Posted on 10/07/2012 10:51:34 AM PDT by blam
Why You Should Be VERY Afraid Of Inflation
Stock-Markets / Inflation
Oct 07, 2012 - 09:52 AM
By: Graham Summers
For the last 80 years or so, financial theory has held that inflation and deflation were mutually exclusive events. We’ve now seen that idea go up in smoke as deflation affects home prices and incomes in the US at the very same time that we experience inflation in energy and food prices courtesy of the Fed’s insane money printing.
Indeed, Ben Bernanke is a disciple of the belief that to battle deflation, one must inflate the financial system/ economy. Never mind that history has shown this to be total bunk (monetization has always inevitably led to higher inflation), Bernanke is an academic and has devoted his life’s work to this misguided belief.
As a result, the man with the greatest control over the value of the US Dollars you own is a man who is so hell-bent on proving his theories that he can and is completely ignoring hard evidence that refutes them.
Case in point, Bernanke and the Fed continually state that inflation is “contained” or “transitory.” This is simply incredible when you consider that food prices, energy prices, rent, and other measures of the cost of living are up double-digit percentage points year over year.
In fact, nothing proves just how insane these people are (either that or they’re pathological liars) than the claim that because iPads are other technological items are becoming cheaper, that overall the cost of living is not increasing much.
Yes, you read that correctly. High ranking members of the US Federal Reserve believe that because a one time purchase of an iPad is cheaper, the increase in the daily cost of food and energy is balanced out.
I bring all of this up, because the Fed is so afraid of de-flation that it is ignoring the clear signs that we are heading towards massive inflation and possibly even hyperinflation.
Throughout history all episodes of hyperinflation have been caused by the same actions: the monetization of debt to fund massive deficits.
This policy works temporarily until the country in question loses credibility in the bond market (bond investors are no longer willing to lend it money). At that point the country enters a currency crisis and experiences hyperinflation.
Sounds familiar, doesn’t it?
Indeed, the US Fed bought 73% of all debt issued last year to fund the US’s deficit. The only reason we’ve been able to get away with this is because the US has the most credibility of any country in the world (we’ve never defaulted on our debt).
However this credibility only goes so far. And we’re on very very thin ice: a 10% deficit and a Debt to GDP ratio over 100%.
I will be blunt here, we are following the precise formula for hyperinflation to a “T.” The only reason it hasn’t hit yet is because the US hasn’t lost all credibility yet. But at this rate, it’s only a matter of time.
So if you’re no preparing for inflation already, you need to get moving now. The Powers That Be are well aware that we’re in big trouble. Consider Mitt Romney’s recent admission that a former head of the NY Fed admitted that as soon as the Fed stops buying all the US debt we’ll have a failed Treasury auction and interest rates will soar.
Make no mistake, the time to prepare for higher inflation is NOW before this happens.
We need to un-export US jobs.
Now.
Agreed, and cancel the H1B program, which brings foreign workers here to take American jobs!
I’m really surprised big time inflation hasn’t already hit. 0bama and Bernanke have been wearing out printing presses printing money 24 x 7 for four years. That’s a recipe for hyperinflation.
Darn straight people should be afraid of inflation. I witnessed its effects in the 70’s. It just wasn’t worth trying to save money - buy it now before the price goes up if you really need it, otherwise just go without, was the meme back then. Of course, if you owned a decent home and could continue to afford it, the value of it would quadruple or more in 10 years.
Inflation's there if you look for it.
“I’m really surprised big time inflation hasn’t already hit.”
Its because the velocity of money is low. Its when the economy picks up that you will likely see inflation really get going.
You don’t even need to see hyperinflation to cause real damage. 10% for 3 years would eat up around 35-40% of your bank accounts and paycheck.
The Rich do well with inflation because they own assets. Its the Middle Class who get savaged by inflation. I’m really surprised that this hasn’t become a huge political issue.
A stable currency is not only good economic policy, its a moral issue.
It’s already here. Go to the grocery store, the car dealer, or the gas station.
You have to laugh at the geniuses who have accumulated wealth, gold and property.
Three words : Executive Order 6102.
If anyone thinks that it won't happen again, they just have NOT been paying attention these last 4 years.
OR if they think that running to some foreign country as a safe haven they will not only cerainly risk their gold and material wealth, but their lives in addition. Even the ones who choose a boat as their escape, assuming that they will never have to go into port; or that a new pirate industry will not instantly materialize.
Good luck to you. I'll take my chances at home.
Don't be silly.
That's like worrying about your kitchen wallpaper while your house in on fire.
STOP THE FREAKING' SPENDING!!!
Do you think the Government is planning a return to a gold standard? (XO 6102); by their actions the last several decades that seems unlikely.
Out of control inflation is the statist’s dream. Inflation reduces savings to essentially zero, thus rendering poor all people who worked hard during their lives and saved so that they would not become dependent.
Inflation raises tax rates, since the rates are based on the number of dollars per year, dollars which are worth less and less every day.
Inflation enables the government to call people rich just because they earn the same number of dollars that a few years before represented a confortable income, but now are a worthless joke.
Inflation is great for a government that owes a lot of money, since it will repay the money with progressively more worthless dollars.
Inflation doesn’t bother the liberal elite at all, because they all have inflation-adjusted salaries, pensions and health insurance.
Inflation makes all dependent on the government.
Inflation leads to a disruption of the civil order, leading to instability, leaving an opening for extreme left statists to establish their power.
Much of what we buy comes from China, including clothes and shoes. If trade is disrupted, which I think it will be, it would be wise to check your everyday clothes you wear around the house, like jeans and shirts. My jeans were old, so I bought three new pair of jeans (have plenty of shirts).
Also check the shoes you wear around the house and work in around the house. Are they falling apart? If so, buy new ones.
At some point, these clothes/shoes may go away.
Gentleman obviously doesn't understand what inflation/deflation is.
It is the drop (or increase) in value of the unit of exchange. It does not necessarily have anything at all to do with the increase or decrease in price of any category of goods.
And surely even a moron can see that much (though perhaps not all) of the drop in housing prices is a direct consequence of the bursting of a bubble. That's just what happens when a bubble goes pop.
IOW, those high prices were never real. (Unless you were lucky/smart enough to sell at the top of the market.)
Depending on the measure used, that sounds like quite a bargain.
Huge budget deficits, that the Keynesians favor, leads to bankruptcy, and would lead to deflation under a gold standard. In order to avoid these results, the Fed has finance the deficit with money created out of thin air, which leads to inflation.Whether average prices are rising or seem to be stable in the face of the increase in the money supply depends on where the economy is in the business cycle.
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