The Result of the Impending Inflation

[PoliticalChic]

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.

Ah, my friend, this is a distinction without a difference: the money may be hoarded now, but at some point will enter the economy.

Since you state that "bad inflation is in our future," it behooves you to face the questions in the original post.

I can understand your hesitation, but I do respect your opinion.

Based on what you have said, let's assume that you foresee inflation. Now, how do you anticipate the administration fighting same? Which of the three strategies in the OP will it use? And will it be a success?

And, can I assume that you see the price of gold at least keeping pace, if not outstipping, the inflation?

Further, will inflation force our senior citizens from their homes, defeating any goals of the 'stimulus'?

 

[Paulie]

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.

Ah, my friend, this is a distinction without a difference: the money may be hoarded now, but at some point will enter the economy.

Since you state that "bad inflation is in our future," it behooves you to face the questions in the original post.

I can understand your hesitation, but I do respect your opinion.

Based on what you have said, let's assume that you foresee inflation. Now, how do you anticipate the administration fighting same? Which of the three strategies in the OP will it use? And will it be a success?

And, can I assume that you see the price of gold at least keeping pace, if not outstipping, the inflation?

Further, will inflation force our senior citizens from their homes, defeating any goals of the 'stimulus'?

All I'm doing is pointing out the difference. You said the money supply was increased by X amount, and that wasn't the case. Those bank reserves could potentially sit there forever, thereby never actually creating any significant amount of inflation, whether it be of the money supply itself, or in prices BECAUSE of the increase in the money supply.

The money supply is the money that you and I see on a daily basis, comprised of currency in circulation, and demand deposits at Fed Reserve member banks. What was significantly increased was the reserve levels at those member banks, which doesn't technically become part of the actual money supply until it is released into the economy. The Fed can create or extinguish those reserves as it sees fit, via its open market operations. If money is not in the economy, and working by chasing goods and services, it isn't inflationary.

As far as your question about gold, I expect that to possibly reach $2000, considering it hasn't fallen at all since we've entered into this pretty bad deflationary environment. As much money as has been extinguished lately, with gold prices staying steady, and a significant amount of money waiting to potentially enter the money supply, makes for a pretty easy forecast of significantly higher gold prices in the future. I'm calling $2000, but I'm certainly no technical expert on that.

And as far as your question about what the admin can do to keep inflation low, I think they handcuffed themselves MONTHS ago by allowing the Federal Reserve's moves to begin with, which started getting as bad as they are back in Bush's last year.

If you think any president has an agenda of controlling the Fed Reserve's actions to the benefit of the people, you're sorely mistaken. We haven't seen such a thing in decades.

 

[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.

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.

Correct you are. I used the wrong term.

 

[PoliticalChic]

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.

Ah, my friend, this is a distinction without a difference: the money may be hoarded now, but at some point will enter the economy.

Since you state that "bad inflation is in our future," it behooves you to face the questions in the original post.

I can understand your hesitation, but I do respect your opinion.

Based on what you have said, let's assume that you foresee inflation. Now, how do you anticipate the administration fighting same? Which of the three strategies in the OP will it use? And will it be a success?

And, can I assume that you see the price of gold at least keeping pace, if not outstipping, the inflation?

Further, will inflation force our senior citizens from their homes, defeating any goals of the 'stimulus'?

All I'm doing is pointing out the difference. You said the money supply was increased by X amount, and that wasn't the case. Those bank reserves could potentially sit there forever, thereby never actually creating any significant amount of inflation, whether it be of the money supply itself, or in prices BECAUSE of the increase in the money supply.

The money supply is the money that you and I see on a daily basis, comprised of currency in circulation, and demand deposits at Fed Reserve member banks. What was significantly increased was the reserve levels at those member banks, which doesn't technically become part of the actual money supply until it is released into the economy. The Fed can create or extinguish those reserves as it sees fit, via its open market operations. If money is not in the economy, and working by chasing goods and services, it isn't inflationary.

As far as your question about gold, I expect that to possibly reach $2000, considering it hasn't fallen at all since we've entered into this pretty bad deflationary environment. As much money as has been extinguished lately, with gold prices staying steady, and a significant amount of money waiting to potentially enter the money supply, makes for a pretty easy forecast of significantly higher gold prices in the future. I'm calling $2000, but I'm certainly no technical expert on that.

And as far as your question about what the admin can do to keep inflation low, I think they handcuffed themselves MONTHS ago by allowing the Federal Reserve's moves to begin with, which started getting as bad as they are back in Bush's last year.

If you think any president has an agenda of controlling the Fed Reserve's actions to the benefit of the people, you're sorely mistaken. We haven't seen such a thing in decades.

Am I unclear, or are you obfuscating?

Is it your position that the money will not be increased?

"By talking up the scale of the recession the President-elect was lowering expectations for what he can achieve next year while seeking to justify what will, in effect, be the greatest injection of federal money into the US economy since the Depression-era New Deal. "
Barack Obama reveals stimulus package that could exceed $1 trillion - Times Online

Spent Wednesday, or in six months, the questions are the same.

Of course, you're wrong about Presidents' interests in curbing inflation:
"In the late seventies and early eighties, Fed Chairman Paul Volker implemented this policy and, in conjunction with President Reagan’s tax cuts, inflation was eventually brought under control. In fact, these policies ushered in a long era of disinflation (a decrease in the rate of inflation) and generally robust economic expansion. "
Looking for a Volker to Fight the Next Economic Battle -- Seeking Alpha



"

 

[Paulie]

Ah, my friend, this is a distinction without a difference: the money may be hoarded now, but at some point will enter the economy.

Since you state that "bad inflation is in our future," it behooves you to face the questions in the original post.

I can understand your hesitation, but I do respect your opinion.

Based on what you have said, let's assume that you foresee inflation. Now, how do you anticipate the administration fighting same? Which of the three strategies in the OP will it use? And will it be a success?

And, can I assume that you see the price of gold at least keeping pace, if not outstipping, the inflation?

Further, will inflation force our senior citizens from their homes, defeating any goals of the 'stimulus'?

All I'm doing is pointing out the difference. You said the money supply was increased by X amount, and that wasn't the case. Those bank reserves could potentially sit there forever, thereby never actually creating any significant amount of inflation, whether it be of the money supply itself, or in prices BECAUSE of the increase in the money supply.

The money supply is the money that you and I see on a daily basis, comprised of currency in circulation, and demand deposits at Fed Reserve member banks. What was significantly increased was the reserve levels at those member banks, which doesn't technically become part of the actual money supply until it is released into the economy. The Fed can create or extinguish those reserves as it sees fit, via its open market operations. If money is not in the economy, and working by chasing goods and services, it isn't inflationary.

As far as your question about gold, I expect that to possibly reach $2000, considering it hasn't fallen at all since we've entered into this pretty bad deflationary environment. As much money as has been extinguished lately, with gold prices staying steady, and a significant amount of money waiting to potentially enter the money supply, makes for a pretty easy forecast of significantly higher gold prices in the future. I'm calling $2000, but I'm certainly no technical expert on that.

And as far as your question about what the admin can do to keep inflation low, I think they handcuffed themselves MONTHS ago by allowing the Federal Reserve's moves to begin with, which started getting as bad as they are back in Bush's last year.

If you think any president has an agenda of controlling the Fed Reserve's actions to the benefit of the people, you're sorely mistaken. We haven't seen such a thing in decades.

Am I unclear, or are you obfuscating?

Is it your position that the money will not be increased?

"By talking up the scale of the recession the President-elect was lowering expectations for what he can achieve next year while seeking to justify what will, in effect, be the greatest injection of federal money into the US economy since the Depression-era New Deal. "
Barack Obama reveals stimulus package that could exceed $1 trillion - Times Online

Spent Wednesday, or in six months, the questions are the same.

Of course, you're wrong about Presidents' interests in curbing inflation:
"In the late seventies and early eighties, Fed Chairman Paul Volker implemented this policy and, in conjunction with President Reagan’s tax cuts, inflation was eventually brought under control. In fact, these policies ushered in a long era of disinflation (a decrease in the rate of inflation) and generally robust economic expansion. "
Looking for a Volker to Fight the Next Economic Battle -- Seeking Alpha



"

Must someone be obfuscating when they're merely pointing out a difference that seems to be widely misunderstood? There's no GUARANTEE that the money supply will increase. There's the implication that it will, and I do believe it will, but to just flat out say it's already been increased is disingenuous, because it simply HASN'T been. The Federal Reserve can not increase the money supply on its own. The member banks, and the citizens who are part of the economy, are the only ones capable of doing so. Imagine if a huge terrorist attack happened sometime this year? That would definitely put the brakes on any major increases to the money supply, because consumer confidence would once again fall off a cliff.

I'd prefer to make sure everyone here understands the difference, because not only is it basic econ, it's slightly dangerous in my opinion for people to go around thinking something of that magnitude, and spreading less than factual information about it. Don't take it so personally, PC.

As far as the part about Reagan, Volcker's move was just about the ONLY option he had. When inflation is that bad, the only real response is raising interest rates. The part about his tax cuts doesn't mean anything in terms of how the inflation was countered. Tax cuts are not central bank monetary policy, they're fiscal policy. There's a big difference. Nevermind how much Reagan DID borrow and spend, which had a direct correlation with how high inflation reached in the early 90's.

 

[PoliticalChic]

All I'm doing is pointing out the difference. You said the money supply was increased by X amount, and that wasn't the case. Those bank reserves could potentially sit there forever, thereby never actually creating any significant amount of inflation, whether it be of the money supply itself, or in prices BECAUSE of the increase in the money supply.

The money supply is the money that you and I see on a daily basis, comprised of currency in circulation, and demand deposits at Fed Reserve member banks. What was significantly increased was the reserve levels at those member banks, which doesn't technically become part of the actual money supply until it is released into the economy. The Fed can create or extinguish those reserves as it sees fit, via its open market operations. If money is not in the economy, and working by chasing goods and services, it isn't inflationary.

As far as your question about gold, I expect that to possibly reach $2000, considering it hasn't fallen at all since we've entered into this pretty bad deflationary environment. As much money as has been extinguished lately, with gold prices staying steady, and a significant amount of money waiting to potentially enter the money supply, makes for a pretty easy forecast of significantly higher gold prices in the future. I'm calling $2000, but I'm certainly no technical expert on that.

And as far as your question about what the admin can do to keep inflation low, I think they handcuffed themselves MONTHS ago by allowing the Federal Reserve's moves to begin with, which started getting as bad as they are back in Bush's last year.

If you think any president has an agenda of controlling the Fed Reserve's actions to the benefit of the people, you're sorely mistaken. We haven't seen such a thing in decades.

Am I unclear, or are you obfuscating?

Is it your position that the money will not be increased?

"By talking up the scale of the recession the President-elect was lowering expectations for what he can achieve next year while seeking to justify what will, in effect, be the greatest injection of federal money into the US economy since the Depression-era New Deal. "
Barack Obama reveals stimulus package that could exceed $1 trillion - Times Online

Spent Wednesday, or in six months, the questions are the same.

Of course, you're wrong about Presidents' interests in curbing inflation:
"In the late seventies and early eighties, Fed Chairman Paul Volker implemented this policy and, in conjunction with President Reagan’s tax cuts, inflation was eventually brought under control. In fact, these policies ushered in a long era of disinflation (a decrease in the rate of inflation) and generally robust economic expansion. "
Looking for a Volker to Fight the Next Economic Battle -- Seeking Alpha



"

Must someone be obfuscating when they're merely pointing out a difference that seems to be widely misunderstood? There's no GUARANTEE that the money supply will increase. There's the implication that it will, and I do believe it will, but to just flat out say it's already been increased is disingenuous, because it simply HASN'T been. The Federal Reserve can not increase the money supply on its own. The member banks, and the citizens who are part of the economy, are the only ones capable of doing so. Imagine if a huge terrorist attack happened sometime this year? That would definitely put the brakes on any major increases to the money supply, because consumer confidence would once again fall off a cliff.

I'd prefer to make sure everyone here understands the difference, because not only is it basic econ, it's slightly dangerous in my opinion for people to go around thinking something of that magnitude, and spreading less than factual information about it. Don't take it so personally, PC.

As far as the part about Reagan, Volcker's move was just about the ONLY option he had. When inflation is that bad, the only real response is raising interest rates. The part about his tax cuts doesn't mean anything in terms of how the inflation was countered. Tax cuts are not central bank monetary policy, they're fiscal policy. There's a big difference. Nevermind how much Reagan DID borrow and spend, which had a direct correlation with how high inflation reached in the early 90's.

The OP lists three options, but I'm going to assume that the last part of your answer is what I was looking for. If inflation turns out to be serious, it's interest rates.

Actually, I would guess that this administration was viewing taxes as the ultimate solution.

 

[Paulie]

Am I unclear, or are you obfuscating?

Is it your position that the money will not be increased?

"By talking up the scale of the recession the President-elect was lowering expectations for what he can achieve next year while seeking to justify what will, in effect, be the greatest injection of federal money into the US economy since the Depression-era New Deal. "
Barack Obama reveals stimulus package that could exceed $1 trillion - Times Online

Spent Wednesday, or in six months, the questions are the same.

Of course, you're wrong about Presidents' interests in curbing inflation:
"In the late seventies and early eighties, Fed Chairman Paul Volker implemented this policy and, in conjunction with President Reagan’s tax cuts, inflation was eventually brought under control. In fact, these policies ushered in a long era of disinflation (a decrease in the rate of inflation) and generally robust economic expansion. "
Looking for a Volker to Fight the Next Economic Battle -- Seeking Alpha



"

Must someone be obfuscating when they're merely pointing out a difference that seems to be widely misunderstood? There's no GUARANTEE that the money supply will increase. There's the implication that it will, and I do believe it will, but to just flat out say it's already been increased is disingenuous, because it simply HASN'T been. The Federal Reserve can not increase the money supply on its own. The member banks, and the citizens who are part of the economy, are the only ones capable of doing so. Imagine if a huge terrorist attack happened sometime this year? That would definitely put the brakes on any major increases to the money supply, because consumer confidence would once again fall off a cliff.

I'd prefer to make sure everyone here understands the difference, because not only is it basic econ, it's slightly dangerous in my opinion for people to go around thinking something of that magnitude, and spreading less than factual information about it. Don't take it so personally, PC.

As far as the part about Reagan, Volcker's move was just about the ONLY option he had. When inflation is that bad, the only real response is raising interest rates. The part about his tax cuts doesn't mean anything in terms of how the inflation was countered. Tax cuts are not central bank monetary policy, they're fiscal policy. There's a big difference. Nevermind how much Reagan DID borrow and spend, which had a direct correlation with how high inflation reached in the early 90's.

The OP lists three options, but I'm going to assume that the last part of your answer is what I was looking for. If inflation turns out to be serious, it's interest rates.

Actually, I would guess that this administration was viewing taxes as the ultimate solution.

Yes, raising interest rates is almost certainly going to be the preferred option, if history is any guide.

I'm not sure how tax increases lower the inflation rate, though. I've never heard of such a thing. Possibly keeping people from spending as much and instead hoarding their money could lower inflation a bit by less money chasing goods, but that's nothing that can be banked on as any kind of serious policy decision to specifically combat inflation.

 

[PoliticalChic]

Must someone be obfuscating when they're merely pointing out a difference that seems to be widely misunderstood? There's no GUARANTEE that the money supply will increase. There's the implication that it will, and I do believe it will, but to just flat out say it's already been increased is disingenuous, because it simply HASN'T been. The Federal Reserve can not increase the money supply on its own. The member banks, and the citizens who are part of the economy, are the only ones capable of doing so. Imagine if a huge terrorist attack happened sometime this year? That would definitely put the brakes on any major increases to the money supply, because consumer confidence would once again fall off a cliff.

I'd prefer to make sure everyone here understands the difference, because not only is it basic econ, it's slightly dangerous in my opinion for people to go around thinking something of that magnitude, and spreading less than factual information about it. Don't take it so personally, PC.

As far as the part about Reagan, Volcker's move was just about the ONLY option he had. When inflation is that bad, the only real response is raising interest rates. The part about his tax cuts doesn't mean anything in terms of how the inflation was countered. Tax cuts are not central bank monetary policy, they're fiscal policy. There's a big difference. Nevermind how much Reagan DID borrow and spend, which had a direct correlation with how high inflation reached in the early 90's.

The OP lists three options, but I'm going to assume that the last part of your answer is what I was looking for. If inflation turns out to be serious, it's interest rates.

Actually, I would guess that this administration was viewing taxes as the ultimate solution.

Yes, raising interest rates is almost certainly going to be the preferred option, if history is any guide.

I'm not sure how tax increases lower the inflation rate, though. I've never heard of such a thing. Possibly keeping people from spending as much and instead hoarding their money could lower inflation a bit by less money chasing goods, but that's nothing that can be banked on as any kind of serious policy decision to specifically combat inflation.

From the article in the OP:
"The cures for inflation all involve removing money from circulation.

Take taxes, for example.

In the United States, only about half of the population pays income taxes. Those that create jobs are among that portion of the population that pay most taxes. Consequently, to increase taxes not only fails to remove money from those who don’t pay taxes, but tends to discourage those that create jobs — thereby increasing unemployment.

The result is stagflation."

So, while your projection is probably the correct one, the Democrats already have the logo embroidered on their pajamas: raise taxes.

The irony is that while Democrat policy has, historically, been 'tax and spend,' this administration is about to reverse the phrase.

 

[PoliticalChic]

Hey, how's this for right on time:
June 7 (Bloomberg) -- President Barack Obama wants Congress to consider taxing the wealthy instead of workers to pay for a health-care overhaul, as House Democrats discuss a plan to require health insurance for most.
Obama’s own proposal would set a 28 percent cap on tax deductions for items such as mortgage interest, investment expenses and charitable gifts for Americans in the two highest tax brackets, which would be 36 percent and 39.6 percent under his proposals. Without the cap, they would be able to deduct 36 cents and 39.6 cents on the dollar for those expenses, respectively.

Obama also proposes new taxes on securities dealers and life insurers, and to raise revenue by prohibiting certain estate-planning techniques.

Democrats Weigh Health Mandate as Obama Urges Taxing Wealthy - Bloomberg.com

 

[editec]

Inflation?

With millions of people losing their jobs every quarter?

I sort of doubt it.

 

[Ame®icano]

”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.”

It should say quadrupled.

 

[STAND4LIBERTY]

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....?

Are you kidding me? of course the fed can and does and congress (so far) doesn't even have the authority to do a full audit of the fed to find out the particulars. If this upsets you make sure you write your reprensentatives and demand that they support Ron Paul's Audit the Fed Legislation HR1207 (more info can be found HERE ). If this legasilation becomes law at least the American People have a chance to find out what the Fed is doing, because as of right now they are one of the most secretive organizations in the country.

 

[Paulie]

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....?

Are you kidding me? of course the fed can and does and congress (so far) doesn't even have the authority to do a full audit of the fed to find out the particulars. If this upsets you make sure you write your reprensentatives and demand that they support Ron Paul's Audit the Fed Legislation HR1207 (more info can be found HERE ). If this legasilation becomes law at least the American People have a chance to find out what the Fed is doing, because as of right now they are one of the most secretive organizations in the country.

The Federal Reserve can NOT put money into circulation. They can only increase bank reserves, but from there it's up to the banks and the citizens who do business with those banks to put that money into circulation.

The fed could literally inject capital into bank reserves infinitely, but unless that money is lent or invested, it never enters circulation, and does not increase the money supply.

 

[wimpy77]

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....?

Are you kidding me? of course the fed can and does and congress (so far) doesn't even have the authority to do a full audit of the fed to find out the particulars. If this upsets you make sure you write your reprensentatives and demand that they support Ron Paul's Audit the Fed Legislation HR1207 (more info can be found HERE ). If this legasilation becomes law at least the American People have a chance to find out what the Fed is doing, because as of right now they are one of the most secretive organizations in the country.

The Federal Reserve can NOT put money into circulation. They can only increase bank reserves, but from there it's up to the banks and the citizens who do business with those banks to put that money into circulation.

The fed could literally inject capital into bank reserves infinitely, but unless that money is lent or invested, it never enters circulation, and does not increase the money supply.

hence the reason why most people you cry inflation is happening are wrong.

 

[KittenKoder]

Okay, a bit of a history lesson. The government didn't start printing money, money was "bank notes" printed by the banks to represent a specific amount of precious metals. They had a "gold standard" so everyone knew how much each note was worth and to keep them all about the same. The developed countries got so big and so many banks they decided to consolidate the notes and gold, giving it to the fed to handle. The feds then altered the gold standard as they pleased, which wasn't all that messed it up. They were printing money based on how frequently they thought it was being lost or destroyed by the elements, estimating averages and all that, but that estimation was never adjusted to account for several facts, one being the durability of the bills (a side effect of making them harder to counterfeit as well) and the fact that people started keeping better track of them. Then came electronic money, printed money spent most of it's life in the bank and people used debit and credit cards, so the amount of notes lost or destroyed fell drastically, but they still haven't adjusted it.

Now, you factor in several other things, prices increasing as well to cover the costs of paying for regulators (mostly bribes) and licenses (which shouldn't cost money in the first place) for the businesses. Raising minimum wages would also cause the prices to go up, so the businesses can pay for the employees while still making a profit. All of this worked to create inflation, where the excessive money with no strength now equals much less product and services and the costs covered have increased much higher than they are worth.

Solution, get rid of excessive regulation (start from scratch would be best), get rid of minimum wage (or drop it back to at least 40 years ago), destroy half our notes and electronic funds ... suddenly the dollar will be stronger (well, not instantly, a short recession will occur) ... but the biggest benefit, these recessions which happen no matter what we do will have a much smaller impact (a short fall off a step is always better than off a cliff) and last much shorter amounts of time. As it is, we are looking at many more years of the current mess because of inflation and people living on money that doesn't even exist.

 

[Paulie]

Are you kidding me? of course the fed can and does and congress (so far) doesn't even have the authority to do a full audit of the fed to find out the particulars. If this upsets you make sure you write your reprensentatives and demand that they support Ron Paul's Audit the Fed Legislation HR1207 (more info can be found HERE ). If this legasilation becomes law at least the American People have a chance to find out what the Fed is doing, because as of right now they are one of the most secretive organizations in the country.

The Federal Reserve can NOT put money into circulation. They can only increase bank reserves, but from there it's up to the banks and the citizens who do business with those banks to put that money into circulation.

The fed could literally inject capital into bank reserves infinitely, but unless that money is lent or invested, it never enters circulation, and does not increase the money supply.

hence the reason why most people you cry inflation is happening are wrong.

I don't know anyone who's claiming inflation is happening right now. At least in prices, anyway. But even the layman understands at this point that it's definitely going to be coming.

 

[wimpy77]

i agree its coming i don't question that. there are people at other boards i post on that claim there is inflation happening.

 

[STAND4LIBERTY]

The Federal Reserve can NOT put money into circulation.

You're kidding me, right? the Fed can do exactly that , it's called monetization of debt the FOMC does it by buying debt instruments on the open market for cash, this results directly in increasing the money supply in circulation.

 

[wimpy77]

The Federal Reserve can NOT put money into circulation.

You're kidding me, right? the Fed can do exactly that , it's called monetization of debt the FOMC does it by buying debt instruments on the open market for cash, this results directly in increasing the money supply in circulation.

the fed has no authority to put money into circulation ( a.k.a. they can't increase the money supply.

 

[STAND4LIBERTY]

The Federal Reserve can NOT put money into circulation.

You're kidding me, right? the Fed can do exactly that , it's called monetization of debt the FOMC does it by buying debt instruments on the open market for cash, this results directly in increasing the money supply in circulation.

the fed has no authority to put money into circulation ( a.k.a. they can't increase the money supply.

Yes they can and they do....congress gave them that "authority" (unconstitutionally IMHO) in 1913, one of the primary excuses..er.. reasons for the existance of the central bank is to regulate the money supply (that means INCREASING it and DECREASING it).

Perhaps you should read this as a primer : Federal Reserve System - Wikipedia, the free encyclopedia