my2cts: Why inflation? There's less and less money for everything. Nothing is spend, every cent that's earned is used to pay of debts. And when you pay of debts money disappears just like it was created from nothing when you got the loan. Money created by the government/FED is no money that comes in the real economy either. So when the money supply declines will there be enough money to let the commodities increase in price? The problem stays the same: there's not enough money to buy commodities
During the 1930s, if a bank went out of business, their depositors lost money and the mony supply fell. Today, the FDIC just cuts them a check. Anybody that loses money in Freddie of Fannie bonds was bailed out. The government is even going to bail out holders of toxic mortgages this year. Nobody is losing "money" they are just losing value in stocks. The actually money supply is not falling though. The government is basically printing money by borrowing from the fed. Watch money velocity
What happens with money that is "given" in the bail outs? Is it to pay of debts or to spend? And what happens to the money that goes in to debts? Imho it goes where it came from: thin air. If all money that is given by the fed goes into debts no extra money is created. What do you think holds people from buying commodities if it were so obvious that prices will go up? The current prices reflect the balance between inflation- and deflation-expectation. Some say the monetary system will disappear.
I agree with the deflationary death spiral except that it will be accompanied by a dollar crisis. The gold price of everything will go down though. The Fed and the US government will keep printing money until there is a currency crisis. The only limit to monetary expansion is how many times Bernanke can hit the zero key before his finger starts to get tired. If the government can spend an extra trillion this year and cut taxes without causing inflation, then we should cancel all taxes.
my2cts: Why inflation? There's less and less money for everything. Nothing is spend, every cent that's earned is used to pay of debts. And when you pay of debts money disappears just like it was created from nothing when you got the loan. Money created by the government/FED is no money that comes in the real economy either. So when the money supply declines will there be enough money to let the commodities increase in price? The problem stays the same: there's not enough money to buy commodities
Mikannika 3 years ago
During the 1930s, if a bank went out of business, their depositors lost money and the mony supply fell. Today, the FDIC just cuts them a check. Anybody that loses money in Freddie of Fannie bonds was bailed out. The government is even going to bail out holders of toxic mortgages this year. Nobody is losing "money" they are just losing value in stocks. The actually money supply is not falling though. The government is basically printing money by borrowing from the fed. Watch money velocity
soveryscrewed 3 years ago
What happens with money that is "given" in the bail outs? Is it to pay of debts or to spend? And what happens to the money that goes in to debts? Imho it goes where it came from: thin air. If all money that is given by the fed goes into debts no extra money is created. What do you think holds people from buying commodities if it were so obvious that prices will go up? The current prices reflect the balance between inflation- and deflation-expectation. Some say the monetary system will disappear.
Mikannika 3 years ago
I agree with the deflationary death spiral except that it will be accompanied by a dollar crisis. The gold price of everything will go down though. The Fed and the US government will keep printing money until there is a currency crisis. The only limit to monetary expansion is how many times Bernanke can hit the zero key before his finger starts to get tired. If the government can spend an extra trillion this year and cut taxes without causing inflation, then we should cancel all taxes.
soveryscrewed 3 years ago