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.
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
This must be the price increases from the drought , eh?
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
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.
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.
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.
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...
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.
We disagree then.
Thanks for your post, though.
BTW, the scripture is not referencing inflation, as such.
It’s talking about starvation, as in a beseiged city.
Inflation isn’t the problem. Inflation isn’t the answer.
Now...deflation. That should scare you.
Deflation, scares me.
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.
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