Researched by Pastor Gary K. Boyd
The stability of America's status quo is illusory.
One of the enduring mysteries of the past decade is why inflation has remained tame while the central bank and government have pumped trillions of dollars of newly created money into the economy. Millions of words have been written about this, and so some shortcuts will have to be taken to make sense of it in one essay.
Let's start with the basics.
1. Adding newly created money but not generating new goods and services of the same value reduces the purchasing power of existing money. To keep it simple: say the economy of a country is $20 trillion. (Hey, the US GDP is $20 trillion...) Say its money supply is $10 trillion.
So banks and/or the government create $2 trillion in new money but the value of goods and services only expands by $1 trillion. the "extra" $1 trillion of newly created money (either "printed" or borrowed into existence) reduces the value of all existing money.
In effect, the new money robs purchasing power from all existing money. Those holding existing money have lost purchasing power while the recipients of the new money receive purchasing power they didn't have prior to receiving the new money.
We can see how this works by looking at a chart of GDP to debt. As debt has soared (and remember, debt is "new money" that was loaned into existence), GDP has risen at a much lower rate, so the ratio of debt to GDP has skyrocketed. (see chart below)
2. Where "inflation" (higher prices for the same item) shows up depends on who gets the newly created money: the wealthy few or the wage-earning many. As I have explained many times, in our system, all newly issued money goes to banks, financiers and corporations--the super-wealthy few.
So what do already-wealthy people and companies do with trillions in new money? They buy assets--stocks and bonds and real estate. Wage earners who receive new money tend to save some of it but they also spend some of it. The super-wealthy and corporations already own more stuff than they know what to do with, so they spend the new money on income producing assets or stock buybacks.
The net result of giving all the new money to the wealthy is the inflation of an asset bubble, which is precisely what's happened in the past decade. Real estate: bubble. Corporate debt: bubble. Stocks: bubble. We can see this bubble by comparing the value of the stock market to the real economy (as measured by GDP): the higher the ratio of stocks to GDP, the greater the bubble.
The current stock market bubble is the greatest in history, exceeded only by the insanity of the last few months of the dot-com bubble, when companies with very little revenue and zero profits were valued in the billions of dollars.
Stocks are in a bubble, period. This is the inevitable result of shoveling all the new money into the hands of the wealthy and corporations. Real-world inflation is certainly higher than official inflation, but the real inflation (higher prices for the same item) is in assets, which have tripled or quadrupled in a mere decade.
3. The inevitable consequence of asset inflation is rising income and wealth ine******y. The wealthy few have gorged on assets with all the newly issued credit-money, and as the assets soared in value, they've become immensely wealthier.
A funny thing happens on the way to extremes of wealth/income ine******y: social unrest, disorder, revolt. The lackeys and apologists that serve the interests of the wealthy few label this "populism," but it's really just the inevitable response to extremes of wealth/income ine******y generated by funneling trillions in new credit-money to the wealthy few at the expense of wage-earners and holders of existing money.
4. To quell the revolt of the many, the Powers That Be will create trillions in new money and helicopter-drop it to the masses. This mass distribution of newly created money (borrowed into existence by the central bank and/or government) will flow into the real-world economy, not assets, and so the inflation (higher prices for the same item) will manifest in goods and services.
This helicopter drop of newly created money will be called pensions, Universal Basic Income, tax subsidies, negative tax rates, etc. There are a lot of names for distributing newly created money that's been borrowed into existence.
This is precisely what Venezuela has been doing for a decade: distributing newly created money that isn't matched by a corresponding increase in the production of goods and services. And as we know, the result of this has been the complete destruction of the purchasing power of Venezuela's money.
"That can't happen here" is just what the Venezuelans thought five years ago. But really, it boils down to math: creating money out of thin air and pumping it into a dysfunctional economy destroys the purchasing power of the existing money. Those receiving the new money are like a snake eating its own tail.
Real-world inflation will blow the doors off every forecast of low inflation forever. From the point of view of the wealthy few who control the status quo in the US, they have a stark choice: either continue pushing wealth/income ine******y to extremes that trigger social and political revolt, which puts their control at risk, or create and distribute trillions in "free money."
They know this generates inflation, but the increases in the value of their assets have always far outstripped real-world inflation, so they don't care about inflation. That's for little people to worry about.
But what the wealthy few are forgetting is rip-roaring inflation destroys the system just as surely as wealth/income ine******y. Just ask the Venezuelans how effective creating new money has been in terms of eliminating poverty: now their entire populace is impoverished, with the only exceptions being the wealthy few in control of the status quo.
The stability of America's status quo is illusory. Can't happen here is going to ring mighty hollow in five years.
Nothing to see here, move along. So what if debt has blown past GDP?
ziggy88 wrote:
Researched by Pastor Gary K. Boyd
The stability of America's status quo is illusory.
One of the enduring mysteries of the past decade is why inflation has remained tame while the central bank and government have pumped trillions of dollars of newly created money into the economy. Millions of words have been written about this, and so some shortcuts will have to be taken to make sense of it in one essay.
Let's start with the basics.
1. Adding newly created money but not generating new goods and services of the same value reduces the purchasing power of existing money. To keep it simple: say the economy of a country is $20 trillion. (Hey, the US GDP is $20 trillion...) Say its money supply is $10 trillion.
So banks and/or the government create $2 trillion in new money but the value of goods and services only expands by $1 trillion. the "extra" $1 trillion of newly created money (either "printed" or borrowed into existence) reduces the value of all existing money.
In effect, the new money robs purchasing power from all existing money. Those holding existing money have lost purchasing power while the recipients of the new money receive purchasing power they didn't have prior to receiving the new money.
We can see how this works by looking at a chart of GDP to debt. As debt has soared (and remember, debt is "new money" that was loaned into existence), GDP has risen at a much lower rate, so the ratio of debt to GDP has skyrocketed. (see chart below)
2. Where "inflation" (higher prices for the same item) shows up depends on who gets the newly created money: the wealthy few or the wage-earning many. As I have explained many times, in our system, all newly issued money goes to banks, financiers and corporations--the super-wealthy few.
So what do already-wealthy people and companies do with trillions in new money? They buy assets--stocks and bonds and real estate. Wage earners who receive new money tend to save some of it but they also spend some of it. The super-wealthy and corporations already own more stuff than they know what to do with, so they spend the new money on income producing assets or stock buybacks.
The net result of giving all the new money to the wealthy is the inflation of an asset bubble, which is precisely what's happened in the past decade. Real estate: bubble. Corporate debt: bubble. Stocks: bubble. We can see this bubble by comparing the value of the stock market to the real economy (as measured by GDP): the higher the ratio of stocks to GDP, the greater the bubble.
The current stock market bubble is the greatest in history, exceeded only by the insanity of the last few months of the dot-com bubble, when companies with very little revenue and zero profits were valued in the billions of dollars.
Stocks are in a bubble, period. This is the inevitable result of shoveling all the new money into the hands of the wealthy and corporations. Real-world inflation is certainly higher than official inflation, but the real inflation (higher prices for the same item) is in assets, which have tripled or quadrupled in a mere decade.
3. The inevitable consequence of asset inflation is rising income and wealth ine******y. The wealthy few have gorged on assets with all the newly issued credit-money, and as the assets soared in value, they've become immensely wealthier.
A funny thing happens on the way to extremes of wealth/income ine******y: social unrest, disorder, revolt. The lackeys and apologists that serve the interests of the wealthy few label this "populism," but it's really just the inevitable response to extremes of wealth/income ine******y generated by funneling trillions in new credit-money to the wealthy few at the expense of wage-earners and holders of existing money.
4. To quell the revolt of the many, the Powers That Be will create trillions in new money and helicopter-drop it to the masses. This mass distribution of newly created money (borrowed into existence by the central bank and/or government) will flow into the real-world economy, not assets, and so the inflation (higher prices for the same item) will manifest in goods and services.
This helicopter drop of newly created money will be called pensions, Universal Basic Income, tax subsidies, negative tax rates, etc. There are a lot of names for distributing newly created money that's been borrowed into existence.
This is precisely what Venezuela has been doing for a decade: distributing newly created money that isn't matched by a corresponding increase in the production of goods and services. And as we know, the result of this has been the complete destruction of the purchasing power of Venezuela's money.
"That can't happen here" is just what the Venezuelans thought five years ago. But really, it boils down to math: creating money out of thin air and pumping it into a dysfunctional economy destroys the purchasing power of the existing money. Those receiving the new money are like a snake eating its own tail.
Real-world inflation will blow the doors off every forecast of low inflation forever. From the point of view of the wealthy few who control the status quo in the US, they have a stark choice: either continue pushing wealth/income ine******y to extremes that trigger social and political revolt, which puts their control at risk, or create and distribute trillions in "free money."
They know this generates inflation, but the increases in the value of their assets have always far outstripped real-world inflation, so they don't care about inflation. That's for little people to worry about.
But what the wealthy few are forgetting is rip-roaring inflation destroys the system just as surely as wealth/income ine******y. Just ask the Venezuelans how effective creating new money has been in terms of eliminating poverty: now their entire populace is impoverished, with the only exceptions being the wealthy few in control of the status quo.
The stability of America's status quo is illusory. Can't happen here is going to ring mighty hollow in five years.
Nothing to see here, move along. So what if debt has blown past GDP?
Researched by Pastor Gary K. Boyd br br The stabi... (
show quote)
I haven't, as yet, read this piece ziggy, however, reading Griffin's book "The Creature From Jekyll Island" I have thought about the question of why, in view, of all the phony money being pumped out by the government, has inflation remained more or less in check.
I've concluded that one of the reason could be that wages have remained stagnant for many years. When getting around to reading this piece, It will be interesting to see if my theory, of stagnant wages, is mentioned as part of the reason inflation has remained, for the time being, relatively low.
ziggy88 wrote:
Researched by Pastor Gary K. Boyd
The stability of America's status quo is illusory.
One of the enduring mysteries of the past decade is why inflation has remained tame while the central bank and government have pumped trillions of dollars of newly created money into the economy. Millions of words have been written about this, and so some shortcuts will have to be taken to make sense of it in one essay.
Let's start with the basics.
1. Adding newly created money but not generating new goods and services of the same value reduces the purchasing power of existing money. To keep it simple: say the economy of a country is $20 trillion. (Hey, the US GDP is $20 trillion...) Say its money supply is $10 trillion.
So banks and/or the government create $2 trillion in new money but the value of goods and services only expands by $1 trillion. the "extra" $1 trillion of newly created money (either "printed" or borrowed into existence) reduces the value of all existing money.
In effect, the new money robs purchasing power from all existing money. Those holding existing money have lost purchasing power while the recipients of the new money receive purchasing power they didn't have prior to receiving the new money.
We can see how this works by looking at a chart of GDP to debt. As debt has soared (and remember, debt is "new money" that was loaned into existence), GDP has risen at a much lower rate, so the ratio of debt to GDP has skyrocketed. (see chart below)
2. Where "inflation" (higher prices for the same item) shows up depends on who gets the newly created money: the wealthy few or the wage-earning many. As I have explained many times, in our system, all newly issued money goes to banks, financiers and corporations--the super-wealthy few.
So what do already-wealthy people and companies do with trillions in new money? They buy assets--stocks and bonds and real estate. Wage earners who receive new money tend to save some of it but they also spend some of it. The super-wealthy and corporations already own more stuff than they know what to do with, so they spend the new money on income producing assets or stock buybacks.
The net result of giving all the new money to the wealthy is the inflation of an asset bubble, which is precisely what's happened in the past decade. Real estate: bubble. Corporate debt: bubble. Stocks: bubble. We can see this bubble by comparing the value of the stock market to the real economy (as measured by GDP): the higher the ratio of stocks to GDP, the greater the bubble.
The current stock market bubble is the greatest in history, exceeded only by the insanity of the last few months of the dot-com bubble, when companies with very little revenue and zero profits were valued in the billions of dollars.
Stocks are in a bubble, period. This is the inevitable result of shoveling all the new money into the hands of the wealthy and corporations. Real-world inflation is certainly higher than official inflation, but the real inflation (higher prices for the same item) is in assets, which have tripled or quadrupled in a mere decade.
3. The inevitable consequence of asset inflation is rising income and wealth ine******y. The wealthy few have gorged on assets with all the newly issued credit-money, and as the assets soared in value, they've become immensely wealthier.
A funny thing happens on the way to extremes of wealth/income ine******y: social unrest, disorder, revolt. The lackeys and apologists that serve the interests of the wealthy few label this "populism," but it's really just the inevitable response to extremes of wealth/income ine******y generated by funneling trillions in new credit-money to the wealthy few at the expense of wage-earners and holders of existing money.
4. To quell the revolt of the many, the Powers That Be will create trillions in new money and helicopter-drop it to the masses. This mass distribution of newly created money (borrowed into existence by the central bank and/or government) will flow into the real-world economy, not assets, and so the inflation (higher prices for the same item) will manifest in goods and services.
This helicopter drop of newly created money will be called pensions, Universal Basic Income, tax subsidies, negative tax rates, etc. There are a lot of names for distributing newly created money that's been borrowed into existence.
This is precisely what Venezuela has been doing for a decade: distributing newly created money that isn't matched by a corresponding increase in the production of goods and services. And as we know, the result of this has been the complete destruction of the purchasing power of Venezuela's money.
"That can't happen here" is just what the Venezuelans thought five years ago. But really, it boils down to math: creating money out of thin air and pumping it into a dysfunctional economy destroys the purchasing power of the existing money. Those receiving the new money are like a snake eating its own tail.
Real-world inflation will blow the doors off every forecast of low inflation forever. From the point of view of the wealthy few who control the status quo in the US, they have a stark choice: either continue pushing wealth/income ine******y to extremes that trigger social and political revolt, which puts their control at risk, or create and distribute trillions in "free money."
They know this generates inflation, but the increases in the value of their assets have always far outstripped real-world inflation, so they don't care about inflation. That's for little people to worry about.
But what the wealthy few are forgetting is rip-roaring inflation destroys the system just as surely as wealth/income ine******y. Just ask the Venezuelans how effective creating new money has been in terms of eliminating poverty: now their entire populace is impoverished, with the only exceptions being the wealthy few in control of the status quo.
The stability of America's status quo is illusory. Can't happen here is going to ring mighty hollow in five years.
Nothing to see here, move along. So what if debt has blown past GDP?
Researched by Pastor Gary K. Boyd br br The stabi... (
show quote)
But...but...but Venezuela is a SOCIALIST economy...America is a CAPITALIST economy... in Venezuela the masses suffer and there is a few rich oligarch at the top. In America we have a middle class and a 1% rich oligarch...oh...wait...in America we give tax cuts...no wait...
buffalo wrote:
But...but...but Venezuela is a SOCIALIST economy...America is a CAPITALIST economy... in Venezuela the masses suffer and there is a few rich oligarch at the top. In America we have a middle class and a 1% rich oligarch...oh...wait...in America we give tax cuts...no wait...
with every post you actually come out and show your socialist self.
ziggy88 wrote:
Researched by Pastor Gary K. Boyd
The stability of America's status quo is illusory.
One of the enduring mysteries of the past decade is why inflation has remained tame while the central bank and government have pumped trillions of dollars of newly created money into the economy. Millions of words have been written about this, and so some shortcuts will have to be taken to make sense of it in one essay.
Let's start with the basics.
1. Adding newly created money but not generating new goods and services of the same value reduces the purchasing power of existing money. To keep it simple: say the economy of a country is $20 trillion. (Hey, the US GDP is $20 trillion...) Say its money supply is $10 trillion.
So banks and/or the government create $2 trillion in new money but the value of goods and services only expands by $1 trillion. the "extra" $1 trillion of newly created money (either "printed" or borrowed into existence) reduces the value of all existing money.
In effect, the new money robs purchasing power from all existing money. Those holding existing money have lost purchasing power while the recipients of the new money receive purchasing power they didn't have prior to receiving the new money.
We can see how this works by looking at a chart of GDP to debt. As debt has soared (and remember, debt is "new money" that was loaned into existence), GDP has risen at a much lower rate, so the ratio of debt to GDP has skyrocketed. (see chart below)
2. Where "inflation" (higher prices for the same item) shows up depends on who gets the newly created money: the wealthy few or the wage-earning many. As I have explained many times, in our system, all newly issued money goes to banks, financiers and corporations--the super-wealthy few.
So what do already-wealthy people and companies do with trillions in new money? They buy assets--stocks and bonds and real estate. Wage earners who receive new money tend to save some of it but they also spend some of it. The super-wealthy and corporations already own more stuff than they know what to do with, so they spend the new money on income producing assets or stock buybacks.
The net result of giving all the new money to the wealthy is the inflation of an asset bubble, which is precisely what's happened in the past decade. Real estate: bubble. Corporate debt: bubble. Stocks: bubble. We can see this bubble by comparing the value of the stock market to the real economy (as measured by GDP): the higher the ratio of stocks to GDP, the greater the bubble.
The current stock market bubble is the greatest in history, exceeded only by the insanity of the last few months of the dot-com bubble, when companies with very little revenue and zero profits were valued in the billions of dollars.
Stocks are in a bubble, period. This is the inevitable result of shoveling all the new money into the hands of the wealthy and corporations. Real-world inflation is certainly higher than official inflation, but the real inflation (higher prices for the same item) is in assets, which have tripled or quadrupled in a mere decade.
3. The inevitable consequence of asset inflation is rising income and wealth ine******y. The wealthy few have gorged on assets with all the newly issued credit-money, and as the assets soared in value, they've become immensely wealthier.
A funny thing happens on the way to extremes of wealth/income ine******y: social unrest, disorder, revolt. The lackeys and apologists that serve the interests of the wealthy few label this "populism," but it's really just the inevitable response to extremes of wealth/income ine******y generated by funneling trillions in new credit-money to the wealthy few at the expense of wage-earners and holders of existing money.
4. To quell the revolt of the many, the Powers That Be will create trillions in new money and helicopter-drop it to the masses. This mass distribution of newly created money (borrowed into existence by the central bank and/or government) will flow into the real-world economy, not assets, and so the inflation (higher prices for the same item) will manifest in goods and services.
This helicopter drop of newly created money will be called pensions, Universal Basic Income, tax subsidies, negative tax rates, etc. There are a lot of names for distributing newly created money that's been borrowed into existence.
This is precisely what Venezuela has been doing for a decade: distributing newly created money that isn't matched by a corresponding increase in the production of goods and services. And as we know, the result of this has been the complete destruction of the purchasing power of Venezuela's money.
"That can't happen here" is just what the Venezuelans thought five years ago. But really, it boils down to math: creating money out of thin air and pumping it into a dysfunctional economy destroys the purchasing power of the existing money. Those receiving the new money are like a snake eating its own tail.
Real-world inflation will blow the doors off every forecast of low inflation forever. From the point of view of the wealthy few who control the status quo in the US, they have a stark choice: either continue pushing wealth/income ine******y to extremes that trigger social and political revolt, which puts their control at risk, or create and distribute trillions in "free money."
They know this generates inflation, but the increases in the value of their assets have always far outstripped real-world inflation, so they don't care about inflation. That's for little people to worry about.
But what the wealthy few are forgetting is rip-roaring inflation destroys the system just as surely as wealth/income ine******y. Just ask the Venezuelans how effective creating new money has been in terms of eliminating poverty: now their entire populace is impoverished, with the only exceptions being the wealthy few in control of the status quo.
The stability of America's status quo is illusory. Can't happen here is going to ring mighty hollow in five years.
Nothing to see here, move along. So what if debt has blown past GDP?
Researched by Pastor Gary K. Boyd br br The stabi... (
show quote)
Well, I didn't read anything about stagnant wages. However, some will survive when and if a financial bust occurs, as in Venezuela, and some won't. One can take all the precautions there are, and still, there are no guarantees.
vernon wrote:
with every post you actually come out and show your socialist self.
How so, vern. Does pointing out that the US has actually 2 economies make me a socialist. One for the ultra wealthy and one for everybody else. Haven't you ever noticed that no matter what the economy is doing, boom or bust, no matter what the stock market is doing, bull or bear, no matter which arm (dem or repub) of the corporate party is in control in DC the wealthy 1% ALWAYS prosper. During the last "great recession" on obammy's watch the top richest 1% captured 95% of the income gains while the bottom 60% lost ground?
Does pointing out that, just as in the socialist Venezuela there are rich oligarchs unaffected by inflation, there is a rich oligarch class in the US that benefits, even prospers, from the creation of money (debt) out of thin air that causes inflation for the rest of US society? Add that inflation to stagnant wages for the middle and working poor classes the last 40 years and the majority of US citizens are struggling financially. 60% of US household could do not even have $500 in case of an emergency. A recipe for disaster for the masses. Of course, you and the others of your ilk will claim that it is their own fault for being lazy and irresponsible.
If you see that as me showing my socialist self, that's your prerogative, although I disagree. Wh**ever...It is still not right because it is done purposely.
Richard Rowland wrote:
Well, I didn't read anything about stagnant wages. However, some will survive when and if a financial bust occurs, as in Venezuela, and some won't. One can take all the precautions there are, and still, there are no guarantees.
Certainly no guarantees if your not of the 1% oligarch and their political monkeys.
buffalo wrote:
How so, vern. Does pointing out that the US has actually 2 economies make me a socialist. One for the ultra wealthy and one for everybody else. Haven't you ever noticed that no matter what the economy is doing, boom or bust, no matter what the stock market is doing, bull or bear, no matter which arm (dem or repub) of the corporate party is in control in DC the wealthy 1% ALWAYS prosper. During the last "great recession" on obammy's watch the top richest 1% captured 95% of the income gains while the bottom 60% lost ground?
Does pointing out that, just as in the socialist Venezuela there are rich oligarchs unaffected by inflation, there is a rich oligarch class in the US that benefits, even prospers, from the creation of money (debt) out of thin air that causes inflation for the rest of US society? Add that inflation to stagnant wages for the middle and working poor classes the last 40 years and the majority of US citizens are struggling financially. 60% of US household could do not even have $500 in case of an emergency. A recipe for disaster for the masses. Of course, you and the others of your ilk will claim that it is their own fault for being lazy and irresponsible.
If you see that as me showing my socialist self, that's your prerogative, although I disagree. Wh**ever...It is still not right because it is done purposely.
How so, vern. Does pointing out that the US has ac... (
show quote)
One would be foolish to argue with your points, buffalo. However, what other systems can be used that would be better? I think capitalism is the best system, however, the Federal Reserve and Central Banks need to be replaced with something more equitable. When a group can create their own wealth by doing little more than putting a figure in a ledger and pretend to loan money, then collecting interest on that pretense, well, something needs to change.
Unfortunately, our political leaders are bought and paid for with this phony money system that puts the working class on the bottom rungs of the economic ladder and continues the hollowing out of the middle class. When a system exists that allows an entity to create the currency of nations out of thin air that entity owns that nation and virtually every citizen.
Imagine what anyone could do if allowed to create their own resources. Hell, the skies the limit. It causes one to wonder why the leaders ever allowed a central bank to get a foothold. A banking system, by the way, that President Andrew Jackson was vehemently opposed to. The answer, I suppose, is yielding to the temptation that unlimited funds could offer.
The sixty-four thousand dollar question: If they have all the money they can ever spend, just by using a printing press, what's the end game? Why the push for OWG and enslaving the masses? Is it merely that scheming minds have to scheme?
Richard Rowland wrote:
One would be foolish to argue with your points, buffalo. However, what other systems can be used that would be better? I think capitalism is the best system, however, the Federal Reserve and Central Banks need to be replaced with something more equitable. When a group can create their own wealth by doing little more than putting a figure in a ledger and pretend to loan money, then collecting interest on that pretense, well, something needs to change.
Unfortunately, our political leaders are bought and paid for with this phony money system that puts the working class on the bottom rungs of the economic ladder and continues the hollowing out of the middle class. When a system exists that allows an entity to create the currency of nations out of thin air that entity owns that nation and virtually every citizen.
Imagine what anyone could do if allowed to create their own resources. Hell, the skies the limit. It causes one to wonder why the leaders ever allowed a central bank to get a foothold. A banking system, by the way, that President Andrew Jackson was vehemently opposed to. The answer, I suppose, is yielding to the temptation that unlimited funds could offer.
The sixty-four thousand dollar question: If they have all the money they can ever spend, just by using a printing press, what's the end game? Why the push for OWG and enslaving the masses? Is it merely that scheming minds have to scheme?
One would be foolish to argue with your points, bu... (
show quote)
As to the illegal, unConstitutional federal reserve bank be abolished, I agree.
As to your first post about Venezuela and socialism being the cause of the masses suffering, I highly suspect that the US and its economic war against Venezuela has had some part in creating their problems.
ziggy88 wrote:
Researched by Pastor Gary K. Boyd
The stability of America's status quo is illusory.
One of the enduring mysteries of the past decade is why inflation has remained tame while the central bank and government have pumped trillions of dollars of newly created money into the economy. Millions of words have been written about this, and so some shortcuts will have to be taken to make sense of it in one essay.
Let's start with the basics.
1. Adding newly created money but not generating new goods and services of the same value reduces the purchasing power of existing money. To keep it simple: say the economy of a country is $20 trillion. (Hey, the US GDP is $20 trillion...) Say its money supply is $10 trillion.
So banks and/or the government create $2 trillion in new money but the value of goods and services only expands by $1 trillion. the "extra" $1 trillion of newly created money (either "printed" or borrowed into existence) reduces the value of all existing money.
In effect, the new money robs purchasing power from all existing money. Those holding existing money have lost purchasing power while the recipients of the new money receive purchasing power they didn't have prior to receiving the new money.
We can see how this works by looking at a chart of GDP to debt. As debt has soared (and remember, debt is "new money" that was loaned into existence), GDP has risen at a much lower rate, so the ratio of debt to GDP has skyrocketed. (see chart below)
2. Where "inflation" (higher prices for the same item) shows up depends on who gets the newly created money: the wealthy few or the wage-earning many. As I have explained many times, in our system, all newly issued money goes to banks, financiers and corporations--the super-wealthy few.
So what do already-wealthy people and companies do with trillions in new money? They buy assets--stocks and bonds and real estate. Wage earners who receive new money tend to save some of it but they also spend some of it. The super-wealthy and corporations already own more stuff than they know what to do with, so they spend the new money on income producing assets or stock buybacks.
The net result of giving all the new money to the wealthy is the inflation of an asset bubble, which is precisely what's happened in the past decade. Real estate: bubble. Corporate debt: bubble. Stocks: bubble. We can see this bubble by comparing the value of the stock market to the real economy (as measured by GDP): the higher the ratio of stocks to GDP, the greater the bubble.
The current stock market bubble is the greatest in history, exceeded only by the insanity of the last few months of the dot-com bubble, when companies with very little revenue and zero profits were valued in the billions of dollars.
Stocks are in a bubble, period. This is the inevitable result of shoveling all the new money into the hands of the wealthy and corporations. Real-world inflation is certainly higher than official inflation, but the real inflation (higher prices for the same item) is in assets, which have tripled or quadrupled in a mere decade.
3. The inevitable consequence of asset inflation is rising income and wealth ine******y. The wealthy few have gorged on assets with all the newly issued credit-money, and as the assets soared in value, they've become immensely wealthier.
A funny thing happens on the way to extremes of wealth/income ine******y: social unrest, disorder, revolt. The lackeys and apologists that serve the interests of the wealthy few label this "populism," but it's really just the inevitable response to extremes of wealth/income ine******y generated by funneling trillions in new credit-money to the wealthy few at the expense of wage-earners and holders of existing money.
4. To quell the revolt of the many, the Powers That Be will create trillions in new money and helicopter-drop it to the masses. This mass distribution of newly created money (borrowed into existence by the central bank and/or government) will flow into the real-world economy, not assets, and so the inflation (higher prices for the same item) will manifest in goods and services.
This helicopter drop of newly created money will be called pensions, Universal Basic Income, tax subsidies, negative tax rates, etc. There are a lot of names for distributing newly created money that's been borrowed into existence.
This is precisely what Venezuela has been doing for a decade: distributing newly created money that isn't matched by a corresponding increase in the production of goods and services. And as we know, the result of this has been the complete destruction of the purchasing power of Venezuela's money.
"That can't happen here" is just what the Venezuelans thought five years ago. But really, it boils down to math: creating money out of thin air and pumping it into a dysfunctional economy destroys the purchasing power of the existing money. Those receiving the new money are like a snake eating its own tail.
Real-world inflation will blow the doors off every forecast of low inflation forever. From the point of view of the wealthy few who control the status quo in the US, they have a stark choice: either continue pushing wealth/income ine******y to extremes that trigger social and political revolt, which puts their control at risk, or create and distribute trillions in "free money."
They know this generates inflation, but the increases in the value of their assets have always far outstripped real-world inflation, so they don't care about inflation. That's for little people to worry about.
But what the wealthy few are forgetting is rip-roaring inflation destroys the system just as surely as wealth/income ine******y. Just ask the Venezuelans how effective creating new money has been in terms of eliminating poverty: now their entire populace is impoverished, with the only exceptions being the wealthy few in control of the status quo.
The stability of America's status quo is illusory. Can't happen here is going to ring mighty hollow in five years.
Nothing to see here, move along. So what if debt has blown past GDP?
Researched by Pastor Gary K. Boyd br br The stabi... (
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The only thing wrong with your theory is that it is wrong.
The amount of money the goverment prints up is contrary to what people think has been changed is still based on the fort knox concept.When the government (treasury) elects to print more money it is to pay its bills,consequently the Excess money printed beyond what the value of gold they have stored in fort knox goes to the goverment not to the banks and wealthy[ why should they give it to the wealthy.]This money inturn is distributed amongst the people through various programs,it inturn goes into the economy[ business].to spurt the economy,since this money is needed by the people and the economy it is not inflationary.Inflation is an economic condition where demand exceeds supply consequently it creates a how bad do you want it scenario and you will pay out the ass for it over the price you would normally pay for it.Reagan curtailed inflation by increasing unemployment thereby limiting the purchasing resources in the economy,there by causing sellers to lower their inflated prices out of desperation to sell their product.
dongreen76 wrote:
The only thing wrong with your theory is that it is wrong.
The amount of money the goverment prints up is contrary to what people think has been changed is still based on the fort knox concept.When the government (treasury) elects to print more money it is to pay its bills,consequently the Excess money printed beyond what the value of gold they have stored in fort knox goes to the goverment not to the banks and wealthy[ why should they give it to the wealthy.]This money inturn is distributed amongst the people through various programs,it inturn goes into the economy[ business].to spurt the economy,since this money is needed by the people and the economy it is not inflationary.Inflation is an economic condition where demand exceeds supply consequently it creates a how bad do you want it scenario and you will pay out the ass for it over the price you would normally pay for it.Reagan curtailed inflation by increasing unemployment thereby limiting the purchasing resources in the economy,there by causing sellers to lower their inflated prices out of desperation to sell their product.
The only thing wrong with your theory is that it i... (
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Who are you working for dong? I doubt there's any gold in Ft. Knox. If there is, and perhaps things work as you indicate, then what's the function of the Federal Reserve? I recall reading some time ago that Texas had petitioned the government to get their gold back. So far, I haven't heard that that has happened.
Richard Rowland wrote:
Who are you working for dong? I doubt there's any gold in Ft. Knox. If there is, and perhaps things work as you indicate, then what's the function of the Federal Reserve? I recall reading some time ago that Texas had petitioned the government to get their gold back. So far, I haven't heard that that has happened.
The idea-ding- is not where the gold is stored ,the term fort knox was used symbolicly to explain the principle of the amount of currency printed up has to match up with the amount of gold that the country has in its possession,this idea is corroborated by the whole world.You can be semantical all you want;the fact remains is that your theory is discombobulated ..
and from what I said,why would you come up with the notion that I said something anti-patriotic,I am not of a mind set of Trump.... by the way there is approximately 261.6 billion worth of gold stilled stored in Fort Knox,the federal reserve in Manhattan has more these days.The principle remains the same
dongreen76 wrote:
The idea-ding- is not where the gold is stored ,the term fort knox was used symbolicly to explain the principle of the amount of currency printed up has to match up with the amount of gold that the country has in its possession,this idea is corroborated by the whole world.You can be semantical all you want;the fact remains is that your theory is discombobulated ..
and from what I said,why would you come up with the notion that I said something anti-patriotic,I am not of a mind set of Trump.... by the way there is approximately 261.6 billion worth of gold stilled stored in Fort Knox,the federal reserve in Manhattan has more these days.The principle remains the same
The idea-ding- is not where the gold is stored ,th... (
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Newsflash, greenie, Nixon took the US completely off the gold standard in August 11, 1971.
http://www.forbes.com/sites/charleskadlec/2011/08/15/nixons-colossal-monetary-error-the-verdict-40-years-later/#5145087a69f7I would wager that Fort Knox is empty and most of the gold has been gobbled up by China, Russia and the 1% oligarch of the world.
The dollar since 1973 and Kissinger's deal with the Saudis has been tied to oil, hence the PETRODOLLAR. Which, by the way is losing it clout in the trading world of oil and the average US citizen will bear the horrible consequences when it finally collapses.
I am far from wealthy, but I started investing in gold and silver and rural land years ago.
buffalo wrote:
Newsflash, greenie, Nixon took the US completely off the gold standard in August 11, 1971.
http://www.forbes.com/sites/charleskadlec/2011/08/15/nixons-colossal-monetary-error-the-verdict-40-years-later/#5145087a69f7I would wager that Fort Knox is empty and most of the gold has been gobbled up by China, Russia and the 1% oligarch of the world.
The dollar since 1973 and Kissinger's deal with the Saudis has been tied to oil, hence the PETRODOLLAR. Which, by the way is losing it clout in the trading world of oil and the average US citizen will bear the horrible consequences when it finally collapses.
I am far from wealthy, but I started investing in gold and silver and rural land years ago.
Newsflash, greenie, Nixon took the US completely o... (
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Yeah ding dong,but it is not legal,paper money in it self has no backing.Your dollar can not be backed up with just your [IOU]
Read this with comprehension.
https://buygoldandsilversafely.com/gold/what-really-backs-the-us-dollars
dongreen76 wrote:
The idea-ding- is not where the gold is stored ,the term fort knox was used symbolicly to explain the principle of the amount of currency printed up has to match up with the amount of gold that the country has in its possession,this idea is corroborated by the whole world.You can be semantical all you want;the fact remains is that your theory is discombobulated ..
and from what I said,why would you come up with the notion that I said something anti-patriotic,I am not of a mind set of Trump.... by the way there is approximately 261.6 billion worth of gold stilled stored in Fort Knox,the federal reserve in Manhattan has more these days.The principle remains the same
The idea-ding- is not where the gold is stored ,th... (
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I think you're all wet dong, but for the sake of argument let's say your correct in that the currency is tied to gold. What you haven't considered is that they keep shaving the value of the gold to match the currency, ergo inflation. However, even that principle doesn't fly, for the dollar is presently tied to nothing. By the way, you didn't answer my question: What's the function of the Federal Reserve?
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