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Why You Should Be VERY Afraid Of Inflation
TMO ^ | 10-7-2012 | Graham Summers

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.


TOPICS: News/Current Events
KEYWORDS: bernanke; fed; hyperinflation; inflation

1 posted on 10/07/2012 10:51:37 AM PDT by blam
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To: blam
The Largest Economy In The World Is Imploding Right In Front Of Our Eyes
2 posted on 10/07/2012 10:56:26 AM PDT by blam
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To: blam

We need to un-export US jobs.

Now.


3 posted on 10/07/2012 10:57:42 AM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: Cringing Negativism Network

Agreed, and cancel the H1B program, which brings foreign workers here to take American jobs!


4 posted on 10/07/2012 11:01:06 AM PDT by The Sons of Liberty ("Get that evil, foreign, muslim, usurping, gay bastard out of MY White House!" FUBO!)
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To: blam

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.


5 posted on 10/07/2012 11:05:26 AM PDT by The Sons of Liberty ("Get that evil, foreign, muslim, usurping, gay bastard out of MY White House!" FUBO!)
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To: blam

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.


6 posted on 10/07/2012 11:05:51 AM PDT by jeffc (The U.S. media are our enemy)
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To: The Sons of Liberty
Gasoline. Food. Stock market. Gold.

Inflation's there if you look for it.

7 posted on 10/07/2012 11:14:01 AM PDT by AZLiberty (No tag today.)
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To: The Sons of Liberty

“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.


8 posted on 10/07/2012 11:15:40 AM PDT by desertfreedom765
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To: blam
We are having, and will continue to have inflation. There is no deflation in housing, just good, old fashioned price drops due to high supply and low demand for houses. In the seventies, there was double digit inflation, but at least people who owned a home had a hedge. They watched as their home went up in price against a mortgage that got smaller and smaller by comparison. The political wizards, as is their wont, have succeeded in producing the worst of all possible worlds. And they show no sign of letting up.
9 posted on 10/07/2012 11:17:31 AM PDT by fhayek
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To: blam

http://www.biblegateway.com/passage/?search=Revelation+6:6&version=KJV

Revelation 6:6

King James Version (KJV)

6 And I heard a voice in the midst of the four beasts say,
A measure of wheat for a penny,
and three measures of barley for a penny;
and see thou hurt not the oil and the wine.


10 posted on 10/07/2012 11:18:46 AM PDT by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: blam

It’s already here. Go to the grocery store, the car dealer, or the gas station.


11 posted on 10/07/2012 11:20:12 AM PDT by ozzymandus
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To: blam
Why You Should Be VERY Afraid Of Inflation

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.

12 posted on 10/07/2012 11:35:45 AM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: Cringing Negativism Network
We need to un-export US jobs.
Now.

Don't be silly.
That's like worrying about your kitchen wallpaper while your house in on fire.

STOP THE FREAKING' SPENDING!!!

13 posted on 10/07/2012 12:09:58 PM PDT by publius911 (Formerly Publius 6961, formerly jennsdad)
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To: publius911

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.


14 posted on 10/07/2012 12:13:12 PM PDT by Freedom4US
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To: blam

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.


15 posted on 10/07/2012 12:33:40 PM PDT by I want the USA back (Liberalism is a malfunction of the brain.)
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To: blam

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.


16 posted on 10/07/2012 12:38:04 PM PDT by Marcella (Republican Conservatism is dead. PREPARE.)
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To: blam
deflation affects home prices and incomes in the US at the very same time that we experience inflation in energy and food prices

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.)

17 posted on 10/07/2012 1:14:18 PM PDT by Sherman Logan
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To: F15Eagle
A measure of wheat for a penny, and three measures of barley for a penny

Depending on the measure used, that sounds like quite a bargain.

18 posted on 10/07/2012 1:15:31 PM PDT by Sherman Logan
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To: blam
Indeed, Ben Bernanke is a disciple of the belief that to battle deflation, one must inflate the financial system/ economy.

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.

19 posted on 10/07/2012 1:15:58 PM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: Sherman Logan

“Depending on the measure used, that sounds like quite a bargain.”

A penny at that time was an entire day’s wage.

http://www.biblegateway.com/passage/?search=Matthew%2020:1-2&version=KJV

Matthew 20:1-2

King James Version (KJV)

20 For the kingdom of heaven is like unto a man that is an householder, which went out early in the morning to hire labourers into his vineyard.

2 And when he had agreed with the labourers for a penny a day, he sent them into his vineyard.

So basically a loaf of bread will cost you your entire day’s wage.

Not a bargain at all. In fact, nothing associated with the Four Horsemen of the Apocalypse will be “a bargain”.


20 posted on 10/07/2012 1:32:32 PM PDT by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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Support Free Republic.

21 posted on 10/07/2012 2:05:51 PM PDT by RedMDer (https://support.woundedwarriorproject.org/default.aspx?tsid=93destr)
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To: blam
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 found myself shouting the very same thing at the TV a couple of months ago at some round-table discussion. This one booger-eating moron kept going on about how there was no inflation, and look at how technology and home prices have fallen. My response was "YOU A$$H@LE! Most people's life savings are tied up in those homes who have lost their values. Prices are lower, but try getting a mortgage! And besides, HOW MANY HOMES and TVs and COMPUTERS DO YOU BUY A MONTH!?!?!?!?!?!"

Mark

22 posted on 10/07/2012 2:17:13 PM PDT by MarkL (Do I really look like a guy with a plan?)
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To: MarkL
Last month at Wal-Mart, I bought Hormel sliced ham for 2 for $5.00...that would be $2.50 each package.
Today when I was there, the same ham was $3.28 a package.

This must be the price increases from the drought , eh?

23 posted on 10/07/2012 3:02:38 PM PDT by blam
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To: blam
Last month at Wal-Mart, I bought Hormel sliced ham for 2 for $5.00...that would be $2.50 each package.

Today when I was there, the same ham was $3.28 a package.

Have you bought Orange Juice lately? A carton of OJ has skyrocketed over the last year. Oh, and by the way... That 64oz carton is now 59oz. And I recall Minute Maid announcing that they were going to "dilute" their "not from concentrate" OJ, because people were asking for a "milder" orange flavor. Yeah, right!

Mark

24 posted on 10/07/2012 3:15:45 PM PDT by MarkL (Do I really look like a guy with a plan?)
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To: Cringing Negativism Network
We need to un-export US jobs.

Read the article and really think about it.

Inflation is the reason the jobs are leaving. You never answer my comments so I'm guessing you're just trying to stir up controversy [or reinforce your own unexamined premises] rather than actually find solutions.

25 posted on 10/07/2012 4:12:40 PM PDT by BfloGuy (Teach a man to fish and you lose a Democratic voter.)
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To: BfloGuy

Sorry there were two similar articles and I answered one, my apologies, sincerely.

I am moving from being concerned about why our jobs are leaving, and becoming most concerned just that our jobs are leaving.

It matters not why.

Evidently we disagree on that point. I can see yours, but still I strongly believe we have passed the point where sending US jobs abroad for any reason is good.

I say bring back (all) US jobs.

This has gone on far, far too long.


26 posted on 10/07/2012 4:27:14 PM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: MarkL
"Have you bought Orange Juice lately? A carton of OJ has skyrocketed over the last year. Oh, and by the way... That 64oz carton is now 59oz. And I recall Minute Maid announcing that they were going to "dilute" their "not from concentrate" OJ, because people were asking for a "milder" orange flavor. Yeah, right!"

No...I don't drink much OJ.

FYI, when Coca-Cola bought Minute Maid, they also bought 12% of the land area of Belieze to grow citrus...
So...price increases now should not be because of drought or freezes.

27 posted on 10/07/2012 4:31:39 PM PDT by blam
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To: F15Eagle

I believe they’re talking about a denarius. In the time of Christ it was about 4 grams of silver. At today’s silver price about $4.40. Which, oddly enough, is roughly what a decent loaf of whole wheat costs at Publix.

There are a host of reasons why comparing prices from one period to another is seriously problematic, but a day’s wage today might be about $60, which is around minimum wage.

We’re a long way from having a loaf of bread cost $60. And when that day gets here, it’s likely the “day’s wage” will be a lot more than $60.

Of course there won’t be any work available...


28 posted on 10/07/2012 4:44:52 PM PDT by Sherman Logan
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To: Cringing Negativism Network

There is no way to “bring back US jobs” any more than there is for the government to “create jobs.”

The US can of course implement all kinds of trade barriers, but the net result is likely to be a loss of US jobs.

Americans are also likely to be less than thrilled when the stuff they’ve been buying imported from China for $5 now costs $22 when made in the USA.

And of course a doubling of prices you pay is just about the same thing as cutting your income in half.


29 posted on 10/07/2012 4:51:13 PM PDT by Sherman Logan
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To: Sherman Logan

We disagree then.

Thanks for your post, though.


30 posted on 10/07/2012 4:53:59 PM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: Sherman Logan

I imagine when it comes, it will come quickly. By the time of this, the Antichrist and War have been unleashed as the first two horsemen.

The Antichrist may very possibly be with us, of course, but he has also not yet made his appearance on the world stage when he comes up with his false peace plan that will divide Israel.


31 posted on 10/07/2012 5:54:54 PM PDT by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: F15Eagle

BTW, the scripture is not referencing inflation, as such.

It’s talking about starvation, as in a beseiged city.


32 posted on 10/08/2012 12:19:07 AM PDT by Sherman Logan
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To: blam

Inflation isn’t the problem. Inflation isn’t the answer.

Now...deflation. That should scare you.


33 posted on 10/08/2012 12:30:19 AM PDT by Southack (Media Bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: Sherman Logan

No, not inflation.

Just a war-torn world where everything is priced outta sight.


34 posted on 10/08/2012 12:30:25 AM PDT by F15Eagle (1 John 5:4-5, 4:15, 5:13; John 3:17-18, 6:69, 11:25, 14:6, 20:31; Rom10:8-11; 1 Tim 2:5; Titus 3:4-5)
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To: Southack
"Now...deflation. That should scare you."

Deflation, scares me.

35 posted on 10/08/2012 7:02:12 AM PDT by blam
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To: Cringing Negativism Network
I say bring back (all) US jobs.

This has gone on far, far too long.

I don't disagree at all. But we can either do it by ending inflation, providing a stable economic atmosphere at home, and letting the markets work; or we can just wallow in our current economic mess and have the government dictate to us how and where we spend our own money.

We don't disagree on the ends -- just the means, apparently.

36 posted on 10/08/2012 2:50:56 PM PDT by BfloGuy (Teach a man to fish and you lose a Democratic voter.)
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