Skip to comments.Monetary Inflation is Our Future
Posted on 03/27/2009 11:16:31 AM PDT by Lorianne
Hong Kong, China Last week, Mr. Bernanke announced that the Federal Reserve would buy $300 billion worth of U.S. Treasuries and another $700 billion worth of government-agency mortgage debt. In order to finance these purchases, the Federal Reserve would simply create this money out of thin air.
It is worth noting, that the Federal Reserve has already dropped the Fed funds rate to a historically low range of 0-0.25% and now it is desperately trying to use other unconventional methods (quantitative easing) to stimulate the economy. In my view, this latest development of the Federal Reserve monetizing debt is inflationary and confirmation that the Federal Reserve wants to debase the U.S. dollar. It is worth noting that the total debt in the United States now exceeds $60 trillion, and its economy is around $14 trillion. So, the United States is already bankrupt, and the only way it can ever hope to repay this gigantic sum is through monetary inflation and debasement.
(Excerpt) Read more at dailyreckoning.com ...
I just don’t see how we can avoid a hyper-inflationary depression at some point. We may have selective deflation now in some categories of products and services, but the Fed and Treasury will keep flinging more fiat money into the pot until they quash all signes of deflationary pressure that will cause the pendulum to swing violently the other way.
signes = signs
I don't think it will be hyper inflation because credit is decreasing as new money is being printed. I do see inflation coming, but that will compound the problem because social security and medicare will grow to keep pace with the inflation.
Total debt is around $60 trillion? What is that person smoking? Surely this author is smarter than using unfunded liability numbers and projecting that current entitlements and economic conditions will be identical every year for the next however many years...that would lack serious academic rigor and open this person to the rightful label of fool.
And regarding inflation...uh...our necks are being crushed against the zero bound....monetary policy is now reduced to alchemy with treasuries. Why would inflation be a bad word?
I guess it is time to buy more silver and gold.
Here’s how I think 0bama is destroying America. The world economic model was to make stuff to sell to Americans. In exchange for selling us stuff, the state banks of these producer/exporter nations propped up the American government by buying treasury notes. Our money came back to finance our government debt.
Where this has broken down is that the American consumer is not buying stuff, so the producer nations don’t have the incentive to send the money back to finance the government debt. But 0bama is now running that debt through the roof.
In effect, 0bama has rendered the world’s economic model invalid, and now the world will have to painfully de-couple from the American consumer and American government. It will be painful for them in the short run, but in the long run they will prosper and we will be bankrupt.
Maybe I missed something. The forecasted debt is based on spending that goes into the future. As inflation snowballs, the debt grows with the spending on forecasts that underestimated inflation, right?
Thank GOPJ who pinged me on this. Back in January the FR deflationist trolls used to swarm my Schiff, Farber, Rogers, Beck threads calling them stupid for predicting inflation under Obama. They all disappeared. I never could understand their reasoning.
I’ve always said deflation first followed by hyper-inflation that will turn on a dime. No telling when it will hit it can’t be far off now.
A common misunderstanding. Unfunded liabilities are not yet due. Comparing the such total "outyears" costs to one year's GDP is disingenuous or ignorant.
Just around the corner, my FRiend....like nothing we’ve seen.
Just look for metals that have something that verifies their content and purity. Try local dealers also.
The theory was (by deflation trolls) that the recession caused such a large contraction in private credit that the government could fill that void with government/federal reserve spending with NO increase in prices. Of course as Peter Schiff says, if you have large job losses and economic contraction then lower prices is the best stimulus, not trying to raise them.
the fed currently believes that deflation is the biggest problem since lending is way down. that means the velocity of money is way slow. to make up for loss of velocity the fed is flooding the system in an attempt to spark inflation.
So far they have not succeeded.
imho they are monitoring the situation very carefully as they are looking for the first signs of success.
when they do see that deflation has ended and inflation has begun — then they will start pulling money out of the system.
but right now real estate is still falling and banks are not lending much.