An Inflationary Deck of Cards

[C-101]

The Big Picture

You would think at some point the government would stop printing money and realize that they're engineering a particularly nasty upswing of inflation in the near future.

The sheer amount of money that they are putting into the system is inevitably going to lead to a huge loss in the value of the dollar.

But, of course, they're banking on the fact that investors will continue to flock to the dollar for a sense of "security" as currencies as a whole around the world continue to lose credibility in the eyes of debt holders like China and Japan.

 

[Big Black Dog]

You'll have to have a gunny sack full of dollars to buy anything this time next year. Before long you can use the dollar to wallpaper your living room. How can you not love those dumb-assed Democrats?

 

[C-101]

You'll have to have a gunny sack full of dollars to buy anything this time next year. Before long you can use the dollar to wallpaper your living room. How can you not love those dumb-assed Democrats?

 

[KissMy]

It is worse than this chart shows. The chart is only the monetary base going from $1 Trillion to $2 Trillion. There were also $6.5 Trillion in bailout dollars lent, spent or guaranteed to turn the economy.

 

[Flopper]

The Big Picture

You would think at some point the government would stop printing money and realize that they're engineering a particularly nasty upswing of inflation in the near future.

The sheer amount of money that they are putting into the system is inevitably going to lead to a huge loss in the value of the dollar.

But, of course, they're banking on the fact that investors will continue to flock to the dollar for a sense of "security" as currencies as a whole around the world continue to lose credibility in the eyes of debt holders like China and Japan.

I don't think the government has any choice but to increase the money supply and hope for a speedy recovery. We are not the only country that is doing this.

Pardon me if I am a little cynical about economic projections. Economist have never been able to accurately project the course of the dollar. They are like the weather man. They are never wrong because they continually change their forecast.

 

[Avatar4321]

I don't think the government has any choice but to increase the money supply and hope for a speedy recovery. We are not the only country that is doing this.

Pardon me if I am a little cynical about economic projections. Economist have never been able to accurately project the course of the dollar. They are like the weather man. They are never wrong because they continually change their forecast.

There is always a choice. And this wont be a quick fix for the economy. It's going to make things worse.

When are we going to realize that all decisions have consequences. They may not come immediately, but they will come. And the longer we put off facing those consequences, the worse it's going to be. Pushing it off again, isn't going to fix the problem at all.

We either have to be men willing to make hard choices now or forced to make harder choices later. I choose the first option.

 

[The Rabbi]

Money supply is only one factor in inflation. Velocity is the other. If we see an uptick in velocity without a reduction in supply, watch out.
But so far this huge increase (and its old news) has not produced the expected inflation.

 

[editec]

Question for you armchair economists

When the stock market collapsed, and when the value of real estate dropped, AND WHEN THOSE bankers -- assets with values BASED ON DEBT REPAYMENT dropped in value..

Did THOSE EVENTS INFLATE THE MONEY SUPPLY or DEFLATE it?

Hint...

those events dramatically DEFLATED the money supply.

TRILLIONS AND TRILLIONS of dollars ceased existing in the macroeconomy, OVERNIGHT.

Now, how many of those evaporated dollars have been replaced by TARP and ARRA?

If you cannot answer these questions (or worse, don't know why I posed these questions), then you truly do NOT understand what happened to our economy.

The LACK of LIQUIDITY in the system meant that there was NOT enough dollars (in aggregate) to pay the contractual debt obligations (in aggregate).

 

[editec]

Money supply is only one factor in inflation. Velocity is the other.

YES!

If we see an uptick in velocity without a reduction in supply, watch out.

Yeah...that would mean a recovery is happening and people are starting to spend again.

Naturally, when demand is up, that is inflationary.

IF (and only if) the money supply is high enough to accommodate that inflation.

If the money supply is NOT too high, (like right after the meltdown..like still even after TARP and ARRA) then demand cannot go up because there isn't enough money in the system to create demand.

As long as the people stay poor (or, as in this case, are getting poorer), the wealthy don't have to worry about inflation.

 

[The Rabbi]

Question for you armchair economists

When the stock market collapsed, and when the value of real estate dropped, AND WHEN THOSE bankers -- assets with values BASED ON DEBT REPAYMENT dropped in value..

Did THOSE EVENTS INFLATE THE MONEY SUPPLY or DEFLATE it?

Hint...

those events dramatically DEFLATED the money supply.

TRILLIONS AND TRILLIONS of dollars ceased existing in the macroeconomy, OVERNIGHT.

Now, how many of those evaporated dollars have been replaced by TARP and ARRA?

If you cannot answer these questions (or worse, don't know why I posed these questions), then you truly do NOT understand what happened to our economy.

The LACK of LIQUIDITY in the system meant that there was NOT enough dollars (in aggregate) to pay the contractual debt obligations (in aggregate).

The money supply is not measured by real estate values or bonds.

 

[KissMy]

If employment ever rises or the velocity of money gets anywhere near where it was over the last 20 years we will see double the inflation due to there being twice as much currency in the system.

Do you think the lower & middle class will get paid double by then?

Do you think the elderly living on fixed incomes & Social Security will get paid double by then?

 

[editec]

Question for you armchair economists

When the stock market collapsed, and when the value of real estate dropped, AND WHEN THOSE bankers -- assets with values BASED ON DEBT REPAYMENT dropped in value..

Did THOSE EVENTS INFLATE THE MONEY SUPPLY or DEFLATE it?

Hint...

those events dramatically DEFLATED the money supply.

TRILLIONS AND TRILLIONS of dollars ceased existing in the macroeconomy, OVERNIGHT.

Now, how many of those evaporated dollars have been replaced by TARP and ARRA?

If you cannot answer these questions (or worse, don't know why I posed these questions), then you truly do NOT understand what happened to our economy.

The LACK of LIQUIDITY in the system meant that there was NOT enough dollars (in aggregate) to pay the contractual debt obligations (in aggregate).

The money supply is not measured by real estate values or bonds.

Yes and no.

The M1 or M 2 or M 3 does not measure the wunrealized capital gains of REAL assets.

However, it most certainly DOES effect the monetary supply.

How does it do that, you ask?

Because the DEBT INSTRUMENTS associated with those real assets valuations are BASED on real estate PERCEIVED values.

We cannot separate capitalization and the money supply like you imagine you can, Rabbi.

Because if you were right about how the money suppply is the only measure of wealth, then we would not have had that meltdown.

Wealth is perceived to exist...even when it has not been capitalized by money.

Money is not wealth.

The monetary meltdown is an example of the tail wagging the dog.

When your stock valuations went down, did you FEEL less wealthy?

Did you perceive your wealth had decreased?

You did.

But did you have the SAME amounts of money?

You did.

The USA experienced a TREMENDOUS loss in pervieved wealth, and that perception of lost wealth, cause the assets in the banks (that were being counted as though they were actual DOLLARS) as a loss in money.

 

[sweetie]

lol!..

..as near as i can tell THERE HAS NEVER BEEN AN HONEST, INDEPENDENT, TRANSPARENT, etc., AUDIT OF 'THE FED'..(PLEASE CORRECT ME IF I'M WRONG)..so please stuff all those stinking number$ up your arse, you republicrat dopes!..

..as one wag put it, "these stoooooooooopid republicrats don't even have an honest understanding as to the origin, nature, etc. of even one fucking 'dollar'...yet they are constantly working their hamburger holes about illion$ of them!.."

...stfu republicrats!..

 

[The Rabbi]

Question for you armchair economists

When the stock market collapsed, and when the value of real estate dropped, AND WHEN THOSE bankers -- assets with values BASED ON DEBT REPAYMENT dropped in value..

Did THOSE EVENTS INFLATE THE MONEY SUPPLY or DEFLATE it?

Hint...

those events dramatically DEFLATED the money supply.

TRILLIONS AND TRILLIONS of dollars ceased existing in the macroeconomy, OVERNIGHT.

Now, how many of those evaporated dollars have been replaced by TARP and ARRA?

If you cannot answer these questions (or worse, don't know why I posed these questions), then you truly do NOT understand what happened to our economy.

The LACK of LIQUIDITY in the system meant that there was NOT enough dollars (in aggregate) to pay the contractual debt obligations (in aggregate).

The money supply is not measured by real estate values or bonds.

Yes and no.

The M1 or M 2 or M 3 does not measure the wunrealized capital gains of REAL assets.

However, it most certainly DOES effect the monetary supply.

How does it do that, you ask?

Because the DEBT INSTRUMENTS associated with those real assets valuations are BASED on real estate PERCEIVED values.

We cannot separate capitalization and the money supply like you imagine you can, Rabbi.

Because if you were right about how the money suppply is the only measure of wealth, then we would not have had that meltdown.

Wealth is perceived to exist...even when it has not been capitalized by money.

Money is not wealth.

The monetary meltdown is an example of the tail wagging the dog.

When your stock valuations went down, did you FEEL less wealthy?

Did you perceive your wealth had decreased?

You did.

But did you have the SAME amounts of money?

You did.

The USA experienced a TREMENDOUS loss in pervieved wealth, and that perception of lost wealth, cause the assets in the banks (that were being counted as though they were actual DOLLARS) as a loss in money.

You're confusing wealth and money supply. Money supply has a narrow technical definition. Wealth has a different definition. There is some interplay between the two but not a direct correlation.
Friedman posited that changes in the money supply affected inflation and deflation,not the level itself.
I actually do not know the rate of change in the supply over the last 3years. But I do know we have not seen the predicted inflation. Yet.