In any case, finally got off my butt and put together this little chart comparing the monetary base against GDP. In other words, how much money is floating around as a percent of the stuff it can buy.
For those of you watching American Idol, or "Glee" or glued to the TV for "March Madness," this is why you are paying $4 a gallon in gas. This is why food prices are going up. This is why gold is so high. And this is why shorting the dollar isn't the worst move you could make.
But to quote Michael Savage,
"No, you don't want to hear that. You want to hear about some guy who hits a ball over a fence."
The FED intends to inflate our way out of our financial obligations, with the support of the current administrations which don't mind as long as the public keep electing them.
ReplyDeleteAny hope for increasing the value of the dollar, Cappy? Or is devaluation the only way out?
The government actually can just print off more money, it just won't solve anything.
ReplyDeleteOh, if only the price adjustment was the only problem with printing money. No, the main problem is that printing money is the ultimate cause of business cycles.
ReplyDeletehttp://mises.org/books/pricesproduction.pdf
When retail prices jump its funny how the msm talking heads of both left and right try to blame the scarcity of the product rather than the increase in the monetary base.
ReplyDeleteCap buddy, you did not go one step further and spell out the conclusion.
ReplyDeleteThe fact that no one understands this concept, enables the government to print off the money supply.
Oh $4 dollars a gallon, it must be those Arabs. No, your money is losing its value.
How many times have you heard from people talking about prices in the old days. Gee my Dad`s old Buick only cost $2,500. I dare you, no I double dare you, just try to even mention the idea of money dilution to these people. Most people have no idea their money has lost value over time. They believe prices magically increase.
Lets face it, the federal government has a free pass, to print as much money as they want. They also get to invent their own statistics, and tell us there is no inflation.
Now you know why people like Thomas Jefferson, were against America having a Central Bank.
Oh, I have a plan that would boost the value of the dollar.
ReplyDeleteBut it would require people be self-supporting, eliminating corporate taxes, balancing the budget by cutting ALL government spending bar military by 25% and immediately raising the retirement age to 70.
And frankly, the American people are just too damn lazy and too damn stupid to accept such a thing.
So buy those Norweigian Kroners!
" Any hope for increasing the value of the dollar, Cappy? Or is devaluation the only way out?
ReplyDelete"
Given our debt load, devaluating it is the only way we're going to be able to pay it off.
(Peace min Kapitaan, the alternatives exist, but I see no evidence our lords and masters have the, er, guts to do the right thing. So they are going to do the immoral and easy route._)
" The government actually can just print off more money, it just won't solve anything."
Not entirely true, it robs lenders, destroys savings and makes it much easier for borrowers to pay back their debts. (Inflation is a numerical quantification of the fiscal immorality of currency issuer.) It accomplishes a lot of things for the political class.
The idea that you can inflate your way out of debt while still running massive deficits is just delusional.
ReplyDeleteSure if you had all your debt in say 1990 dollars you could inflate your way out and that debt would be gone, but when your adding trillions of current day dollar debt to the pile, your chasing your tail and starting a spiral into hyper inflation.
So tell me captain, ever heard of something in economics called a 'liquidity trap'? You also didn't mention wealth lost as a result of this recession. Our currency faced a period of deflation and overall core inflation has been low since it's been reaccuring. The billions printed by the Fed is minimal compared to the magnitude of say, oh, trillions lost!
ReplyDeleteNormally I agree with you Cappy, but this isn't the reason Gas is up. YOu had it right in a previous post (or a link). Supply and demand.
ReplyDeleteThe reason the Fed's printing of electronic money isn't causing inflation is because all that money is sitting on balance sheets. It never really left the fed. It's as if the Fed printed a bunch of money and stuck it in a closet. It can't cause inflation until people start spending it. When the banks who own those reserves start finding good investments, look out...
The anonymous above is right. So far, the Fed hasn't actually printed much money. It has just credited the accounts of the banks that it deals with, which seem happy to let the money sit as reserve balances.
ReplyDeleteEconbrowser has a series of posts on the evolution of the Fed's balance sheet. Here is the most recent:
http://www.econbrowser.com/archives/2010/02/bernanke_on_the_3.html
A woman is using graphs! I just thought you should know.
ReplyDeletehttp://traditionalcatholicism.wordpress.com/2011/03/28/why-inflation-is-evil
Got a new target on my life....going to print a shirt with "I Wanna Print My Moneys" with a little golden pig printed upside...thankyou all, that made my day ^^
ReplyDelete