HYPER inflation just around the corner? fed Is Paying Banks NOT To Lend 1.8 Trillion

but the corporations and the stock market hasn't been pulling the puppet fed strings as they are now to the fed, and the last time they did it was the 1920s..

 

And it's not even close to coming. We are in more danger of deflation than hyperinflation.

 

Let me try to explain. As the Federal Reserve starts to deplete its reserve assets to take money out of circulation, the market price of those reserve assets is dynamic.

It would be like if too many homeowners in a city tried to unload their houses at once. If each home could individually fetch a price of 400,000 dollars, the combined market value of 100 homes together may be 40 million dollars, but that does not mean all these homes together are actually worth if some corporate entity was going to simultaneously buy all these houses together. For large scales, the fallacy of composition applies.

And since the whole asset pool is backing the reserve notes in circulation, the value of the notes can tend to change as other notes are pulled out of circulation. This can have the complete opposite effect of what you might expect. As they try to reduce the money supply, it could actually cause inflationary pressure, counteracting whatever deflation there may have been.

Something else to consider also is that as the federal reserve bank unloads reserve assets into the market, private banks can then use it as reserve assets, expanding the money supply. The market has an equilibrium. However the federal reserve bank acts, the market forces will tend to counteract it.

There is no danger of deflation. This is just an excuse being used so they can keep printing more money, keep financing the growing government debt. A little deflation would actually be good.

 

what a joke, the aldrich plan was written by the money trust and aldrich

it never passed congress

 

The funny thing is banks actually make less money when the Fed purchases treasuries off them as the IOER pays less than yields on government debt. So they aren't paying them to not lend money. Banks will lend money to any qualified borrowers out there. Problem is not the banks it's the private sector and them deleveraging to the point there is not a large enough demand for credit. Which is why the Fed basically has produced the lowest interest rates ever to try to get people to buy houses, cars, start businesses, etc. But after we lost $20 trillion in wealth during the recession, people simply don't want debt... they want income.

 

Without more printing of money, using the Federal Reserve to hold all that growing debt, Liberals know that the government wouldn't be able to continue to spend so much money. But when the music stops, someone will be left to foot the bill, and I rather suspect they won't like austerity.

 

I don't believe in conspiracies. There is no reason for them to "keep printing more money" for any other reason than to encourage economic growth. And the Fed can't purchase debt from the government so they don't need to create money to finance the growing debt.

A little deflation would not be good at all. In fact they do everything they can to prevent deflation. You really should ask questions rather than make comments, because this isn't even in the ballpark of realistic monetary thought.

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When will the music stop and why?

 

At some point, there will be too much debt, too many liabilities, and people will come to the realization that it cannot all be repaid. When that happens, the Federal Reserve will be desperately printing out money to keep the payouts going, to try to maintain investor confidence. When investors finally demand back their money, and there are no new lenders to come in (at least ones that will not demand exorbitant returns), the system will begin to collapse, much like any Ponzi scheme.

Printing money does not lead to economic growth. Some Liberals and Keynesians think that the government spending more money leads to economic growth, that's probably why they like the idea of more money being printed.

 

What is too much debt? Do you have a number, or you just throwing darts?

Well it sure has a strange correlation with economic growth. Maybe that's why most intelligent economists think differently from your strange anti-government ideology...

 

Inflation has been present all along in the price of nearly everything for the past six years (at least), except computer components and housing. But the inflation has not been the "runaway" kind of the 1970's -- no question about that. Personally, though, I would welcome some deflation, if only because people generally don't earn as much money as they used to five or six years ago. The deflation wouldn't hurt the interest rates on people's savings, because those have already cratered to about absolute-zero already.

 

It's because you only think about consumer goods. Inflation is more geared towards business owners, investors, and people who do stuff with their money... not just people who buy groceries and gas.

 

Here's a great article from Ben Bernanke on why they make sure deflation doesn't happen. It's not like I make this stuff up. I simply advocate what the most educated monetary experts in the world say and I simply believe they do this to create the most efficient economy not for any conspiratorial type reasons.

http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/

 

A larger population is going to make the economic "growth" look bigger. And much of this "economic growth" is miscalculated, failing to take into account rising prices. Supposedly it is adjusted for inflation, but it is difficult to define what inflation actually is. Furthermore, with rising urbanization, new problems are created that require more economic exchange. This does not necessarily create wealth, but shows up as greater economic exchange.

It is difficult to argue observed correlations because economics is so complicated. One really needs a very controlled environment to be able to observe these things. Example, a small country where only a single economic variable has changed.

I do not argue that this is not true, but just because most economists advocate something does not make it true. It has much to do with the educational system in economics departments, and some economic schools of thought being given more weight. I just fear that politicians will fall prey to the fallacy that just because most of the experts are telling them something that it must be true. This has the potential to bring economic disaster, all because of a widespread faulty perspective being held within an academic field.

Example: If the Soviet Union had turned out more educated economists than the USA, would that have made Communism a better economic policy than Capitalism? No, of course not. Number of experts who hold an opinion is not necessarily relevant. We have to look at the different sides, regardless of whether one side has many more supporters.

 

well what about this dart at the fed balloon

http://inflationdata.com/Inflation/Inflation_Articles/Inflation_and_Recession.asp
if this recession is about over shouldn't there be a inflationary period about to begin? in all the past recessions there has been inflation so will it be hyper this time since the fed really blew the balloon up with cash

 

You can make all the excuses you want, it still doesn't change basic mathematics. And by the way, that is "real" GDP which does take in to account rising prices.

GDP = Velocity*Qty

Something everyone should know.

You can't turn us all in to lab rats... but you can understand how people adjust their spending/saving/investing habits based off incentives using rates. The people controlling our monetary system are not dumb. The fact you discredit them as if they are blatantly doing something wrong is your first mistake. They are much more intelligent and understanding of our system than anyone of us here.

 

It didn't blow up a balloon of cash. Our broad money supply has not grown at any rate above historical levels. So there will not be hyperinflation because there is more reserves in the banking system. And if you look at the current chart, we have low inflation and low growth, so you are correct, most economic growth periods coincide with inflation. Which is why they try to target a level of inflation at all times and do everything they can to prevent deflation (which has a correlation with recession/depression). If you understand math and the economy you'd see why. It's not like they are just drawing things on napkins. They are very intelligent people.

 

When the USA president can "pull over" an airplane in Europe carrying a Bolivian president, it is clear that Europe will NEVER be able to stand on two legs again. The downfall of the USA (i.e. "hyperinflation") rests clearly on Russian, Brazil, India and China. Money means nothing when bombs start a dropping- unless the fuel to supply the bombs is interrupted. I have said for years that the USA has already economically collapsed. Addiction isn't really an addiction without an "intervention", is it?

 

ok so the recession isnt even close to being over since there no inflation now, thus no wage increases for the workers to spend, so will stay in a recession forever ?

 

The recession is over. We just have minimal economic growth with low inflation. We will stay in this malaise for as long as our politicians are actively set on destroying our economy. Many economists think that we need another massive war in order to get the amount of spending we need to generate sufficient economic growth. I think we don't need a war, we can just spend it on our national infrastructure. I have said for the last 3-4 years that the economy was going to grow very slowly and that the Fed will have little impact, there will be no hyperinflation, no bond vigilantes, we won't run out of people buying our debt, etc.

The economy simply needs MORE money, not less.

 

what about the trade deficit at a all time high
http://www.usatoday.com/story/money/business/2013/07/03/trade-deficit-june/2485625/
and the 17 trillion debt is that going away too? dont think so with out a big reset somewhere.. see your theory got some big hole$ in it.

 

How did this poke holes in my theory?

The debt is never going away, it will continue to grow until infinity or until we dramatically change our monetary system.

As for balance of trade, who cares. We have a large demand in this country and places around the world need it, so they accept it. Not sure what that has to do with my "theory".

 

infinity? as there is no repercussion of our borrowing trillions zillions and on?? for social services like obama care etc and spending on wars and such? are you kidding me? as if the usa is exempt for all this action globally.

 

So what is the limit of how much debt we can create?

 

I don't like to hear people talking about war as a necessity or an economic boon. We're talking about destroying human life to make people wealthier.

 

Problem with almost every country at some point and usually ends up being their demise is

Over population , not enough people working, and eventually not enough people spending because they have no money... thus the circle is broken and the country starts to fall.

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Really depends on when we lose our credibility.

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Not every war has direct deaths.... cold war creating trillions through its time. You could argue that the war was fought through and in different countries, but I would argue many of those would have happened either way.