http://www.canadafreepress.com/index.php/article/26436
This is a day that will forever live in infamy. Today is the day that President Obama came out of the closet and began to monitize the debt in earnest. Monetizing the debt is an economic term for a shell game. It is not like a ponzi scheme, that would be social security. It is different and more dangerous. When a consumer monetizes their debt, they pay off the balance of one credit card with another card and use the lower balance card to cover other debt, until the card is maxed out. But it does not end there. They begin to create more money through the use of payday loans, and every payday they fall further and further behind, until they can no longer borrow or pay on their debt. This is when families file bankruptcy. But, the federal government does this a little differently, because they have something most of us do not have, a printing press.
Our government is selling their debt to the Federal Reserve, for cash, to cover things like paying for the massive spending they have undertaken. This is being done because other lenders, such as China, do not want to loan us any more money, we are a bad risk. This is where the government differs from the typical American household, the government has the Federal Reserve print more money. Problem solved, right? Wrong! The more there is of something, the less it is worth. Having more money in circulation, because the government uses the freshly printed money to pay wages, salaries, operating expenses and such causes the money to lose value. Since our money is not backed by anything but the full faith of the American government (that should allow you to sleep better at night) and we are buying our own debt with our own money, while printing our own money, we have succssfully monetized the debt. So, rather than bankruptcy, you have ruination first.
Deficit spending combined with debt monetization leads to inflation. But, not just normal inflation, the kind of inflation that means that you are not buying a loaf of bread, you are investing in it, as tomorrow it will be more expensive. Aside from needing a wheelbarrow full of money to buy groceries or being able to take a dollar out of your wallet and make it a ten with your pen, because it is just paper, thereis nothing to worry about. Unless, by 'nothing to worry about' you mean nothing but
Black Markets: Where a barter system, or inflated prices of good and services are available.
Fluctuations: Fluctuations in both supply and pricing occur, almost daily, and are at the whim of the elite ruling class. If the ruling class wants milk, they but it and you are left to 'eat cake'
Corruption: Those with the money and access have the ability to bribe entities to get what they want, leaving the people to be further disenfranchised.
Hyperinflation: The rapid and uncontrolled price increases and devaluation of the dollar will not last forever.
To halt the loss of value in the dollar, the hyperinflation, corruption, and black markets that spring up the government has no choice but to pull back money. In pulling back money hyperinflation becomes deflation, the sudden decrease in goods and services causes the dollar to become worth more. So, businesses and service providers are left with no profit, or have to sell their product at a loss, to avoid spoilage, further harming the economy, as they let people go. Deflation leads to things like the Great Depression and more inflation as the government tries again to spend itself out of this situation. Wicked monetary spirals become the norm and eventually class warfare through economic policy prevails and the road to serfdom is complete.
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If some of you don't know, Ben Barnanke was quoted as saying, "Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation. The Federal Reserve WILL NOT monetize the debt." What can I say, they lied.
So now that they have begun, what are we to think? Will the US travel down the same path as other countries who have tried the same thing? Has Keynesian central planning brought the US to the brink?
Originally posted by WajomaYeah it worked in Zimbabwe, lookit this happy man, he's got piles of money.
Hey, just wave a magic wand and money appears out of nowhere, what's not to like.
http://moneytipcentral.com/wp-content/uploads/2009/03/zimbabwe-inflation.jpg
Prolly got enough to buy a stick of gum.
Originally posted by WajomaNewflash to you, expanding the money base is not some exceptional thing only done in Zimbabwe, it's done in every country and every age. Once it's overdone and there is an actual threat of hyperinflation you start getting into trouble. I'm asking for Whodey to give any actual figures on this instead of the worst-case scenario. Incidentally, did you know that countries that don't ever expand their money base take the risk of deflation, something that is seen as a much bigger problem economically than a little inflation.
Hey, just wave a magic wand and money appears out of nowhere, what's not to like.
Printing money essentially lowers the value of the money. But as Barts points out, everybody does it. If they didn't, inflation would not be nearly so universal. We need inflation, partly because human beings are programmed to live with it. Can you imagine the whole country accepting a 2% wage cut because of deflation?
Excessive use of printing money leads to hyper inflation which is generally bad for people who have a significant part of their wealth in cash or monetary earnings - which is usually most poor people.
In the case of America, since a large number of foreign countries have stock piled dollars, devaluing the dollar is actually one way to reduce foreign debt. But if you do it too suddenly you will cause a run on the dollar and shoot yourselves in the foot.
Originally posted by twhiteheadI don't need inflation, personally.
Printing money essentially lowers the value of the money. But as Barts points out, everybody does it. If they didn't, inflation would not be nearly so universal. We need inflation, partly because human beings are programmed to live with it. Can you imagine the whole country accepting a 2% wage cut because of deflation?
Excessive use of printing money l ...[text shortened]... if you do it too suddenly you will cause a run on the dollar and shoot yourselves in the foot.
I like the way, for example, the price of computers, of equivalent quality, has been steadily deflating.
Moreover, I am not sure "human beings are programmed to live with inflation".
Are you saying most people are too intrinsically stupid ever to realize that 2% inflation is equivalent to a general wage cut of 2%?
It might not be obvious, but it's hardly rocket science.
I am of the brazenly optimistic school of thought that such economic revelations might one day be within the grasp of the person in the street, given all the money lavished on public education.
Originally posted by BartsAre you sure the Bernanke et al.--the same geniuses who didn't see the housing bust coming, and whose easy credit policies inadvertently fueled it--are intellectually equipped to identify the point at which the monetary base has been harmlessly expanded and the point at which it has been fatally expanded?
Newflash to you, expanding the money base is not some exceptional thing only done in Zimbabwe, it's done in every country and every age. Once it's overdone and there is an actual threat of hyperinflation you start getting into trouble. I'm asking for Whodey to give any actual figures on this instead of the worst-case scenario. Incidentally, did you know that c ...[text shortened]... ation, something that is seen as a much bigger problem economically than a little inflation.
I mean--with their track record, and the sheer predictability of economic trends in general, and the fact that non-linear shifts in currency valuation are unknown--only a fool wouldn't trust them, right?
Originally posted by whodeyThe idea that hyperinflation is likely in the current depressed economic situation is laughable.
http://www.canadafreepress.com/index.php/article/26436
This is a day that will forever live in infamy. Today is the day that President Obama came out of the closet and began to monitize the debt in earnest. Monetizing the debt is an economic term for a shell game. It is not like a ponzi scheme, that would be social security. It is different and more da ...[text shortened]... o have tried the same thing? Has Keynesian central planning brought the US to the brink?
You seem to oppose ANY government (or quasi government in this case) policy that might possibly stimulate the economy. Outside of the obvious fact that the poorer the economy the better for Republican candidates this November, is there any other reason you'd wish for the government to do nothing in the face of massive un and underemployment of societal economic resources?
Originally posted by IshDaGeggYou clearly don't understand the concept at all. The price of computers has nothing to do with inflation or deflation.
I don't need inflation, personally.
I like the way, for example, the price of computers, of equivalent quality, has been steadily deflating.
If you had deflation, and the price of computers remained steady in real terms, your salary would come down with the price of computers and you wouldn't be so happy any more. You'd probably still be using a 286 from 1985.
Moreover, I am not sure "human beings are programmed to live with inflation".
Witness how many people could not handle the credit crunch. Although not identical, a large part of the problem is that people find it very hard to deal with an income that is going down.
Are you saying most people are too intrinsically stupid ever to realize that 2% inflation is equivalent to a general wage cut of 2%?
'Stupid' isn't the right word. But yes, most people would not like it at all.
I am of the brazenly optimistic school of thought that such economic revelations might one day be within the grasp of the person in the street, given all the money lavished on public education.
Understanding economics and living with them are two very different things. Most people understand finances perfectly well, but they still max out their credit cards and bank loans and go bankrupt. Many people I know find it hard not to spend money in the bank. As a result, they either end up broke, or learn to invest money as it comes in into types of investments that it is hard to withdraw from.
Originally posted by BartsIf you want a Congressional assessment as to the dire fiscal state of the union just look at my thread "Death of the Republic via statists". The committee that Obama appointed said that within the next 5 years they need to both raise revenue and slash spending....or else.
Can you give any actual figures why people should be worried, instead of this fear-mongering article that tries to paint the bleakest picture possible ?
If you want historical examples of what has happened in the past with monetization of the debt that are worrisome look at the Weimar Republic before the advent of WW 2.
If you want personal experience with this sort of thing try paying off one credit card with another and see how far that takes you.