Posted on 10/02/2007 3:01:32 PM PDT by Tolerance Sucks Rocks
Looks like Greenspan is doing everything in his power to push this baby over the cliff. He prints money by the boatload during his reign as the Fed chief, allows banks to loan money to anyone with a pulse, promotes multinational globalism as a good thing as far as industry fleeing to cheap labor countries (watch out China, Africa looks pretty cheap compared to you), retires, and then starts shouting from the rooftops that it is all going to implode.
The downside is that American’s are whacked out in debt (including our government), rely on cheap imports to support their lifestyles, have eroded our industrial base and basically cycle cash through our system to keep it moving, and now get to watch our currency plunge to the point where we are going to get whacked by expensive goods in the near future. If this stack of cards does come tumbling down, what are we going to do? Print even more money? Rebuild our industrial base? What a headache, on top of that, we have the huge retirement of the Boomers also coming down the pipeline to pay for in the near future. It just seems inevitable that we are heading for a financial reset of some magnitude.
Rising prices due to changes in the supply & demand curves do not directly result in inflation. Rising prices could mean less sales at Walmart, possibly slow the economy, which may lead the Fed to cut rates, which could lead to inflation.
This is “inflationary pressure.” However, the rising prices themselves do not cause inflation.
The Chinese, the US Fed, indeed **every single central bank in the world** all create money out of thin air, which is the very definition of “inflation”, for by printing money (or creating electronic currency units), and using it to purchase assets and buy services, it is counterfeiting private wealth.
The Chinese in particular have been running a type of fascist economy. Government collusion with the banks gives banks the clearance to “loan” money to business enterprises that enjoy political favor, some of which like the PLA and NORINCO are really government-owned enterprises. Many of these enterprises find they cannot repay the loans or service their debt, so instead of forcing bankruptcy or asset recovery, the bank “lends” more money to cover the interest or approves rolling the note through another term.
The net effect of this is simple: lending money that never has to be repaid is identical to printing money. All this money is convertible to US Dollars, but also to Euros, Yen, etc.
If China suddenly decides to get control of bank lending, it will throw the brakes on the Chinese economic expansion, as well as the high rate of inflation that the flood of money is sure to cause in the near future. When coupled with rising wages and exchange rate adjustments, this will cause the price of Chinese goods being sold in the US to rise.
Yesterday I was in a name-brand factory outlet store and observed that all the shirts on display in the front were made in Vietnam. On the other hand, a Silicon Valley high-tech CEO told me last year that he is scaling back his engineering activities in India because the wage advantage is no longer enough to compensate for the hassle-factor.
For me, its a toss. On the one hand, what he's saying now makes sense. On the other, why didn't he say it before instead of speaking ambiguous gobble-de-gook?
Gold and Economic Freedom By ALAN GREENSPAN
see:
http://www.gold-eagle.com/greenspan041998.html
...
The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which-through a complex series of steps-the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets.
The law of supply and demand is not to be conned. ...
I wish Freepers would stop killing the messenger and instead try to learn somthing.
Make that USA imports inflation from China.
Correct.
Not if you made your livelihood as a American manufacturer.
With a billion underemployed laborers? I don't think so.
right, right?
/crickets chirping
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.