Morality101.net

Morality is Liberty without Force

Browsing Posts tagged hyperinflation

CNSNews.com – Economic Forecast is ‘Smoother’ than Reality

CNSNews.com – Chief Treasury Economist Says White House Economic Forecast is ‘Smoother’ than Can Be Expected in Reality.

(entire article reposted here – please comment!)

Alan B. Krueger, U.S. Assistant Secretary of the Treasury for Economic Policy


Tuesday, September 08, 2009
By Matt Cover
(CNSNews.com) – Alan Krueger, assistant secretary for economic policy and chief economist at the Treasury Department, told reporters that the economic projections used by the White House–which foresee a decade of uninterrupted economic growth ahead–are “smoother” than what can be expected in reality.

Even with this smoother-than-reality economic forecast, the administration is predicting that the federal government will run up an additional $905 billion in deficit spending over the next decade, almost doubling the national debt.

Krueger, speaking to reporters at a Friday briefing, said that while the administration’s Gross Domestic Product (GDP) growth forecasts were largely in line with private estimates, numerous factors could affect and alter those estimates.

“It’s the nature of forecasting that forecasts typically are smoother than the realizations,” he said. “Your hope is that the ups and downs balance out and, on average, are on the forecasted path.”

What Krueger did not mention is that, while the administration’s projections are close to those of private economists, known as the Blue Chip Consensus, those private forecasts only extend through 2010, while the White House’s extend through 2019.

When asked by CNSNews.com if the fragility of the administration’s projections meant higher budget deficits in the future, Krueger said that deficits were inevitable during bad economic times.

“Deficits are inevitable when you’re trying to recover from such a steep recession,” he said.

Krueger also said that, because of that steep recession, it was impossible for the administration to produce a balanced budget in the short term, saying such an idea was not “advisable” for Obama.

“In fact, it wouldn’t be advisable to have a balanced budget at this point or anything close to a balanced budget at this point,” he said.

In the longer run, however, Krueger said that the administration planned to put the budget back on a path toward fiscal responsibility, saying that the country relies far too much on borrowing and not enough on public investment.

“One has to draw a distinction between the short run and the long run,” he said. “Certainly in the longer run the administration plans to put the budget on a path that’s fiscally responsible.”

“In the U.S., I think that we rely too much on borrowing and short-term consumption at the expense of longer-run investment, public infrastructure,” he said. “The president has said that it’s very important that when we emerge from this recession that we build a stronger foundation, one that’s less susceptible to these kinds of boom-and-bust cycles.”

However, the Obama administration’s projected budgets rely on what Krueger criticizes: borrowing to finance short-term consumption.

For example, the Obama administration projects that, as a result of its 2010 budget, the federal government will run a cumulative deficit of $9.05 trillion by the year 2019. In total, the government plans to spend $43 trillion during the next decade while taking in only $34 trillion in tax revenue.

In no year between now and 2019 does the administration plan to balance the budget. In fact, the smallest single-year deficit Obama plans to incur is $739 billion in 2015, after which time the deficit will begin climbing again until it hits nearly $1 trillion ($917 billion) in 2019.

However, Krueger claimed that it was a “very important” part of Obama’s budget to move the country toward “responsible budgeting” and a “more sustainable” path.

“That’s why it’s very important, in the administration’s budget, that we make the critical investments in human capital and physical infrastructure, responsible budgeting, health care reform, clean energy, to move the U.S. to a more sustainable economic path,” he said.

Collapse , , , , , , , , , , , , ,
Read more

Gary North: Which Flation will Get Us?

8 Sep 09 Striker No comments

WHICH FLATION WILL GET US?
from garynorth.com

Date 9/8/2009

  • Issue 109

    • One of them will. That’s if things work out really well. Two or three will if things go according to the Austrian theory of the business cycle.

    Americans have been living in the eye of the monetary hurricane. Prices have been stable. In July, both the Consumer Price Index and the Median CPI were flat compared to June. (http://GaryNorth.com/public/5405.cfm)

    There are five flations to consider.

    Deflation
    Inflation
    Stagflation
    Mass inflation
    Hyperinflation

    We had better consider all of them.

    FLATION: MONETARY OR PRICE?

    We should always keep in mind the fact that there are two ways to define flation: (1) as a change in the money supply; (2) as a change in the price level.

    This assumes two more things: (1) we can accurately define money; (2) we can accurately identify the price level. Both are questionable.

    The Federal Reserve three years ago dropped M3. It said that M3 was useless as an indicator of future prices. That was a long time coming. The FED was correct. M3 was the most misleading of these M’s: M1, M2, M3, MZM. It always vastly overstated the looming rise in the CPI. There is no doubt which M is best in this regard: M1. For my detailed “Remnant Review” article on this, go here:

    http://GaryNorth.com/monetarystats.pdf

    Furthermore, there is more to an M than predicting future consumer prices. There is also the question of predicting the business cycle. There is no agreement here among economists.

    Then there is the price level. Which basket of goods and services should statisticians use? What relevance should a statistician place on any of a hundred commodities and services? This weighing will change when consumer tastes change. No index survives intact over time. They all are revised when there are major changes, from the CPI to the Dow Jones averages.

    I look for trends. I use M1 and the Median CPI.

    The crucial fact is monetary policy. According to the Austrian theory of the business cycle, the cycle is completely the outcome of prior central bank monetary policy. Booms and busts are the result of central bank monetary inflation, followed by reduced expansion. The other schools of thought reject this theory. The other schools of thought are wrong. For an introduction to this issue, see Chapter 5 of my mini-book, “Mises on Money.”

    http://LewRockwell.com/north/mom.html

    DEFLATION

    Most of those who forecast deflation have in mind price deflation. A few think monetary deflation will take place because of bankrupt banks, but the position is difficult to defend. The FDIC can keep bank doors open. There are no runs on banks involving currency withdrawal. There are only runs involving the transfer of digital money to other banks. This does not affect the money supply.

    Price deflation can come through the free market. It results from steady increases in economic output in an economy with stable money. Here is my slogan: “More goods chasing the same amount of money.” A gold coin standard economy provides such a world, as long as central banks do not protect insolvent banks. So does 100% reserve banking, which we have never had. This is not the scenario offered by deflationists.

    Here is their scenario. Banks create credit. Fiat money lowers interest rates. People borrow. This is consistent with Austrian economics. This credit structure cannot be sustained indefinitely. Austrianism also teaches this.

    Here is where the schools of opinion depart. The deflationist says that people in general cannot pay their debts. They default. So, prices fall. Not just prices of market sectors that were bubbles, but all prices.

    There is a problem with this argument. If you find that half of the things you regularly buy cost less, you buy the same amount, or maybe a little more, and then buy more of something else. This includes the purchase of capital goods.

    You don’t put currency in a mattress. You buy something with the money that falling prices allows you to keep. You buy more of B when the price of A falls . . . or more of A.

    Simple, isn’t it? But those who call themselves deflationists do not understand it or believe it.

    The same money supply is out there. Someone owns each portion of it. You own some. I own some. We both would like to own more . . . at some price. But the credit contraction of a popped market bubble does not affect the money supply if the central bank or the Treasury or the FDIC intervenes and prevents a fractional reserve bank from going bust and taking all of the digital money with it.

    This is economic logic. If the logic is incorrect, then there should be detailed theoretical criticisms of it. Or, given the weaknesses of human thought, maybe logic does not correspond to reality. Economists are famous for constructing detailed theories that do not conform to reality. But the free market theory of price changes as the result of the supply and demand for money in relation to the supply and demand for products and services is straightforward. It undergirds all of economic theory. Throw it out, and what remains of economic theory?

    If a central bank creates a boom with fiat money, and then ceases to inflate, it can create deflation. How? By refusing to bail out busted banks. It allows the money supply to contract as bankrupt commercial bank deposits disappear. Fractional reserve banking implodes. That will create a deflationary depression. We have not seen anything like this since 1934: the creation of the FDIC.

    Don’t bank on this just yet.

    INFLATION

    Monetary inflation produces price inflation. On this, Chicago School monetarists and Austrian school economists agree.

    If the central bank expands the money supply, prices will rise. This takes time. Economists debate about the lag time: 6 months, a year, 18 months. But monetary expansion will raise prices. The new money has to go somewhere. It has to wind up in someone’s bank account.

    If the central bank expands the monetary base by buying assets of any kind, it creates money to buy them. The recipients of those assets spend the money. If the Treasury gets it, Congress spends it. (In both theory and practice, if Congress gets its collective hands on money, it spends it. All economists are agreed on this point.)

    The expansion of money by the central bank is the source of economic booms and specific asset bubbles. The expansion of money temporarily lowers the interest rate. Someone borrows this newly created money.

    America suffered from monetary inflation from 1914 to 1930. Then, with a 3-year hiatus of collapsing banks, we have suffered from 1934 until today. The dollar has fallen by 95% since 1914. No, I don’t believe the CPI tells us this exactly. But I can follow the trend. The trend is up for prices and down for purchasing power.

    For as long as the Federal Reserve creates money, we will have price inflation. The only thing that can retard this is if the FED raises reserve requirements or commercial banks send excess reserves to the FED. The monetary effects are the same: increased reserves are the result. This reduces the multiplier of fractional reserve banking.

    Price inflation of under 10% per annum is what I call inflation. But before we get to this, we will suffer from stagflation.

    STAGFLATION

    This was the burden of the 1970′s. There was monetary expansion and massive Federal deficits. Why, the Federal deficit was a staggering $25 billion in 1970, and as bad the next year. Unthinkable!

    The dominant Keynesian theory was that Federal deficits would overcome recessions. The central bank need only inflate enough to cover part of the Federal deficit. But there were two major recessions in the 1970′s. Unemployment rose, and prices rose. That combination of events was dubbed stagflation.

    That we can have economic stagnation in today’s world is obvious. Just about every mainstream economist and forecaster is predicting slow economic growth next year. The familiar V-shaped recovery is not a popular forecast these days. More typical is the forecast of Muhammed El- Erian, the CEO of PIMCO, the largest bond fund in the world. He calls this “the new normal.”

    Global growth will be subdued for a while and unemployment high; a heavy hand of government will be evident in several sectors; the core of the global system will be less cohesive and, with the magnet of the Anglo-Saxon model in retreat, finance will no longer be accorded a preeminent role in post-industrial economies. Moreover, the balance of risk will tilt over time toward higher sovereign risk, growing inflationary expectations and stagflation. (http://tinyurl.com/p4vsbd)

    This scenario is a combination of slow growth and rising prices. Today, we have no growth and flat prices. So, slow growth and rising prices is not much of a stretch conceptually.

    I think stagflation is likely, once the recovery comes. But we are seeing a gigantic Federal deficit. Ross Perot in 1992 spoke of a giant sucking sound. He said that was the sound of jobs lost to Mexico. I think it is the sound of the Federal government sucking up all excess capital in the United States and much of the world. This money will not be going into the private sector.

    What is the basis of a sustained economic recovery? Increased capital formation. We are seeing capital destruction.

    For a time, we will suffer from stagflation. It will not be stagdeflation. It will be staginflation.

    What do I envision? Economic growth under 2% per annum, coupled with price increases of 5% per annum or more.

    MASS INFLATION

    This phenomenon will appear when the Federal deficit cannot be covered by private investment and purchases by foreign central banks. This seems certain within a decade. I think it is likely before the end of the next President’s term. I think the Social Security trust fund will cease to provide a surplus that is used to purchase nonmarketable Treasury debt, as it is today. The trustees will have to sell some of these nonmarketable Treasury debt certificates back to the Treasury. The Treasury in turn will have to sell conventional Treasury debt to cover the redemptions by the trust fund.

    This stage will be the indicator that the present borrow-and-spend model has failed. The FED will be called upon to supply the difference between purchases of T-debt by the public and borrowing by the government. When the FED complies, the rate of monetary inflation will rise. Prices will also rise.

    I define mass inflation as double-digit price inflation above 20% but below 40%. Americans have not seen this. No industrial nation has seen this except after a major military defeat.

    The disruption of the capital markets will be extreme. The government will absorb virtually all capital formation. There will be no net capital formation. There will be capital consumption.

    The international value of the dollar will fall. But other Western nations will be pursuing comparable policies. It is not clear how far the dollar will fall. It depends on the competitive race to national self-destruction. Every Western nation faces the day of reckoning: the bankruptcy of Social Security/Medicare.

    At this point, the FED will have to make a choice: put on the brakes or destroy the dollar.

    HYPERINFLATION

    The worst-case scenario is hyperinflation. Ludwig von Mises called this the crack-up boom. It leads to the destruction of the currency. The economy will move to barter or to alternative currencies. The division of labor will collapse.

    No modern industrial economy has suffered this since the recovery after World War II. The West is not Zimbabwe. The West is not a backward agricultural nation that still has functional tribal organizations to help their members.

    Think about the implications of your money not buying anything of value. How would you live? You are urban. You are dependent on a complex system of computerized production and distribution. It is all governed by profit and loss. The profit-and-loss system will cease to function at some point. That is when the economy shifts to a new monetary system.

    This would be the destruction of wealth on the scale of a war. It would create a new social order.

    I do not think the Federal Reserve will allow this. This would destroy the banking system. The FED’s unofficial but primary job is to preserve the biggest banks in the banking system. If it’s a question of providing fiat money for the government’s debt vs. destroying the dollar, the FED will cease buying Treasury debt.

    That will be the turning point.

    DEFLATION

    Then we will get the crash. The FED will protect the biggest banks, which will swallow the assets of smaller banks. A lot of smaller banks will go under. They will take deposits with them.

    We will get bank runs. People will demand currency. The FDIC will be busted. These banks will go under. So will depositors’ money. It will be “It’s a Wonderful Life” without the 6 o’clock escape hatch in the script.

    You had better have your money in Potter’s Bank, not the Bedford Falls Building & Loan.

    The contraction of digital money will be matched by a truly serious recession. Bankruptcies will be widespread. Unemployment may not rise, but only because the final phase of mass inflation had created so much unemployment.

    This will be a period of restoration. The cost of the restoration will depend on how bad the dislocations of the mass inflation had been. If they are very serious, which I would expect, the time of recession will be tolerable if you have currency and a job. But the investment strategies of hedging against mass inflation will produce losses. An opposite set of strategies will appear. Be a debtor in mass inflation. Be a creditor in the post-inflation recovery.

    If the Federal Reserve intervenes again, repeat the cycle from the top. But the numbers will be much larger.

    CONCLUSION

    Pick your flation. You can try to beat it, but each successive flation threatens your capital.

    We are entering a period of capital consumption in the United States. I think this problem will afflict the West. The same political promises have been made. They will be broken.

    He who sustains his lifestyle through these flations will be blessed indeed. Getting rich will be miraculous.

    article120408

    from email subscription at GaryNorth website.

    Economy, Money-Banking , , , , , , , , , , , , , , ,
    Read more

    Shockwaves of the Dollar Collapse

    6 Sep 09 Striker No comments

    The Five Financial Shockwaves to Expect When China’s Yuan Swaps Places with the U.S. Dollar | Overseas Stock Markets. | Overseas Stock Markets.

    This article is from Australia, for goodness sake!  It’s written more for the viewpoint of investors, but will apply to everyone.  Obviously Australians can see past the brainwashing better than we Americans!

    Due to the continuing increases in the debt, now beyond any ability of America to pay, our vaunted dollar will most surely collapse.  This article says it will be replaced by the yuan of China; well maybe, maybe something else, but which doesn’t really matter.

    The USA Fed and Treasury will be unable to maintain the charade forever.  Adding to the debt will absolutely result in severe inflation or hyperinflation of our dollar, and America will be forced to admit bankruptcy.  That will mean that all the funding for defense, collectivist shams, … everything, will cease.

    The government and it’s welfare system will be unable to pay itself to send you more checks, because it is out of “real” money.  This will be the economic collapse, far worse than the Great Depression.

    It will be plain hell falling into that abyss.  The many who have never learned to be self-sustaining. who have survived only via the welfare system, will have no means of buying food or services, no reserves, and will resort to being the thieving criminals they have always been.  There will be severe shortages of everything as producers fail and their goods and services disappear.

    The bright light at the end of that tunnel can be the opportunity for, either Anarchy (NO RULER) or a new constitution, which severely and absolutely limits the powers of government and it’s force upon the people.

    We must return to Reason and assert our true Right to Life.  Either we get it together at that time, or humanity, if it survives at all, will return to the Stone Age.  All the alternative scenarios are too horrible to even think about.

    This article, while oriented to investors, holds much which must be grasped by we everyday folk.  Understanding it will not be enough, for each of us must act to prepare for the events ahead.

    Failure to use your mind and your Reason may well mean that you cannot survive.

    ONLY LIBERTY IS MORAL.  Force and Sacrifice of collectivism is the immoral cause of this collapse, and if one fails to choose liberty, humanity can well disappear.  The leftist brain-dead altruists are not your friends, they are your mortal enemy.

    See it now, or you’ll see it later the hard way. Ditch them!

    Economy, Money-Banking , , , , , , , ,
    Read more

    Refuting “Economic Suicide”

    1 Sep 09 Striker No comments

    Tuesday, September 1, 2009

    Refuting “Economic Suicide”

    Inflation is always and everywhere a monetary phenomenon. These are the words of Milton Friedman in A Monetary History of the United States. The meaning of those words is that no matter what, inflation is a function of the amount of money available. Inflation occurs when more money is introduced into the supply. When this happens, the real value of the money goes down. This is the reality. The face value perception is that things begin to “cost more.” Physical things actually still hold their same value, it is the money, due to inflation, that has lost its value, meaning that it takes more of that money to buy the same thing. Nowhere was the phenomenon of inflation, and indeed hyperinflation, more evident than in the Weimar Republic, where we find the famous historical incident of it costing a wheelbarrow full of money to buy a loaf of bread.

    I bring up a brief discussion on the nature of inflation in response to possibly one of the most foolish articles I have seen lately. At Seeking Alpha, Henry Bee writes that Auditing the Fed is Economic Suicide. In an incredible feat of intellectual gymnastics, Bee lays down the accusation that somehow the public knowing what is happening with the money supply will be the end of the free market:

    The free market understands that auditing the fed is a very dangerous line to cross. If crossed, U.S. inflation will likely skyrocket over the next decade to unseen levels. U.S. economy tanks. Bond investors lose money as interest rates rise. Stock investors earn negative real return as equity risk premium rises and aggregate PE ratio tank. The US Dollar erodes due to higher domestic inflation relative to foreign inflation. Gold and commodity prices rise.

    Perhaps we can forgive Mr. Bee for being Canadian, and therefore not understanding the history of the Federal Reserve and monetary policy in the United States. Or perhaps we can direct him to the aforementioned Milton Friedman, or maybe Murray Rothbard, or F.A. Hayek, for some simple education on monetary policy. Remember, “gold and commodity prices rise” only in terms of the value of the money itself. They are physical, tangible things. They always retain the same value, and it is the value of the money itself that changes due to inflation. After beginning with the Vault, Bee continues and moves on to the Balance Beam:

    How Does Auditing the Fed Cause Inflation?

    Inflation is caused by a central bank that loses control of its money supply. There are two ways that a politically compromised central bank can lose control of its money supply.

    I’ll interrupt Mr. Bee while he’s still doing some of his simple posing, and before he really gets going with the tumbling. Inflation is caused by a central bank that loses control of its money supply? I think not. Remember, inflation is always and everywhere a monetary phenomenon. Inflation is caused by the introduction of more money into the supply. Who introduces more money into the supply? The central bank. The Federal Reserve is our central bank. Incidentally, Mr. Bee might be interested to know that since its inception, the Federal Reserve has practiced nothing but inflationary monetary policy and, in about 100 years, has managed thereby to devalue the dollar by approximately 97%. It would seem then, that the Federal Reserve itself has been the cause of inflation all along. But I will allow Mr. Bee to continue:

    Road to Inflation #1: Repeating the Political Cycle

    When the central bank is not independent, politicians have historically pumped up the money supply (for temporary economic boost) shortly before an election to buy votes with a lower unemployment rate. After the election, the effects wear off, returning the economy to its natural rate of unemployment but at a higher inflation rate than before. Because it is hard to fight off inflation quickly, by the time the next election rolls around the economy has not been squeezed back to its original inflation rate. Politicians pump up the money supply again, this time from a higher base inflation. As this cycle repeats itself, the central bank loses control of the money supply.

    Bee makes a good point here in defending the separation of church bank and state. However, akin to a balance beam backflip, Bee here asserts that an audit of Federal Reserve will allow politicians direct control of the money supply. Since the discussion surrounding HR 1207 has been one of simply getting a look at the books, Bee’s arguments, while valid conceptually, are unfounded in reality. Indeed, both Barney Frank and Ron Paul have agreed with Bee’s own argument, and intend to be disciplined in making the audit one that trails real time by enough that exactly what Bee purports to be the danger will not happen.

    That said, I would like to ask Mr. Bee a simple question. What makes you suppose, Mr. Bee, that the Federal Reserve is not already unduly influenced by politicians? As I have explained in the past, the Fed is largely a conglomeration of private banking institutions, overseen by a Board of Governors, headed by the Chairman of the Federal Reserve, currently Ben Bernanke. The Board of Governors is a seven-member panel appointed by the President of the United States. This means, Mr. Bee, that seven people who, through their appointment, answer to the President, and the President alone, control all that is our monetary policy, all that is our money supply, and therefore all that is our inflation. If Ben Bernanke and six others answer only to the President, how exactly is the Federal Reserve not influenced by politics in the manner you suggest already?

    Bee goes on to discuss a second road to inflation:

    Road to Inflation #2: Financing Government Spending

    A central bank that lacks independence from politicians makes it tempting for the government to finance an inappropriately large portion of its spending through printing money. A central bank that promises to finance too much government spending also loses control of the money supply.

    Now honestly, there is only just so much we can forgive of Mr. Bee for his being Canadian. This really represents a complete lack of attention to current events. Inside of a four month period, the Federal Reserve just financed a $700 billion bailout of the US Financial industry through TARP, an effort, mind you, that resulted in all that money going to the noble purpose of, well, nobody really knows, followed by the $800 billion stimulus package. Based on Barney Frank’s admission in the video found in this post, Ben Bernanke indicated to him when the bailouts began with AIG, that he had $800 billion to play with. Well that covered TARP. The only logical inference then is that the Fed printed the rest to finance the stimulus. Our central bank is already following this road, Mr. Bee. The only question is, how much have they inflated the money supply?

    Well the answer from the Fed has been, to this point, simple. Silence.

    When seven men who answer to one man control the entire money supply, and hold no accountability, they can do as they please. Adding a check to this highly centralized power by making their actions transparent to the public cannot be a bad thing.

    Economy , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
    Read more

    There Will Be (Hyper)Inflation

    27 Jul 09 Striker No comments

    There Will Be (Hyper)Inflation by Thorsten Polleit.

    Increasing “Excess Reserves”

    The demise of fiat-money regimes around the world has become unmistakable. They can only be kept alive by central banks creating ever-greater amounts of base money and governments underwriting commercial banks’ liabilities.

    The US Federal Reserve, for instance, increased the stock of the monetary base – which includes banks’ demand deposits held with the Fed, plus coins and notes in circulation – from $870.9 billion in August 2008 to $1735.3 billion in January 2009.

    Banks’ “excess reserves” – banks’ base-money holdings minus required reserves – rose from $1.9 billion to $798.2 billion. These excess reserves allow the banking sector, which operates under fractional reserves, to increase the credit and money supply manifold.

    The monetary base expands when the central bank takes over the troubled assets of commercial banks in order to extend new credit to those banks. This process is gaining momentum: on March 18, 2009, the Federal Open Market Committee (FOMC) announced that it will increase base money by purchasing another $1,150 billion of securities. It is also considering increasing base money by extending credit to private households and small businesses.

    continue reading…
    Money-Banking , , , , , , , , , ,
    Read more

    Deflation Vs. Inflation: The Great Debate Rages On

    4 Jul 09 Striker 1 comment

    Deflation Vs. Inflation: The Great Debate Rages On – Marc Courtenay — Seeking Alpha.

    As we celebrate the 4th of the July in the USA we find ourselves at a tipping point that will impact our financial conditions and quality of life for many years to come.
    Most of you know I don’t create or sell any of my own trading services and I’m known for fiercely independent analysis. If I were selling a product or a service in the western world in the summer of 2009, would I be able to keep my prices at current levels? Would I have to lower them in order to keep up with the competition and/or accommodate the sinking incomes of my customers?
    Robert J. Samuelson wrote an insightful article in Newsweek magazine recently titled “Deflation and Inflation? The Fed Could End Up Facing Both”.  What he wrote speaks to the confusing and paradoxical nature of the bizarre times we are living in.
    “To make sense of today’s most perplexing economic debate–whether we’re flirting with inflation or deflation–it’s worth recalling what happened after WWII. Under intense political pressure, President Truman lifted wage-price controls. All heck broke loose.

    “Suppressed during the war, wages and prices exploded. Autoworkers, steelworkers and others went on strike for higher pay. In 1946 and 1947, consumer prices rose 8.5% and 14.4%, respectively.

    “What’s instructive,” writes Samuelson, ” is that prices then stabilized. There was no wage-price spiral as occurred in the 1960s and 1970s. True, a mild recession in late 1948 and 1949 helped temper price increases. But inflation subsided mainly becuase people dindn’t expect it to continue.
    They’d lived through the Depression, when prices declined. Except for wars, American prices were usually fairly stable.
    “The lesson for today: psychology matters [that is why consumer confidence, or the lack thereof, is so important]. What economists call “expectations” shape how workers, managers, investors behave. If they fear inflation, they act in ways that bring it about.
    “The converse is also true, as the late 1940s show. The lesson provides context for today’s debate. Are the Federal Reserve’s easy-money policies laying the groundwork for higher inflation?
    “Or, will these policies prevent deflation–a broad decline of prices–that would deepen the economic slump?” Samuelson goes on to give the numbers we have all read a hundred times including “…to lower long-term interest rates, it’s [the Federal Reserve] pledged [to buy] $1.25 trillion of mortgage securities backed by Fannie Mae and Freddie Mac and $300 billion of long-term Treasury bonds.”
    We all know these steps are without modern precedent. We also have been told that the billions and billions of bailout dollars that have been “loaned” to the banks have not made their way into the US economy yet. continue reading…
    Economy , , , , , ,
    Read more

    Looters (Govt.) admit $700 bailout did not work

    31 Jan 09 Striker No comments

    America let these crooked politicians take her to the cleaner to give free money to their bankster buddies. Now the politicians/looters admit that we will never know if the money did any good. How’s that for accountability? I say, bring on the tar and feathers!

    Striker: Please see my comment to this, then spend some time here on m101.

    read more | digg story

    Economy, Money-Banking , , , , , ,
    Read more

    U.S Treasuries Downgraded – Hyperinflation

    23 Sep 08 Striker No comments

    Read it and weep. The reason? Hyperinflation is here at last!
    The ongoing bailout insanity will only delay for a bit, and then will make things worse. I am happy to say I told you so.

    read more | digg story

    SocialSites , , , , , , , ,
    Read more

    A Real Plan to Fix Financial Markets

    23 Sep 08 Striker No comments

    The Republican Study Committee, the star members of the House of Representatives that take on the collectivists of DC – angering Republicans and Democrats in the process – has put out its own plan in response to Paulson’s idiotic one.

    read more | digg story

    SocialSites , , , , , , , ,
    Read more

    Bernanke: Recession certain in absence of bailout

    23 Sep 08 Striker No comments

    What we are trying to get you see on http://morality101.net is the irrationality of almost all of our 537 elected government. And ever hear of trickle-down?

    read more | digg story

    SocialSites , , , , , , , , , , ,
    Read more

    Categories

    Meta

    Powered by WordPress Web Design by SRS Solutions © 2010 Morality101.net Design by SRS Solutions