Money Supply – Exploding Inflation

[briansd1]

Arraya, if you think that money is just a human construct that we choose to believe in, and that real productive activities don’t really need money, then why do you care if we keep on printing money?

Why would too much money lead to collapse?

The collapse is the seizing up of economic activity if and when people stop believing in money.

I’m thinking that you don’t have a problem with debt per se. But you dislike the economic activities that money and debt encourage.

[NotCranky]

If all is fair in love and war than beating down a guy for his alleged hate speech against what he perceives as his encroaching enemy is absurd. Grandstanding on it is for whores.

[urbanrealtor]

[quote=Jacarandoso]If all is fair in love and war than beating down a guy for his alleged hate speech against what he perceives as his encroaching enemy is absurd. Grandstanding on it is for whores.[/quote]
Except that all isn’t fair in love or war.
And talking back at haters is not absurd in the least.
See?
Here I go doing it now.
I don’t think that makes me a whore.
though other things might…

[NotCranky]

[quote=urbanrealtor][quote=Jacarandoso]If all is fair in love and war than beating down a guy for his alleged hate speech against what he perceives as his encroaching enemy is absurd. Grandstanding on it is for whores.[/quote]
Except that all isn’t fair in love or war.
And talking back at haters is not absurd in the least.
See?
Here I go doing it now.
I don’t think that makes me a whore.
though other things might…[/quote]
You are not coming across as very thoughtful, Dan.

[sdduuuude]

I leave you guys alone for a few days and now – not only inflation is possibly the Jews’ fault but anyone who says so is, by definition, a bigot ? Wow. You people are crazy. Glad I got out when I did.

[NotCranky]

[quote=sdduuuude]I leave you guys alone for a few days and now – not only inflation is possibly the Jews’ fault but anyone who says so is, by definition, a bigot ? Wow. You people are crazy. Glad I got out when I did.[/quote]
Finally, someone I agree with!

[SK in CV]

[quote=sdduuuude]I leave you guys alone for a few days and now – not only inflation is possibly the Jews’ fault but anyone who says so is, by definition, a bigot ? Wow. You people are crazy. Glad I got out when I did.[/quote]

I really don’t want to point out the fallacy in your claim, it’s gone on long enough. But if you really think that’s the way it went down, you probably should re-read the thread.

[sdduuuude]

[quote=SK in CV][quote=sdduuuude]I leave you guys alone for a few days and now – not only inflation is possibly the Jews’ fault but anyone who says so is, by definition, a bigot ? Wow. You people are crazy. Glad I got out when I did.[/quote]

I really don’t want to point out the fallacy in your claim, it’s gone on long enough. But if you really think that’s the way it went down, you probably should re-read the thread.[/quote]

The sarcasm font would have been useful here.

[scaredyclassic]

I got it without the font. Please don’t ignore me

[sdduuuude]

[quote=walterwhite]I got it without the font. Please don’t ignore me[/quote]

Did you say something ?

🙂

[markmax33]

All I ever said is that there could be a tie between this:

http://www.altermedia.info/civil-rights/96-of-media-owned-by-6-jewish-companies_906.html

and the fact Ron Paul gets no time in the debates. I didn’t state it a fact. I merely posed the question. Feel free to discredit the article or come up with a logical reason why Ron Paul gets so little air time. I’m really interested in the opinions. If you say some idiotic statement like Ron Paul is crazy you are no better than the rest of the media and you don’t speak with facts.

[kev374]

Here is the interesting thing… if the price of goods increases (inflation) and the wages do not keep up with it then i’m guessing essential goods will be prioritized by people and there will be severe cutbacks in non-essential goods.

So, in essence demand for non-essential goods will drop like a rock causing deflation in those asset classes…correct?

Now, given that our economy is 70% spending there will be a sharp overall contraction in GDP due to pullbacks. A hike in inflation may be brief and overcome with serious deflationary forces. What do you think?

So, you say the government comes in and dumps money… however, what could the government do? Lending money to the banks isn’t going to change much as banks are unwilling to lend money to people in the first place and if sentiment is low and employment is shaky.. people will not want to borrow in any case. Unless the govermnet throws money from helicopters which is unlikely I don’t see how “printing money” actually would work.

The only other scenario is extreme where the government effectively cancels everyones debt…which seems to be what the government is attempting to do indirectly. Acquire toxic assets through FNM/FRE/FHA and then bail them out. Also let people declare BK on their credit cards and then shore up the balance sheets of the banks…of course that has the exact same problem as above.

The government cannot pursue bailouts without increasing the national debt/deficit… therefore to overcome these deficits somewhere down the road there has to be increase in taxes or austerity measures. These will once again result in a severe recession, unemployment, deflationary forces etc. BACK TO SQUARE ONE except it has only DELAYED THE INEVITABLE 🙂

Comments?

[urbanrealtor]

[quote=walterwhite]I got it without the font. Please don’t ignore me[/quote]

PD/sc/ww:
Why does your name keep showing up without a post?

[urbanrealtor]

[quote=kev374]Here is the interesting thing… if the price of goods increases (inflation) and the wages do not keep up with it then i’m guessing essential goods will be prioritized by people and there will be severe cutbacks in non-essential goods.

So, in essence demand for non-essential goods will drop like a rock causing deflation in those asset classes…correct?

Now, given that our economy is 70% spending there will be a sharp overall contraction in GDP due to pullbacks. A hike in inflation may be brief and overcome with serious deflationary forces. What do you think?

So, you say the government comes in and dumps money… however, what could the government do? Lending money to the banks isn’t going to change much as banks are unwilling to lend money to people in the first place and if sentiment is low and employment is shaky.. people will not want to borrow in any case. Unless the govermnet throws money from helicopters which is unlikely I don’t see how “printing money” actually would work.

The only other scenario is extreme where the government effectively cancels everyones debt…which seems to be what the government is attempting to do indirectly. Acquire toxic assets through FNM/FRE/FHA and then bail them out. Also let people declare BK on their credit cards and then shore up the balance sheets of the banks…of course that has the exact same problem as above.

The government cannot pursue bailouts without increasing the national debt/deficit… therefore to overcome these deficits somewhere down the road there has to be increase in taxes or austerity measures. These will once again result in a severe recession, unemployment, deflationary forces etc. BACK TO SQUARE ONE except it has only DELAYED THE INEVITABLE 🙂

Comments?[/quote]

You have a point but its not quite that mechanical.
There are 3 primary types of inflation.

Demand side:
In most major inflationary events, there is a manic printing of money. Literal printing of paper currency (eg: Weimar, Zimbabwe, Mexico).
That puts more nominal cash in peoples pockets and causes prices to rise (basically a demand pull).
In our case, “printing” means lending a crap load of money to, and buying bonds from, troubled firms.
That does not directly put cash in people’s hands.
It does go a good distance toward making skittish firms less reactive.

Supply side:
Most inflationary events in the US have been due to supply shocks of consumables or commodities.
Supply shocks tend to cause destructive demand and lead to remedies at the end user level.
So, for example gas prices increased dramatically between 2005 and 2011 but that lead to a modification of vehicle consumption and lifestyle.
Overall prices did not shoot up (even though most everything uses gas to get to market).

Confidence:
If a country (eg: Iceland or Greece) carries a huge load of debt in a currency it cannot print or control, then it can cause the currency they use to become worthless. For example if the US owed China 5Trillion denominated in RMB (instead of Dollars), then either the Chinese government or just the market could double that debtload overnight just by changing the exchange rate.

For us to have a big (like really big) inflationary event (or like what you described), we would have to see strong components of all three coupled with a very weak domestic economy and probably a big food production break down (like the dustbowl).
Remember we grow more food per capita than most of the planet.
That really creates a limit on how broke we can get.
This means its almost always unlikely you will starve in the US (unless you are in the Carpenters).

And again, you are right because if that perfect storm happened (as it sort of did in the 1930s), the anemic consumption would drive down prices (as it did int he 1930s).

[Anonymous]

History proves that the price of Rearden Metal will skyrocket.

It’s happened thousands of times.

[Author]

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