Is high inflation coming after this crisis??

[deswamped]

Quote from jueco2005:

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

That's a silly myth from conspiracy sites. That's what happens on the internet these days and particularly when people smoke too much pot for which I have many experiences also.

The Fed loans money to the treasury at a very low rate. The Fed takes out their upkeep costs (like a normal business) and then remit whatever is over that back to the treasury.

Therefore, essentially the new money is just pushed into the system, minus the costs of putting it there.

This will not suddenly correct this myth because people just do not want to hear this unexciting truth.

 

[deswamped]

Quote from jem:

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.

Hey jem,

Yes well as said I don't want to too much into specific economic schools of thought, or debating what I stated, which you have most considerably respected.

However, I will state this. I do not follow any particular school of thought and do endeavour to never make assumptions. The majority of my economic knowledge is purely my own and not taken from any school, for I avoid even reading contemporary literature.

I do not try to predict what the government will do, and I am purely interested in the big picture of economics as opposed to chance decisions.

Well in regards to the Fed charging interest to americans, as stated in a very recent post, which you might not have read yet, I believe that to be a myth that has convinced even the best of us.

 

[Cutten]

Massive credit busts are usually accompanies by falling prices, not inflation.

Quantitative easing is inflationary but IMO the amounts they will print will be far less than the deflationary impact of credit reduction. There is a reason G7 government bonds have yields in the 3% range.

 

[jueco2005]

Oh sorry. You are still blindfolded. Search the truth my friend.

Quote from deswamped:

That's a silly myth from conspiracy sites. That's what happens on the internet these days and particularly when people smoke too much pot for which I have many experiences also.

The Fed loans money to the treasury at a very low rate. The Fed takes out their upkeep costs (like a normal business) and then remit whatever is over that back to the treasury.

Therefore, essentially the new money is just pushed into the system, minus the costs of putting it there.

This will not suddenly correct this myth because people just do not want to hear this unexciting truth.

 

[deswamped]

Quote from jueco2005:

Oh sorry. You are still blindfolded. Search the truth my friend.

Always do. At present I believe the truth to be as I stated. But I always retain an open mind. I have of course watched zeitgeist and such and such. If you have something you think I should see, I am more than happy to give it my unbiased attention.

My pleasure is always to be corrected. For I only wish to be correct.

 

[JB3]

How the hell do you re-inflate the housing values without the same increase in wages and lowering lending standards again? Housing was priced out of range of most people working a normal job. And unless you go back to loose lending (which caused the whole mess), do you think most people have 20% down payment for a house? Not likely when they have a crap load of CC debt still.

The government cannot spend its way out of a fundamental problem of this magnitude.

 

[deswamped]

Quote from JB3:

How the hell do you re-inflate the housing values without the same increase in wages and lowering lending standards again? Housing was priced out of range of most people working a normal job. And unless you go back to loose lending (which caused the whole mess), do you think most people have 20% down payment for a house? Not likely when they have a crap load of CC debt still.

The government cannot spend its way out of a fundamental problem of this magnitude.

That's what happens when you vote for charisma over competence. It is inevitable. There is no solution, but they have to at least pretend to try

Representative democracy is a farce.

 

[jprad]

Quote from JB3:

How the hell do you re-inflate the housing values without the same increase in wages and lowering lending standards again?

What part of taxpayer subsidized backstops are you having trouble parsing?

The government cannot spend its way out of a fundamental problem of this magnitude.

While they shouldn't, they certainly can, and they will.

 

[piezoe]

Quote from jueco2005:

Many economists say so, even Bernanke has warned about a possible inflationary period after the crisis is over.

However, for this to happen new massive debt needs to be issued and I don't see too much room in the economy for that; unless of course they find a new creative way of doing it.

-Both business and consumers are full of debt. I don't see how they cant absorb more.

If you don't understand how modern economies with fiat currency work and the relationship between deficits and inflation then you might wonder if high inflation is coming. If you do understand the relationship, you won't need to ask the question. That's why Bernanke knows the answer to your question and you don't.

 

[saxon22]

Quote from jueco2005:

So you think you are safe from inflation or that it benefits you?? Not good.

I am not safe from inflation. However my debt from the purchase of my home is a kind of hedge against it. I still have sizable 401K which if there is inflation might take a hit.
However, some inflation (moderate) is good for the economy and the folk in general.