Stagflation hits the main stream press!!!

[DWCAP]

admittedly I am new to the geopolitical power plays, so please dont jump down my throat if I say something dumb. But I think you guys are missing a very key piece of the picture when you wonder why they keep financing us. ‘What the hell else are they gonna do with this money?’
China, Japan, Saudi Arabia have been gaming the system for years to make sure their export laden economies at turning at full steam. They invent very little, relying on their amazing if limited natural resources or pure cheap muscle to grow themselves. This brings in huge numbers of dollars, way more then their economies can absorb without runaway inflation and chaos. They have to put this stuff outa the country and where better than where it is coming from? They lend because they HAVE to lend. If they didnt, their curriencies would appreciate rapidly as wealth flowed into the country and didnt leave. This would eventually crush export laden economies as labor is always cheap somewhere, and oil has substitutes at the right prices. So for all the worry about their rising power, remember America can simply say “we wont buy from you anymore” and set up shop in Vietnam, or Kenya, or Mexico if it is close to home and get our oil from Canado and Norway. Their economies would CRASH, I dont care how many chinese their are, the home market just isnt mature enough to drive itself.
So if you wonder why this has gone on so long, I think it is because we have created a system where we have both a country that constantly is inventing massive amounts of wealth (internet anyone) but is debt laden, vain and stupid, AND a network of creditor countries unable to support themselves. We have to borrow, but they have to lend. Holding out on the USA gets them nothing but a crashed economy and rapidly appreciating curriencies, further crashing their economy.

[Eugene]

This is what stagflation looks like:

[img_assist|nid=6669|title=|desc=|link=node|align=left|width=466|height=280]

Monetary base growing at 8%/year, M2 money supply growing even faster, fixed-income security traders demanding steep inflation premiums, mortgage rates above 8%.

This is what stagflation DOESN’T look like:

[img_assist|nid=6670|title=|desc=|link=node|align=left|width=466|height=280]

[Eugene]

This is what stagflation looks like:

[img_assist|nid=6669|title=|desc=|link=node|align=left|width=466|height=280]

Monetary base growing at 8%/year, M2 money supply growing even faster, fixed-income security traders demanding steep inflation premiums, mortgage rates above 8%.

This is what stagflation DOESN’T look like:

[img_assist|nid=6670|title=|desc=|link=node|align=left|width=466|height=280]

[Eugene]

This is what stagflation looks like:

[img_assist|nid=6669|title=|desc=|link=node|align=left|width=466|height=280]

Monetary base growing at 8%/year, M2 money supply growing even faster, fixed-income security traders demanding steep inflation premiums, mortgage rates above 8%.

This is what stagflation DOESN’T look like:

[img_assist|nid=6670|title=|desc=|link=node|align=left|width=466|height=280]

[Eugene]

This is what stagflation looks like:

[img_assist|nid=6669|title=|desc=|link=node|align=left|width=466|height=280]

Monetary base growing at 8%/year, M2 money supply growing even faster, fixed-income security traders demanding steep inflation premiums, mortgage rates above 8%.

This is what stagflation DOESN’T look like:

[img_assist|nid=6670|title=|desc=|link=node|align=left|width=466|height=280]

[Eugene]

This is what stagflation looks like:

[img_assist|nid=6669|title=|desc=|link=node|align=left|width=466|height=280]

Monetary base growing at 8%/year, M2 money supply growing even faster, fixed-income security traders demanding steep inflation premiums, mortgage rates above 8%.

This is what stagflation DOESN’T look like:

[img_assist|nid=6670|title=|desc=|link=node|align=left|width=466|height=280]

[Deal Hunter]

We all have nothing to worry about. The U.S. Dollar is the world’s reserve currency. It is the standard by which the world operates business. We can rest easy because of the respect and reverence the world has for our Dollar.

Now, if only Iran would shut up about possibly selling their oil in exchange for Euro, we could relax more and go back to business as usual. What, Iran hasn’t said anything? Well, not directly. However, has anyone listened in on any Hugo Chavez speaches lately?

But I digress. Please, relax, everyone. Go back to your $8 lattes bought on your Capital One Master Cards. Everything is fine. The U.S. Dollar is still the world’s reserve currency.

[Deal Hunter]

We all have nothing to worry about. The U.S. Dollar is the world’s reserve currency. It is the standard by which the world operates business. We can rest easy because of the respect and reverence the world has for our Dollar.

Now, if only Iran would shut up about possibly selling their oil in exchange for Euro, we could relax more and go back to business as usual. What, Iran hasn’t said anything? Well, not directly. However, has anyone listened in on any Hugo Chavez speaches lately?

But I digress. Please, relax, everyone. Go back to your $8 lattes bought on your Capital One Master Cards. Everything is fine. The U.S. Dollar is still the world’s reserve currency.

[Deal Hunter]

We all have nothing to worry about. The U.S. Dollar is the world’s reserve currency. It is the standard by which the world operates business. We can rest easy because of the respect and reverence the world has for our Dollar.

Now, if only Iran would shut up about possibly selling their oil in exchange for Euro, we could relax more and go back to business as usual. What, Iran hasn’t said anything? Well, not directly. However, has anyone listened in on any Hugo Chavez speaches lately?

But I digress. Please, relax, everyone. Go back to your $8 lattes bought on your Capital One Master Cards. Everything is fine. The U.S. Dollar is still the world’s reserve currency.

[Deal Hunter]

We all have nothing to worry about. The U.S. Dollar is the world’s reserve currency. It is the standard by which the world operates business. We can rest easy because of the respect and reverence the world has for our Dollar.

Now, if only Iran would shut up about possibly selling their oil in exchange for Euro, we could relax more and go back to business as usual. What, Iran hasn’t said anything? Well, not directly. However, has anyone listened in on any Hugo Chavez speaches lately?

But I digress. Please, relax, everyone. Go back to your $8 lattes bought on your Capital One Master Cards. Everything is fine. The U.S. Dollar is still the world’s reserve currency.

[Deal Hunter]

We all have nothing to worry about. The U.S. Dollar is the world’s reserve currency. It is the standard by which the world operates business. We can rest easy because of the respect and reverence the world has for our Dollar.

Now, if only Iran would shut up about possibly selling their oil in exchange for Euro, we could relax more and go back to business as usual. What, Iran hasn’t said anything? Well, not directly. However, has anyone listened in on any Hugo Chavez speaches lately?

But I digress. Please, relax, everyone. Go back to your $8 lattes bought on your Capital One Master Cards. Everything is fine. The U.S. Dollar is still the world’s reserve currency.

[4plexowner]

the global monetary system is interesting

when a factory in China exports toys to America they receive US dollars in payment – they then take those American $$ to their local bank and exchange them for yuan because the local grocery store in China doesn’t sell milk in US dollars, it sells milk in yuan

now the local banks all over China send those US dollars to the Chinese central bank and exchange them for yuan (because the local banks don’t operate in US dollars, they operate in yuan)

note that by exporting goods to America and receiving payment in US dollars the demand for the yuan within China has increased – both the toy seller and the local bank have new demand for yuan because of the exports – if the supply of yuan remains fixed, the value of the yuan will increase (econ 101 – more demand with fixed supply means increased value)

the Chinese don’t want the yuan to rise in value so they increase the supply of it – the central bank prints enough yuan to buy up the new US dollars that have entered the country – increasing the supply of yuan available within China creates inflation as more money chases a fixed supply of goods and services

this monetary process has several results:
– US dollars pile up in the Chinese central bank
– the supply of yuan increases within China
– inflation occurs within China

the process described above is occurring in most of the nations that trade with the US – 18 out of 20 major central banks have been inflating their currency at double-digit rates for the last decade or so

the world is starting to suffer from the inflation in prices that is caused by this global monetary debasement – on monday, wheat prices jumped by $4.00 per bushel – that is nearly a 25% increase in one day – I’m sitting here this morning looking at charts of gold at $963.10, oil at $101.04, silver at $19.28 – tell me those prices don’t reflect massive inflation

as far as the inflation / deflation debate – I like the Kondratiev cycle theory because it describes how inflation (whether ‘hyper’ or not) results in deflation – according to the K cycle theory, we will experience inflation in commodities as asset prices deflate (kinda like what’s happening right now) – put me firmly in the ‘deflationista’ camp

[4plexowner]

the global monetary system is interesting

when a factory in China exports toys to America they receive US dollars in payment – they then take those American $$ to their local bank and exchange them for yuan because the local grocery store in China doesn’t sell milk in US dollars, it sells milk in yuan

now the local banks all over China send those US dollars to the Chinese central bank and exchange them for yuan (because the local banks don’t operate in US dollars, they operate in yuan)

note that by exporting goods to America and receiving payment in US dollars the demand for the yuan within China has increased – both the toy seller and the local bank have new demand for yuan because of the exports – if the supply of yuan remains fixed, the value of the yuan will increase (econ 101 – more demand with fixed supply means increased value)

the Chinese don’t want the yuan to rise in value so they increase the supply of it – the central bank prints enough yuan to buy up the new US dollars that have entered the country – increasing the supply of yuan available within China creates inflation as more money chases a fixed supply of goods and services

this monetary process has several results:
– US dollars pile up in the Chinese central bank
– the supply of yuan increases within China
– inflation occurs within China

the process described above is occurring in most of the nations that trade with the US – 18 out of 20 major central banks have been inflating their currency at double-digit rates for the last decade or so

the world is starting to suffer from the inflation in prices that is caused by this global monetary debasement – on monday, wheat prices jumped by $4.00 per bushel – that is nearly a 25% increase in one day – I’m sitting here this morning looking at charts of gold at $963.10, oil at $101.04, silver at $19.28 – tell me those prices don’t reflect massive inflation

as far as the inflation / deflation debate – I like the Kondratiev cycle theory because it describes how inflation (whether ‘hyper’ or not) results in deflation – according to the K cycle theory, we will experience inflation in commodities as asset prices deflate (kinda like what’s happening right now) – put me firmly in the ‘deflationista’ camp

[4plexowner]

the global monetary system is interesting

when a factory in China exports toys to America they receive US dollars in payment – they then take those American $$ to their local bank and exchange them for yuan because the local grocery store in China doesn’t sell milk in US dollars, it sells milk in yuan

now the local banks all over China send those US dollars to the Chinese central bank and exchange them for yuan (because the local banks don’t operate in US dollars, they operate in yuan)

note that by exporting goods to America and receiving payment in US dollars the demand for the yuan within China has increased – both the toy seller and the local bank have new demand for yuan because of the exports – if the supply of yuan remains fixed, the value of the yuan will increase (econ 101 – more demand with fixed supply means increased value)

the Chinese don’t want the yuan to rise in value so they increase the supply of it – the central bank prints enough yuan to buy up the new US dollars that have entered the country – increasing the supply of yuan available within China creates inflation as more money chases a fixed supply of goods and services

this monetary process has several results:
– US dollars pile up in the Chinese central bank
– the supply of yuan increases within China
– inflation occurs within China

the process described above is occurring in most of the nations that trade with the US – 18 out of 20 major central banks have been inflating their currency at double-digit rates for the last decade or so

the world is starting to suffer from the inflation in prices that is caused by this global monetary debasement – on monday, wheat prices jumped by $4.00 per bushel – that is nearly a 25% increase in one day – I’m sitting here this morning looking at charts of gold at $963.10, oil at $101.04, silver at $19.28 – tell me those prices don’t reflect massive inflation

as far as the inflation / deflation debate – I like the Kondratiev cycle theory because it describes how inflation (whether ‘hyper’ or not) results in deflation – according to the K cycle theory, we will experience inflation in commodities as asset prices deflate (kinda like what’s happening right now) – put me firmly in the ‘deflationista’ camp

[4plexowner]

the global monetary system is interesting

when a factory in China exports toys to America they receive US dollars in payment – they then take those American $$ to their local bank and exchange them for yuan because the local grocery store in China doesn’t sell milk in US dollars, it sells milk in yuan

now the local banks all over China send those US dollars to the Chinese central bank and exchange them for yuan (because the local banks don’t operate in US dollars, they operate in yuan)

note that by exporting goods to America and receiving payment in US dollars the demand for the yuan within China has increased – both the toy seller and the local bank have new demand for yuan because of the exports – if the supply of yuan remains fixed, the value of the yuan will increase (econ 101 – more demand with fixed supply means increased value)

the Chinese don’t want the yuan to rise in value so they increase the supply of it – the central bank prints enough yuan to buy up the new US dollars that have entered the country – increasing the supply of yuan available within China creates inflation as more money chases a fixed supply of goods and services

this monetary process has several results:
– US dollars pile up in the Chinese central bank
– the supply of yuan increases within China
– inflation occurs within China

the process described above is occurring in most of the nations that trade with the US – 18 out of 20 major central banks have been inflating their currency at double-digit rates for the last decade or so

the world is starting to suffer from the inflation in prices that is caused by this global monetary debasement – on monday, wheat prices jumped by $4.00 per bushel – that is nearly a 25% increase in one day – I’m sitting here this morning looking at charts of gold at $963.10, oil at $101.04, silver at $19.28 – tell me those prices don’t reflect massive inflation

as far as the inflation / deflation debate – I like the Kondratiev cycle theory because it describes how inflation (whether ‘hyper’ or not) results in deflation – according to the K cycle theory, we will experience inflation in commodities as asset prices deflate (kinda like what’s happening right now) – put me firmly in the ‘deflationista’ camp

[Author]

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