The Result of the Impending Inflation

[PoliticalChic]

”In the last five months, according to the Federal Reserve Board, the money supply in the United States has increased by 271 percent. It has almost tripled.”
TheHill.com - Coming next year: Obama's inflation

“When the government has approved government spending on an order of magnitude far greater than any conceivable increase in the supply of goods and services (as in the case of the Obama Administration), the only way to avoid inflation would seem to be to reduce the supply of money.
There are three ways to do this (which can be done in any combination):
1. Increase taxes.
2. Remove money from circulation by selling government bonds.
3. Increase bank reserve requirements.”
Capital Flow Watch

Here are three questions that I would like answered:
a. Which of the three choices will the Obama Administration use?
b. Will they be successful?
c. What will be the impact on the price of gold?

 

[wimpy77]

you ask three very good questions. toro and possibly paulie can answer those for you. but those are three very good questions. there's no doubt that i think taxes will be raised.

 

[alan1]

Inflation is a "tax" that most do not understand.
If I get a 10% raise but everything costs 10% more and I pay tax on it, then I just lost out.

 

[Midnight Marauder]

My take on all of this isn't very popular, but here goes again anyway.

The economy was never as bad as it was made out to be, and isn't as bad as they're still making it out to be. I don't think we're going to see the hyper-inflation we experienced in the mid-late 70s. I think there's way too many doomsayers and Chicken Little squawkers out there.

 

[Care4all]

Can the fed, indiscriminantly just "print money" on their own and put it in to circulation without congress? I don't know, but it seems that this is what i have read the fed has been doing? What am i missing on all of this....?

there was a ton of borrowing on the bush watch, but because we borrowed from overseas, we were able to skirt some of the inflationary impact that should have had....in a global market, why did this work this way? you would think there is only so much money to go around, even globally?

there are so many things that don't make sense...

and yes, i think gold would be a good investment to protect against inflation.

 

[Midnight Marauder]

there was a ton of borrowing on the bush watch

Important to remember, the POTUS has no real power when it comes to spending and/or borrowing. That's Congress.

The POTUS gets way too much credit when things go right, and way too much criticism and blame when things don't. And that's ALL Presidents.

 

[Care4all]

there was a ton of borrowing on the bush watch

Important to remember, the POTUS has no real power when it comes to spending and/or borrowing. That's Congress.

The POTUS gets way too much credit when things go right, and way too much criticism and blame when things don't. And that's ALL Presidents.

well it IS the president's Budget, that congress tries to follow when they are appropriating the budget....it is the general theme of the President's budget, with alot of bribes being paid added to it....

and the president can veto a spending bill and send it back to congress to get it more in line with his budget that he sent them....these are constitutional duties of his....?

so, i think i disagree, to a degree!

care

 

[Midnight Marauder]

well it IS the president's Budget, that congress tries to follow when they are appropriating the budget....it is the general theme of the President's budget, with alot of bribes being paid added to it....

and the president can veto a spending bill and send it back to congress to get it more in line with his budget that he sent them....these are constitutional duties of his....?

so, i think i disagree, to a degree!

care

If "following" the budget means piling the pork on, sure.

Vetoes really are nearly impossible for a POTUS to do anymore, on funding bills. For two reasons. First, they figure out the things he really really wants and give it to him, with as much pork and earmarks attached to it as they possibly can. Now, if he vetoes this bill they will howl, saying the President "doesn't care about kids" or "the troops" and such. Or whatever the lever is.

Second, they can and will override the veto and STILL get to make the howls.

This is the wink and nod, co-dependency relationship Bush entered into with Congress, and it continues with Obama today. Bush wanted war funding, they gave it to him happily as the truckloads of pork rode those coattails. And he was powerless to do anything about it. And that's just one example.

We REALLY need line-item veto back, and need Congress to back up their mouth and pass a paygo bill that actually has some teeth. Bill Clinton reaped the benefits of these, truly he was the most powerful President ever, due to these tools the courts took away.

A President's budget merely lays out what his particular priorities are and how much he thinks needs to be spent on it. Congress actually opens the purse. Or not.

Here's a good example of that: Obama signed an executive order allowing federal funding of embryonic stem cell research. Okay, fine. Very nice. But it's meaningless without Congress actually funding it. The President cannot execute any spending independent of Congress. And Congress still hasn't funded ESCR, and in fact hasn't even tried.

Therefore, on fiscal matters I give them the lion's share of the blame, the criticism, and the credit if they deserve it.

 

[Care4all]

makes sense MM except i disagree on the veto...it should be used, regardless of the politicking and screams of foul!

 

[Midnight Marauder]

makes sense MM except i disagree on the veto...it should be used, regardless of the politicking and screams of foul!

I agree too, but what's the POTUS to do? The veto has no teeth on spending bills anymore. Not only would it be a wasted effort, but sending a bill back to the sumbitches gives them more time to pile more shit on it.

As a symbolic gesture, vetoing it on nationwide TV while saying something like, "I regret I have been forced to veto this bill, but I know no other way to communicate to Congress my desire to control spending" then yeah, he might put political pressure on them.

But at least we can all agree, no matter our stripe, that the present deficit situation is intolerable. It's the same situation we had for eight years, except now magnified, amplified, a hundred times! It's towering, when one stops to realize that a trillion is a million million million!

We need paygo and line-item veto back, to give the POTUS some control over these wasteful, spending like a drunk sailor on leave, imbeciles in Congress.

 

[Care4all]

makes sense MM except i disagree on the veto...it should be used, regardless of the politicking and screams of foul!

I agree too, but what's the POTUS to do? The veto has no teeth on spending bills anymore. Not only would it be a wasted effort, but sending a bill back to the sumbitches gives them more time to pile more shit on it.

As a symbolic gesture, vetoing it on nationwide TV while saying something like, "I regret I have been forced to veto this bill, but I know no other way to communicate to Congress my desire to control spending" then yeah, he might put political pressure on them.

But at least we can all agree, no matter our stripe, that the present deficit situation is intolerable. It's the same situation we had for eight years, except now magnified, amplified, a hundred times! It's towering, when one stops to realize that a trillion is a million million million!

We need paygo and line-item veto back, to give the POTUS some control over these wasteful, spending like a drunk sailor on leave, imbeciles in Congress.

The veto has more power than you give credit though... remember, it takes 2/3's not 60 in the Senate, to override a veto....and 2/3's in the House...the case is not lost from the get go...as you may have thought....

Even with Al Frankin and Arlin Spector there is only 60 dems in the Senate and I am not certain there are 2/3's democratic in the House either....

Plus, there are some dems that are blue dogs, fiscal conservatives that might have felt pressure to vote for the bill initially, that will praise God that the President vetoed it, giving them power to negotiate the spending downward, with their counterparts.

Obama can veto the full bill to get congress's spending in line, saying something like what you said.......in a nationwide announcement, and guaranteed, the people will pressure congress....especially the Obamabots, they will follow obama and not congress....it's time for Obama to show his political capital and start vetoing the spending bills he disagrees with...imho instead of sitting back and saying we need to institute paygo and and a constitutional line item veto...which could take 6 months or a year to get thru....he needs to use the veto pen NOW....

I agree, we are in dire straits .....

care

 

[Midnight Marauder]

Obama can veto the full bill to get congress's spending in line, saying something like what you said.......in a nationwide announcement, and guaranteed, the people will pressure congress....especially the Obamabots, they will follow obama and not congress....it's time for Obama to show his political capital and start vetoing the spending bills he disagrees with...imho instead of sitting back and saying we need to institute paygo and and a constitutional line item veto...which could take 6 months or a year to get thru....he needs to use the veto pen NOW....

You know that's not going to happen.

I agree, we are in dire straits .....

care

Yes, as far as towering deficit goes. But again, I don't think the economy was ever as bad as they made out, and isn't as bad as they're making it out to be now.

 

[Neubarth]

Can the fed, indiscriminantly just "print money" on their own and put it in to circulation without congress? I don't know, but it seems that this is what i have read the fed has been doing? What am i missing on all of this....?

there was a ton of borrowing on the bush watch, but because we borrowed from overseas, we were able to skirt some of the inflationary impact that should have had....in a global market, why did this work this way? you would think there is only so much money to go around, even globally?

there are so many things that don't make sense...

and yes, i think gold would be a good investment to protect against inflation.

The Fed can not print money at all. Only the Treasury can do that. The FED is an independant bank that has no resources, no reserves and no debt. It can buy US Treasury bonds even thought it has no money. Nobody has ever figured out how that works, but they do it just like now. It basically consists of a free loan to the Federal Government of money that never existed in the first place. Imagine that!

When you extrapolate that, the FED can buy all of the US government debt and we could go on deficit financing for ever and ever amen.

 

[Sunni Man]

Can the fed, indiscriminantly just "print money" on their own and put it in to circulation without congress? I don't know, but it seems that this is what i have read the fed has been doing? What am i missing on all of this....?

there was a ton of borrowing on the bush watch, but because we borrowed from overseas, we were able to skirt some of the inflationary impact that should have had....in a global market, why did this work this way? you would think there is only so much money to go around, even globally?

there are so many things that don't make sense...

and yes, i think gold would be a good investment to protect against inflation.

The Fed can not print money at all. Only the Treasury can do that. The FED is an independant bank that has no resources, no reserves and no debt. It can buy US Treasury bonds even thought it has no money. Nobody has ever figured out how that works, but they do it just like now. It basically consists of a free loan to the Federal Government of money that never existed in the first place. Imagine that!

When you extrapolate that, the FED can buy all of the US government debt and we could go on deficit financing for ever and ever amen.

Good post Neubarth

This is why we will NEVER be out of debt.

The Federal Reserve has America by the balls and is squeezing the life out of our country

 

[Paulie]

Everyone here needs to understand something very important...It's not the money supply that's been increased yet.

Only the monetary base has been increased, which isn't inflationary in and of itself until that money is either lent or invested.

We all know banks aren't lending much, and apparently aren't investing much either, so we can pretty much be assured that as of right now, the money supply itself has not increased. In fact, it's probably DECREASED quite a bit in the past year or so, which is why there's been so much loss of employment. Money has become more scarce, which is the main effect of a deflationary environment.

 

[elvis]

Everyone here needs to understand something very important...It's not the money supply that's been increased yet.

Only the monetary base has been increased, which isn't inflationary in and of itself until that money is either lent or invested.

We all know banks aren't lending much, and apparently aren't investing much either, so we can pretty much be assured that as of right now, the money supply itself has not increased. In fact, it's probably DECREASED quite a bit in the past year or so, which is why there's been so much loss of employment. Money has become more scarce, which is the main effect of a deflationary environment.

Yes but it seems in the next couple years, there will be inflation. Mortgage rates have already increased a full percentage point over the past month or two, anticipating the inflation?

 

[Paulie]

Everyone here needs to understand something very important...It's not the money supply that's been increased yet.

Only the monetary base has been increased, which isn't inflationary in and of itself until that money is either lent or invested.

We all know banks aren't lending much, and apparently aren't investing much either, so we can pretty much be assured that as of right now, the money supply itself has not increased. In fact, it's probably DECREASED quite a bit in the past year or so, which is why there's been so much loss of employment. Money has become more scarce, which is the main effect of a deflationary environment.

Yes but it seems in the next couple years, there will be inflation. Mortgage rates have already increased a full percentage point over the past month or two, anticipating the inflation?

Oh trust me, I don't doubt that bad inflation is in our future. But I just want to make sure everyone understands the difference between the money supply and the monetary base. Most of the Fed's actions in the past 12 months haven't been inflationary in and of themselves. Stuffing the bank reserves to the gills is not the same thing as the money supply increasing.

If the money supply was increasing as rapidly as the OP stated, we'd already be seeing inflationary effects. There's LESS money right now, not MORE.

But becuase of the fact that inflation is definitely in our future, we haven't seen much of a flight from gold. And rightfully so.

 

[Kevin_Kennedy]

My take on all of this isn't very popular, but here goes again anyway.

The economy was never as bad as it was made out to be, and isn't as bad as they're still making it out to be. I don't think we're going to see the hyper-inflation we experienced in the mid-late 70s. I think there's way too many doomsayers and Chicken Little squawkers out there.

Well we didn't experience hyperinflation in the 70's, merely high inflation. Hyperinflation would be Zimbabwe today or the Weimar Republic after World War 1.

 

[Paulie]

My take on all of this isn't very popular, but here goes again anyway.

The economy was never as bad as it was made out to be, and isn't as bad as they're still making it out to be. I don't think we're going to see the hyper-inflation we experienced in the mid-late 70s. I think there's way too many doomsayers and Chicken Little squawkers out there.

Well we didn't experience hyperinflation in the 70's, merely high inflation. Hyperinflation would be Zimbabwe today or the Weimar Republic after World War 1.

Yeah, with hyperinflation comes an implied worthlessness of the currency.

The USD, while hanging on by a thread, is certainly not worthless right now.

 

[alan1]

makes sense MM except i disagree on the veto...it should be used, regardless of the politicking and screams of foul!

I agree too, but what's the POTUS to do? The veto has no teeth on spending bills anymore. Not only would it be a wasted effort, but sending a bill back to the sumbitches gives them more time to pile more shit on it.

As a symbolic gesture, vetoing it on nationwide TV while saying something like, "I regret I have been forced to veto this bill, but I know no other way to communicate to Congress my desire to control spending" then yeah, he might put political pressure on them.

But at least we can all agree, no matter our stripe, that the present deficit situation is intolerable. It's the same situation we had for eight years, except now magnified, amplified, a hundred times! It's towering, when one stops to realize that a trillion is a million million million!

We need paygo and line-item veto back, to give the POTUS some control over these wasteful, spending like a drunk sailor on leave, imbeciles in Congress.

As much as I disagree with Mr Obama, I still think you are right, he needs line item veto authority (and the next president and the next, etc). Make 2/3 of congress over ride his line item veto if it's that important.