Archive for the Inflation Category

Quantitative Easing = Money Printing (January 19, 2015)

Posted in Deflation, Economics, Federal Reserve, Inflation, INFORM Act, Money, Quantitative Easing on January 19, 2015 by

. . .

A          “‘Quantitative Easing’ sounds so academic and antiseptic and . . . surely sound.”

B          “And nebulous enough to fool a frightened public that does sense that something is wrong.”

A          “When you cannot do anything positive and you feel a compulsion to do something, should you do something negative?”

B          “It is doing something.”

. . .

A          “The Federal Reserve has been ‘printing’ more money and passing it to the wealthy for a half-dozen years.  The money is not making a demand on resources right now, so there is no systemic inflation yet other than rises in the prices of basic necessities.  The general public does not have enough money to make substantial demands on resources, so some prices are even heading down.  The Federal Reserve ‘electrons’ are driving up the stock market and leading some to conclude that all is good in the land.  When the money meanders into the economy and begins to make demands on resources that also may be in short supply, prices will go up.”

B          “Limited deflation then inflation if not hyperinflation.  Coming to a nation near you.”

. . .

A          “When someone discovers that printing money is the problem, how will the Federal Reserve react?”

B          “‘Print’ more money.”

. . .

[See the “Intergenerational Financial Obligations Reform Act” (INFORM Act) discussed at]

Bumper stickers of the week:

Quantitative Easing:  Coming (Back) To A Nation Near You

Quantitative Easing 4 = Money Printing (4th Edition) ?

Print, baby, print

The Dow At 14 K. Again. (February 4, 2013)

Posted in Banks and Banking System, Economics, Federal Reserve, Housing, Inflation, Stock Market on February 4, 2013 by

. . .

C          “Back above 14,000 again.”

D          “Happy daze are here again.  I guess.  14,000 is better than 7,000, but how much better and for how long and for whom and for what reasons are anyone’s guess.”

C          “Beaucoup dollar electrons are given to those who already have beaucoup dollar electrons.  There are no other places to plug in the dollar electrons, so the stock markets are the default investment.”

D          “And money market funds and certificates of deposit are paying .0000001 percent which is crippling current retirees.”

C          “And those who know that the stock market is rigged and instead seek a safe refuge have no remunerative alternative.”

. . .

C          “Real estate continues to fool everyone.  The value of commercial properties is likely to slide as brick and mortar businesses board up their doors and windows.”

D          “The banks cannot mark to the actual market value their vast portfolios of repossessed and returned houses and underperforming loans.  Their collective insolvency would be manifest.  A collective lie undergirds the system.”

C          “Housing starts may be up but only at the upper end of the housing market.”

D          “With these low interest rates, a 30 year note is very appealing and may be prudent and prescient for the right person.  The homeowners who can manage to hold jobs and fund and feed a mortgage with a low interest rate may find that they have a bird’s nest on the ground.”

C          “When inflation takes off.”

D          “Yup.”

. . .

C          “One arm of the government – the Federal Reserve – is funding and fueling the other arms of the government with bogus electronic chits.”

D          “The way I see it, one arm of the bankers – the Federal Reserve – is funding and fueling the bankers and fooling and defrauding the body politic.”

C          “Anything that cannot go on forever.”

. . .

[See the “e-ssays” titled The Dow Jones (the Murdoch ?) Hits 14 K In A Hollow Economy (July 23, 2007) and “Fiat Stock”: Taking Stock Of The Stock Market (May 16, 2011).]

Bumper stickers of the week:

Shouldn’t it be Obsessive-Compulsive Order?

Anything that cannot go on forever will not go on forever.

Interesting Thing About Interest Rates (November 29, 2010)

Posted in Banks and Banking System, Economics, Federal Reserve, Inflation on November 29, 2010 by

. . .

K         “It really is hard to get rich when they are paying .000000001 percent per annum interest.”

J          “Unless it is compounded every second.”

K         “We are told that we should save, yet there is no economic incentive.  There is no interest when there is no interest.  Senior citizens who counted on a five to ten percent interest rate for their money to fund their retirements are being flat lined by the flat line interest rates.”

J          “Some of the negative economic impact of the contemporary economic excess is being inflicted on the current generation.  Doesn’t seem unfair.  Although there is more saving, only a thin sliver of the populace is saving because there is no other safe haven for the money.  The money is just parked.  Another problem may be brewing.  The banks are given free money by the federal government and are loaning it at positive but low rates to a few apparently credit-worthy borrowers.  What will happen in three years when interest rates are forced to go up and the rate of return on the current mortgages and deeds of trust is less sexy?  Will the banks try to call the loans early?  I assume the banks will enforce provisions precluding assignment of the obligations to get them off the books as quickly as possible.”

K         “They will find a way.  Some astute homeowners will secure a low interest rate mortgage and use the funds to invest in savings accounts that should start paying substantial interest rates.  That stratagem may be the only way to ride rising interest rates in the safest investments in a broken economy.  With so much money in the system and an unresponsive economy, we will see inflation.  Recent purchases of Treasury securities suggest that the smart money anticipates inflation.  When bread rises to $100.00 a loaf, the attendant changes in the economy will lead to interest on your bread rising from the current 00.001%.”

J          “Inflation will make all the current debt much less of an expense in real economic terms.  Inflation will expunge debt.”

K         “Anyone who saves is spent.”

. . .

Bumper stickers of the week:

Paying the highest rate allowed by law (but nothing is allowed?)

Anyone who saves is spent

Printing Electrons? (December 1, 2008)

Posted in Economics, Federal Reserve, Inflation on December 1, 2008 by

The Federal Reserve is running the “printing presses” 24/7.  The Fed. issues regular press releases announcing:

Federal Reserve will offer $150 billion in 28-day credit through Term Auction facility [yesterday].

Federal Reserve announces results of auction of $150 billion in 28-day credit held on [yesterday].

Federal Reserve will offer $150 billion in 28-day credit through Term Auction facility today.

Federal Reserve announces results of auction of $150 billion in 28-day credit held today.

Federal Reserve will offer $150 billion in 28-day credit through Term Auction facility [tomorrow].

Federal Reserve announces results of auction of $150 billion in 28-day credit held on [tomorrow].

. . . . . . . . . .

The amount raised and the term may vary, yet the country is burrowing in deeper at a faster rate.

Bumper stickers of the week:

The Trillion is the new Billion.

“A billion [Trillion] here, a billion [Trillion] there, and pretty soon you’re talking real money.”                                        Attributed (perhaps incorrectly) to Everett Dirksen

Deflation? (November 24, 2008)

Posted in Depression, Economics, Gas/Fossil Fuel, Inflation on November 24, 2008 by

Deflation seems to be the current concern.  Oil, copper and aluminium prices are down dramatically.  When the raw materials go down in price, the finished products should go down in price.  In theory, sort of.  The price of a 250 foot section of Romex wire is now almost what a 100 foot section cost a year ago.  However, prices often are sticky and ratchet down slowly.  Lower prices sound appealing, although deflation does create economic problems among debtors and consumers.

However, the old economic models may not work.  Demand is down because no one has any real money and no one will loan any real or unreal money.  However, credible reports indicate that people need to eat, house, drive, acquire plasma tvs, etc.  The system is awash in unreal money.  However, those who produce goods and provide services are not standing by ready to respond.  They are collapsing.  The world‘s economies and the world Economy are splintered and increasingly disconnected.  If you build it, they may not come.

Gas did not hit $6 a gallon by Halloween; it hit $3 a gallon.  [See the e-ssay dated May 26, 2008 entitled “$4 in June, $5 in July, ….”.]  The momentum for fuel-efficient vehicles has abated and investment in oil-producing equipment and fields has declined.  When the demand for aluminium declines, bauxite is not mined.  In the near future, everyone will compete with pockets full of unreal dollars for scarce goods and services.  Bread at $100 a loaf?  Inflation still seems to be the hidden monster.  The new Weimer Republic writ large.

Bumper sticker of the week:


Whip Inflation Later

The Economic Numbers Game (May 5, 2008)

Posted in Economics, Inflation, Unemployment on May 5, 2008 by

“The truth, though it would not exactly set Americans free, would at least open a window to wider economic and political understanding.  Readers should ask themselves how much angrier the electorate might be if the media, over the past five years, had been citing 8 percent unemployment (instead of 5 percent), 5 percent inflation (instead of 2 percent), and average annual growth in the 1 percent range (instead of the 3 – 4 percent range).

. . .

The real numbers, to most economically minded Americans, would be a face full of cold water.  Based on the criteria in place a quarter century ago, today’s U.S. unemployment rate is somewhere between 9 percent and 12 percent; the inflation rate is as high as 7 or even 10 percent; economic growth since the recession of 2001 has been mediocre, despite a huge surge in the wealth and incomes of the superrich, and we are falling back into recession.

If what we have been sold in recent years has been delusional “Pollyanna Creep,” what we really need today is a picture of our economy ex-distortion.  For what it would reveal is a nation in deep difficulty not just domestically but globally.”

Kevin Phillips

The CPI (Consumer Price Index), the benchmark for measuring inflation, underreports the actual prices for necessities such as food and energy.  [See the e-ssay dated July 16, 2007 entitled “Back Door Inflation.”]  The current CPI is “inflation sans inflation.”  The U-3 unemployment figures underreport unemployment, whereas the U-6 figures are more accurate.  The reporters should report the U-6 figures.

Perhaps the government should simply state and the media could mindlessly repeat that there is no inflation and are no unemployed citizens while the economy is growing ten percent every year.  How much less true would these statements be than the current statistics?

“Transparency” is the rage in many disciplines today.  Presenting accurate information and revising all the past information to conform to consistent and reliable benchmarks across time is a positive and long overdue start.

See by John Williams and navigate from there.

Bumper stickers of the week:

73 percent of all statistics are made up on the fly.

Lies, Damn Lies, and Government Statistics.

Disraeli was 100 percent right.

U-6 Not U-3 Unemployment Figures.

[Mildred Loving, one of the plaintiffs who challenged the miscegenation law in Virginia, died today.  See the e-ssay dated March 14, 2005 entitled “’Strict Construction’ Strictly Construed.”]

More Fun At The Fed (December 11, 2007)

Posted in Economics, Federal Reserve, Inflation on December 11, 2007 by

On September 18, the Fed reduced the FFR (Federal Funds Rate) by .5 percent; on October 31, the Fed reduced the FFR by .25 percent.  The pundits claim that the Fed will reduce the FFR by another .25 or .50 percent tomorrow.

Reducing the FFR results in the injection of even more paper money into the economy.  There are already too many dollars chasing too few goods and services even if those dollars are being hoarded by some skeptical lenders at this time.  The additional money is not going to spur the production of additional goods and services; the production of goods in China and the provision of services by India are responsive to other factors.  The additional money in circulation will only drive up the cost of the available goods and services which means we suffer. . . inflation.  “Price stability” (holding down inflation) was one of Ben Bernanke’s primary concerns in his previous academic writings.  He also studied the relationship between a lack of liquidity and the Great Depression and is aware of the precarious national predicament.

The Economy is threatened.  The decline in the dollar (in relation to the Canadian “Looney” and the Euro and beaver pelts) is having and will have deleterious impacts even though some American exporters benefit.  The gradual transition from the Petrodollar to the PetroEuro is more than symbolic.  The United States government is paying less interest for Treasury bills and bonds, but that may soon spawn less interest among potential investors in the bills and bonds.  Then the United States will need to pay more interest to attract interest.  The low interest rates also discourage what little savings there is in the United States today.  Reducing the FFR is appearing to be a bailout for Wall Street at the expense of other individuals and policy concerns and objectives.

Bumper sticker of the week:

Stagflation Again?