Is high inflation coming after this crisis??

377OHMS · Mar 23, 2009

You guys are joking, right?

Have you seen a recent plot of money supply?

It isn't going to be inflation. Its going to be massive devaluation effectively sucking the savings out of everyones accounts. They printed money at unprecedented rates for the last 2 years. Eventually that money will lose value against other currencies. You don't just put a shock into the system like that then expect nothing nonlinear to happen.

jprad · Mar 23, 2009

Quote from 377OHMS:

It isn't going to be inflation. Its going to be massive devaluation effectively sucking the savings out of everyones accounts. They printed money at unprecedented rates for the last 2 years. Eventually that money will lose value against other currencies. You don't just put a shock into the system like that then expect nothing nonlinear to happen.

It's not like the rest of the world's presses have been idle and it remains to be seen who ends up printing the most and sterilizing the least.

deswamped · Mar 23, 2009

Quote from jueco2005:

Anyone has a detail knowledge of how the govt calculates inflation.

I know they have changed it twice since 1980; always on their accounting favor.

They just take a biased group of goods and services and compare them to previous times.

jueco2005 · Mar 23, 2009

You are right. But remember all new money in circulation has to be backed by debt. That is were I see a brake to this massive buildup of money.

Quote from 377OHMS:

You guys are joking, right?

Have you seen a recent plot of money supply?

It isn't going to be inflation. Its going to be massive devaluation effectively sucking the savings out of everyones accounts. They printed money at unprecedented rates for the last 2 years. Eventually that money will lose value against other currencies. You don't just put a shock into the system like that then expect nothing nonlinear to happen.

Robert Weinstein · Mar 23, 2009

Quote from hilojack:

How are they gonna "manage" this? This country is already out of irresponsible buyers, are they going to have to make the standards even less to induce the responsible to step in and catch the falling knife?

America is NOT out of irresponsible buyers yet, we still have many in Washington. Take a look at the house, the Senate and the white house and you will find them.

As far as they know the credit card has no limit, and no payment due date..............

deswamped · Mar 23, 2009

Quote from jprad:

It's not like the rest of the world's presses have been idle and it remains to be seen who ends up printing the most and sterilizing the least.

It's more about interest rate differentials. The low interest rates accounts for the majority of the "printing press".

The United States has been the lowest of the credit hungry countries. The credit brings with it a illusory inflation, because it must one day be paid back to foreigners.

deswamped · Mar 23, 2009

Quote from Robert Weinstein:

America is NOT out of irresponsible buyers yet, we still have many in Washington. Take a look at the house, the Senate and the white house and you will find them.

As far as they know the credit card has no limit, and no payment due date..............

The biggest school bully can steal as much lunch money as he likes and get away with it, until another bully can meet his match.

deswamped · Mar 23, 2009

Quote from jueco2005:

You are right. But remember all new money in circulation has to be backed by debt. That is were I see a brake to this massive buildup of money.

What do you mean all new money is backed by debt? You mean new money the Fed injects on occasion?

jueco2005 · Mar 23, 2009

The Fed, the treasury and banks issue money trough debt.

Quote from deswamped:

What do you mean all new money is backed by debt? You mean new money the Fed injects on occasion?

jem · Mar 23, 2009

deswamped - out of all the econ theories I read the - monetarist - money is a veil argument - is a compelling school of thought.

but as with all economic schools of thought, the participants make a lot of assumptions.

I do not think any of the schools of thought would have predicted the govt would spend trillion and trillions to bail out banks and then the fed would tighten.

What will happen right after the toxic assets are off the books.

The Fed will tighten to fight inflation...

so the fed will charge americans interest on the trillions of dollars it paid its member banks.