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Hyperinflation
- Thread starter Bestmiler
- Start date
Quote from Daal:
Heres a simple way the fed can create inflation. bernanke along with the treasury creates the 'Patriot American Credit Card Facility', treasury gets the authority to create credit cards that can only be used for goods purchases(to avoid saving) for $1000 per citizen, they issue treasury bonds to fund it which the fed buys it(with new electronic money)
This would need supermarkets adaptation, because as you well know..you can buy for 1$ of good and take out 60$ cash...approximately.
Why not create inflation by repairing public infrastructure? there is not enough?
look at overconsumption of water in farming practice, more tramway, more cheap flat for the unemployed in the future...
Quote from Random.Capital:
Nobody is arguing against that. The problem is that the traditional way out is a cul-de-sac - which means there really is no way out.
In all the posts you have made on this topic, you have not explained how this vast new supply of money enters the system. Saying "print more" is not an explanation - it's a wish. I would be most interested in hearing your detailed explanation on the mechanics of this. What exactly does the Fed do, what exactly does Treasury do, is there a role for Congress, what do foreign lenders need to do, etc?
Cheers.
http://en.wikipedia.org/wiki/Money_creation
Here ya go.
Explains the facets of money creation.
Good resource that explains what hyperinflation is w/ video, http://forextradinglife.com/hyperinflation-bail-out
"What is Hyperinflation? Hyperinflation is inflation that is "out of control", a condition in which prices increase rapidly as a currency loses its value."
"What is Hyperinflation? Hyperinflation is inflation that is "out of control", a condition in which prices increase rapidly as a currency loses its value."
Until Banks clear their sheets, inflation won't happen.
Fractional reserve lending is responsible for the bulk of money creation. Without banks willing to lend, fractional money expansion cannot take place.
Second, even if credit was available, the American consumer is tapped.
This isn't 1929 where a violent contraction in the money supply destroyed fortunes and made lending scarce.
This is a Japanese-style recession where consumers & investors locked-in at bubble top, with huge debt, and saw their underlying equity vanish overnight -- at pre-bubble income!!
Home valuations in Japan went up 10 to 100 times, debt was locked in, wages rose only a fraction, and then the bubble collapsed. America is in a similar predicament. Caught at the top, holding the bag, now gotta pay it back with pre-bubble income.
Whats the difference?
1929 saw private savings wiped out in the Market. 2008 wiped out current and future income of homeowners and RE investors, alike.
No amount of traditional inflation could cure that until shitty banks fail or "recapitalize".
Sure, we could hyperinflate. But any of you cowboys actually understand the ramifications of that???
If the FED did that - and yes, its possible with solvent banks - Johnny six-pack could pay off his 200K subprime with a 100K burger flipping job. Then a trip to the Grocery store or gas station would cost a few thousand. Prices quickly outpace wages and we'd all be a lot poorer, in Real Terms. A lot of people, would see their entire savings destroyed at the hands of the "Fearless deflation hawks" that printed the dollar into toilet paper. Oh yay, thats a great idea.
This is a typical bubble where monetarists want to prop inflated prices to help banks and homeowners stay solvent. Japan tried that. It doesn't work. Consumption and investment dropped off as Real Estate and debt stayed completely unaffordable. Consequently, the Nikkei lost 75% (and counting).
You geniuses first need to figure out why America 2.0 won't be like Japan. Otherwise, the point is moot.
We could sit around all day, pulling ourselves, debating FED mechanisms to juice a System that's purposely been run into an iceberg.
Have any of you seriously considered the cost to underwrite the Mortages in question? And be done with it?
Its many, many multiplies smaller than the total running tab of the bailout.
Yet, here we are. Several Trillions later, still, with no end in sight. Curious, isn't it?
Debating optimal policy in lieu of "special interest economics" is pointless.
We're never gonna see a soundly managed country, currency or economy. Because its not in the interests of the Corporations and Banks who wield overwhelming control over Government.
Arranging deckchairs on the Titanic.
Fractional reserve lending is responsible for the bulk of money creation. Without banks willing to lend, fractional money expansion cannot take place.
Second, even if credit was available, the American consumer is tapped.
This isn't 1929 where a violent contraction in the money supply destroyed fortunes and made lending scarce.
This is a Japanese-style recession where consumers & investors locked-in at bubble top, with huge debt, and saw their underlying equity vanish overnight -- at pre-bubble income!!
Home valuations in Japan went up 10 to 100 times, debt was locked in, wages rose only a fraction, and then the bubble collapsed. America is in a similar predicament. Caught at the top, holding the bag, now gotta pay it back with pre-bubble income.
Whats the difference?
1929 saw private savings wiped out in the Market. 2008 wiped out current and future income of homeowners and RE investors, alike.
No amount of traditional inflation could cure that until shitty banks fail or "recapitalize".
Sure, we could hyperinflate. But any of you cowboys actually understand the ramifications of that???
If the FED did that - and yes, its possible with solvent banks - Johnny six-pack could pay off his 200K subprime with a 100K burger flipping job. Then a trip to the Grocery store or gas station would cost a few thousand. Prices quickly outpace wages and we'd all be a lot poorer, in Real Terms. A lot of people, would see their entire savings destroyed at the hands of the "Fearless deflation hawks" that printed the dollar into toilet paper. Oh yay, thats a great idea.
This is a typical bubble where monetarists want to prop inflated prices to help banks and homeowners stay solvent. Japan tried that. It doesn't work. Consumption and investment dropped off as Real Estate and debt stayed completely unaffordable. Consequently, the Nikkei lost 75% (and counting).
You geniuses first need to figure out why America 2.0 won't be like Japan. Otherwise, the point is moot.
We could sit around all day, pulling ourselves, debating FED mechanisms to juice a System that's purposely been run into an iceberg.
Have any of you seriously considered the cost to underwrite the Mortages in question? And be done with it?
Its many, many multiplies smaller than the total running tab of the bailout.
Yet, here we are. Several Trillions later, still, with no end in sight. Curious, isn't it?
Debating optimal policy in lieu of "special interest economics" is pointless.
We're never gonna see a soundly managed country, currency or economy. Because its not in the interests of the Corporations and Banks who wield overwhelming control over Government.
Arranging deckchairs on the Titanic.
Yea, but not as protracted.
Japan RE bubble was way more severe.
Although derivatives compounded potential losses equal or more so than Japan.
Of course, those derivatives could be outlawed or underlying mortgage paper bought and guaranteed by Government.
Of course, that won't happen.
Thats the real issue. Not minutia book-keeping analysis of what won't happen.
But why real solutions will never see the light of day.
Then solid conclusions and predictions can be made.
Japan RE bubble was way more severe.
Although derivatives compounded potential losses equal or more so than Japan.
Of course, those derivatives could be outlawed or underlying mortgage paper bought and guaranteed by Government.
Of course, that won't happen.
Thats the real issue. Not minutia book-keeping analysis of what won't happen.
But why real solutions will never see the light of day.
Then solid conclusions and predictions can be made.
Quote from scriabinop23:
http://en.wikipedia.org/wiki/Money_creation
Here ya go.
Explains the facets of money creation.
That's a fairly generic treatment, much of which isn't applicable to the way it's done in the U.S.
If you want to rely on Wikipedia then you should refer to this instead:
http://en.wikipedia.org/wiki/Federal_Reserve
A pretty good treatment of the components of the U.S. money supply is in this chart:
http://en.wikipedia.org/wiki/Fractional-reserve_banking#Money_supplies_around_the_world
Note that the M0 monetary base is referred to as "central bank money" or currency.