Is it intentional inflation?

Maybe it's just me, and it usually is, but I can't help but feel the inflation of all currencies is intentional to a degree. Forget facts, just thinking logically. If I wanted to usher in a new currency I would need to devalue the previous ones. If this currency was global then I would need to devalue the majority of all currencies.

So what would be the best course of action for achieving this? Inflate the current currencies by printing in excess, and release a small amount of the new currency. Investors are going to seek the non-inflated new currency because it is valuable. Basic supply/demand.

Is this why they announced the 5 trillion "global stimulus" at the G20 as well as the 1 trillion of new global currency? Demand for the new currency will go unknown to the mainstream for years, while the rich get richer, poor get poorer. This process will further destroy the value of our current currencies already beat down by inflation, and snowball investing into the new currency and the solution to our economic problems.

Just speculating I guess.

Good theory.

Drive down the price of the dollar so that US goods and services are cheaper than those in other countries... Bring back manufacturing jobs to the US... PROFIT!!! $$$

The US is spending money like it's going out of style.

A trillion here, a trillion there. I don't see how this can't lead to a devaluation of the dollar or as we at home will see it, an increase in prices for everyday items.

Inflation.

reply to post by Ciphor


Yes. It is intentional..Will quantitative easing cause inflation? Yes – and that is the general idea. Warren Buffett, the world’s famous investor, has warned of “an onslaught of inflation” as a result of current policies.”

BB knows what he is doing ...he recently spoke before the CFR for hours...the man knows this game, inside and out.

This was his goal:

Federal Reserve Chairman Ben Bernanke has told an elite gathering that a new overarching financial authority should be created by the government and empowered with sweeping new regulatory responsibilities.

Bernanke also coyly indicted to the renowned globalist group that he believes a new international order could be fomented out of the crisis.

www.cfr.org...

.



[edit on 10-4-2009 by burntheships]

reply to post by Ciphor


There is no inflation that's happening, yet ... i can see it coming in the future, but it's not here now ... the dollar is actually pretty strong as of right now ... there's actually more of a fear of deflation then inflation ...

[edit on 10-4-2009 by baseball101]

reply to post by baseball101


I haven't seen to much inflation either. The only thing I can think of that is going up is food, fast food and gas. Our gas in the last few months shot up around 30 cents everywhere even though demand is still way down. Also most food store items have gone up 10-30 cents. I also noticed that places like McDonalds introduced a 1.29 menu that now sits next to there old dollar menu, even though McDonalds is making mints of money in our current economy. The 1.29 menu is the old dollar menu basically.

Is this inflation? Or just price hikes? My main observation is that in general, for the areas of the economy in my state where prices have went up, it seems to be right around 30 cents.

Raw Video: Obama Economic Adviser Heckled at Economic club meeting

Much of the money being spent will eventually be paid back as the danger of many of the derivatives pass and banks start being profitable again. So basically over the next few years the TARP, etc. will have no effect on inflation.

What will have an effect on inflation is the other spending we are doing. Stimulus, war funding and other draining social programs. But to look at those efects you also have to look at how much money has dissapeared from the economy. When all is told there will continue to be less money in the economy than before this whole fiasco began. Thus I think l there is a greater chance of prevelant deflation rather than inflation. Even some members of the Fed Board, said this week that we need to expand the money supply further to stem deflation.

As far as the rest of the world and other currencies they are also facing the same things we are and have expanded their money supplies in line with us. Thus inflation on a currency exchange basis is also unlikely.

Looking forward if we do get high inflation it will be because the equity aqnd real estate markets have returned to their previous highs and we return to fairly full employment. As the fed raises rates that will cause a bit of inflation as well, as fed rate hikes actually cause inflation rather than stemming it, despite popular economic theory.

Inflation comes because of interest rates. Interest is neccesary to help cover the risk of lending money. It covers opportunity costs. For instance if you have $100,000 saved and someone wants to borrow it for a period of time, then you have to make up for profits that you could have made by investing that money in a business of your own.

So basically as long as we allow profits, then we also have have to interest rates, which by proxy will lead to inflation over time. Inflation in itself isn't bad. It is when inflation outpaces people abilities to raise their earnings which causes all the problems. Without goverment intervention employers will do their best to not raise wages and instead pocket those excess profits from inflation for themselves. Wish I coud explain it better but until we do away with profit, we will always have inflation over the long term.

edited for spelling and replace inflation with deflation in 2nd paragraph

[edit on 10-4-2009 by disgustedbyhumanity]

Informative thank you. I don't remember where, may have been Glenn Beck, but I remember hearing somewhere that some banks have already offered to pay back some or all of the TARP money, and were told not to do so. Know anything about that Disgustedbyhumanity?

reply to post by Ciphor


There technically should ALWAYS be a degree of inflation. If you have no inflation that means nothing is being created.. your not producing wealth. Your stagnate. Obscene inflation is bad, deflation indicates negative growth. the objective is to have inflation relative to the GDP .. that is to say the inflation of currency should not extend beyond that of the economy's own natural inflation or growth. Most would say inflation at around 2-3% is ideal for our economy, the economy should produce at least .5%-2% gdp growth and we should be adding 250,000-500,000 jobs/m to show positive signs of growth.

While we are in a Deflationary spiral at the moment, it is ideal to increase the availability of cash -- inflate the currency, to make it more competitive for our corporations over seas. In August-December our currency was so devalued and competitive that many F500 companies only posted profits due to currency exchange. Granted, the only reason they received more Dollars was because it was worth less.

The problem with forced inflation at this point however is that it does not coincide with economic growth. This is to say we are inflating the currency while the economy contracts, making the inflation actually worse as consumer revenue drops, corporate profits slump and yet the money supply expands. If however just the right amount of inflation is pumped into the economy, the effects will bring us out of this recession. If the money is available so that it can be circulated through loans then capital is at hand to expand business. This is why the "Credit Crunch" of last year into this year has so drastically reduced our economy into shambles. Capital dried up, credit dried up, no one had the cash they needed to continue operation, so they laid people off, consumers dried up, credit reduced, corporate profits follow suit and you end up in a deflationary spiral. Self perpetuating Deflation.

However, if we extend to much capital and credit to fast we will see gradual inflation, get out of the deflationary spiral and slowly inflation would excel as more and more of the cash, capital and credit is used and exploited. The policies today fighting Deflation could lead to a mild Inflationary expansion.. which would devalue our Dollar I would say as much as 20% over the next 2-3 years not unlike what happened under the Bush Administration when they made credit so cheap and available we saw over expansion. If you have not caught the subtle undertones, I do not have much faith that Status Quo will ever be achieved.

The Administration is trying to get back to the way we where in 2006, but they fail to see that it was a mirage. Wealth was not really there, it was just a devalued dollar. But they want to see an inflationary expansion to imitate wealth .. Which I believe is going to be disastrous to say the least. What we need is to dismantle the largest institutions and allow smaller regional banks to fill the void.. start a fresh.

[edit on 4/10/2009 by Rockpuck]

the masters-of-the-financial-universe @ the Fed/Treas...
want controlled Inflation in the near term.


Their ultimate goal is to make the dollar devalued so that the Chinese
among others that are holding over $2Trillion in Treasury notes/bonds and
lots of Fannie-Freddie CDO & mortgage bonds & such...
will only be worth 40% of what it was worth in 2008


i say a 'controlled' inflation... because the Fed/Treas has undoubtedly
instructed the favorite 19-21 mega-banks to keep 'Hoarding' the $11Trillion in loans/bailouts/asset-sales the banks have been Injected
with so they can remain solvent...and still pay themselves & top banker execs and board members their outrageous salaries

But wait until the Fed/Treas gives all these mega banks the word to 'circulate' the Trillion$ they have been hoarding...
the dollar will collapse with that extra $11-13+Trillion that will flood the world markets (that's the Inflation)
-(the dollar collapse is the devaluation) which will almost immediately result in hyper-inflation because too much treasury-notes are chasing too few goods


at least that's the way it is explained to me...

Originally posted by baseball101
reply to post by Ciphor

 

There is no inflation that's happening, yet ... i can see it coming in the future, but it's not here now ... the dollar is actually pretty strong as of right now ... there's actually more of a fear of deflation then inflation ...

[edit on 10-4-2009 by baseball101]

I'm afraid you're incorrect on this point:

Fed says plan now to avert inflation(Reuters)

Originally posted by Ciphor
Informative thank you. I don't remember where, may have been Glenn Beck, but I remember hearing somewhere that some banks have already offered to pay back some or all of the TARP money, and were told not to do so. Know anything about that Disgustedbyhumanity?

I forget which one it was, but I think that was the Bank of America. It was on 60 minutes a few months ago. They weren't specifically told not to pay it back, but they were pressured strongly enough that they didn't. I think the idea was that the government wanted a stake in all the major banks, and if one bank didn't take the money, then the government didn't have a stake in that bank. Something like that, anyway; my head spins when economics comes up, but I think that was the gist of it.

reply to post by Ciphor


Actually some of then have already paid it back. The goverment has refused no money to date. I think the point of them keeping it maybe longer than neccesary, is so they can make back some of their losses, restore confidence and then raise the money from the public markets to pay back the goverment.

What people here don't want to realize is that the banks could have handled the loan losses, they couldn't however handle the possible derivative explosion. They screwed up with Lehman which in turn led to the AIG and Citi implosions. Had AIG and Citi gone down those derivatives would have taken down many more and those would have taken down any more and so on. If you want there to be no food in the grocery stores letting these instututions fail would have been the quickest way to do so.

So as we go forward and the banks aren't allowed to fail the derivative risks will go away. They just need to buy time until those contracts expire. Once the danger to the sytem of a bank failure passes, then I think they will let the weak ones fail. If they fail at that point, goverment gets paid back first. IOf they don't fail the public will buy their stock at depressed prices and then they will pay the goverment back.

So to sum it all up, the majority of this money will be coming back to the goverment,so in that respect at least, the bank bailouts will not be inflationary

reply to post by projectvxn


what are you talking about? how am i incorrect? ... i said that out of control inflation isn't here yet and so does the article ... they said they're preparing for a surge ... they don't say it's here now ...