of goods materials
The only way for what you're saying in what bolded can happen is if an economy is outgrowing the amount of money being printed. In other words, if the economy had kept up with the printing of money during the Obama's QE the economy would have had to have grown by at least $6 trillion during Obama's term in office. It didn't even come close to it. This means that the numbers for inflation published by the US government are pretty much meaningless. They have been massaged to the point that they no longer resemble anything close to reality.
As our government currently has to borrow about $4 out of every $10 it spends it is constantly borrowing and printing money with no relation to actual wealth as a result we have a continual devaluing of the dollar and an increasing wealth gap between the poor and the wealthy.
With the beginning of Chinese yuan being accepted as world's reserve currency we are going to see hyper inflation in the US. Why? Because of all the US dollars floating around in the world. As more and more countries accept the yuan because it is backed by gold, real wealth, more and more central banks and corporations are going to dump (sell) US dollars. Who are they going to sell this vast amount of currency to? There is going to be no real market for them so the Fed is going to have to try to print enough money to keep up with the selling demand, meaning massive inflation and the resulting huge devaluation of the dollar. The US is in very serious economic trouble.
WizardofOz
New member
Yes, but what causes these things to happen? The symptom is rising prices. It is the cause behind the symptom that drives the increases. It could be falling production creating a shortage of product but that will most often only affect the prices of those products alone. In the case of prices rising across the board it is far more often, especially with a fiat currency like we have, debt and willy nilly printing of currency that has no relation to real wealth. When we have a system like ours that is based entirely on debt inflation is the natural effect of the system.
I don't think I understand.
The monetary base in 2007 or 2008 was rapidly doubled and tripled, and given that the monetary base has a multiplier effect upon more tangible measures of money supply like M-2 or M-3, you'd think that we'd see 100-200% inflation and relatively soon, but we've seen very little in the last decade.
The price of money (the interest rates) of course has been almost free in the past decade, and short of actually paying us to borrow money (negative interest rates), the Fed couldn't be doing more to lend than they've been doing.
I used to be worried about that enormous surge in the monetary base, but I'm not anymore. Having all that cash (that's mainly just sitting in banks, on the sidelines right now) is good to prevent the collapse that almost happened in 07, and gives the economy more opportunity to grow.
But in answer to your question again, I don't think I understand; these are just my thoughts.
We track the exchange rates between dollars and every foreign currency, and, the price of gold, which is just another exchange rate. A troy ounce of gold is about 31 grams, and recently gold sells for about $40 per gram.
So a gram of gold fetches $40. A gram of one-hundred-dollar-bills fetches $100. US currency is 1 gram per note. So, $100 bills are not only worth their weight in gold, but are worth two-and-a-half times their weight in gold (one gram of $100 bills will buy 2.5 grams of gold).
Even a 50-dollar bill is more valuable than gold, since 1 g of fifties will buy 1.25 g of gold.
Nihilo,
I'll try to answer both your posts in this one post.
The price of gold is being manipulated big time right now by central banks. Just a short while back the Fed, or some other central bank, dumped $4 billion of paper gold on the market. It resulted in about a $10 reduction in the price of gold that lasted for a couple of days. Traders say that such a dump of gold shares on the market would have resulted in the price of gold dropping $50 or more and have taken at least several months to recover.
I have some links to this if you're interested in learning about it. If you want them I'll pm them to you as me posting that many links in one post would most likely be seen as spamming by the moderators.
As to the money supply, the government has so fiddled with the accounting practices used to create what we are told about the economy that their numbers do not reflect reality any more. There is a website called shadowstats.com run by a high-powered financial analyst whose main business is working with large corporations so they can plan financially for the future. His site shows us the economic reality of where we are according to the way the federal government used to produce the numbers on the economy back in the 80s. He uses their actual formulas from back then. His charts show the US with 20%+ unemployment, inflation above 10%, and what is called "money veolocity" slowing greatly, and that our economy has been in a depression almost continually since 2001--a shrinking gdp for almost 16 years. I'll give a link to the page showing these numbers.
http://www.shadowstats.com/alternate_data
The above page has multiple charts on it. Clicking on any of them will open that chart up in a new page and allow you to inspect it.
Hope this helps you with your understanding.
Nihilo,
I have an addendum to the above post.
There is another financial analyst, who is said to be the hardest working analyst on Wall Street, who has compared the numbers of our economy now to that of the economy during the Great Depression of the 1930s. He said the economic indicators for both time periods are exactly the same. In other words, we are in the depths of the greatest depression this country has ever seen. There's a reason we see the very poor and the very rich, that the jobs have disappeared, and that bankruptcies and business closures are at all time record highs.
I have an addendum to the above post.
There is another financial analyst, who is said to be the hardest working analyst on Wall Street, who has compared the numbers of our economy now to that of the economy during the Great Depression of the 1930s. He said the economic indicators for both time periods are exactly the same. In other words, we are in the depths of the greatest depression this country has ever seen. There's a reason we see the very poor and the very rich, that the jobs have disappeared, and that bankruptcies and business closures are at all time record highs.
WatchmanOnTheWall
New member
Inflation is what happens when we don't have God's economic regulatory Jubilee year. He is Great!
