Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Broad Oak Blog (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

When money velocity stabilises, inflation will let rip

% of readers think this story is Fact. Add your two cents.


A while back, before the trillion-dollar-coin idea that was publicly kited and then smacked down, I too was wondering why, if the government can conjure up money out of thin air and lend it to itself, it can’t similarly forgive itself.

Insofar as banks are allowed to get involved brokering the deal, I suppose debt cancellation might deprive them of some of their income stream, but other than inconveniencing a few thousand banking families it wouldn’t seem to be a bad scheme. As President Andrew Jackson famously said, “You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! “ One longs today for such un-mealy-mouthed leaders.

But this kind of living on debt causes real damage, whether or not it is ultimately extinguished. Because the government is trying to keep things normal in the economy, and spends the borrowed money on salaries and other benefits. This is increasing the stock of cash in the economy.

The reason we don’t have high inflation at the moment is that money is changing hands more slowly during the recession – its “velocity” is dropping, and counteracting the boost in the quantity available to spend.

When the velocity stops dropping, inflation will begin properly. (Food and energy prices may be rising at the moment, but there’s other factors at work there. Houses, cars and all sorts of other things are trading at a discount still, for ordinary people. Overall, I think we are still experiencing deflation, partially disguised by increased prices for the things rich people buy because they are benefiting from the collapse of the middle class.)

If velocity increases, inflation will roar. Unless government removes money at just the right rate (by taxation, or higher interest rates) – and it will be reluctant to do so because it won’t want to be seen to be “killing the recovery”. Ordinary savers will be sacrificed for the sake of apparent health in stock and property markets. But the economy will still not have been fundamentally set right, and sooner or later we will need some reset in the currency. In real terms, in the currency of “stuff”, the average Western person will be poorer.

And that is why smart, privileged money is pouring into tangible assets. A small fraction of the population will become the “Sultans of stuff”.

UPDATE:

Charles Hugh Smith thinks the deflation is unstoppable. But there will be an end, however far off it now seems.  I think spotting the turn and moving out of cash fast will be the test for investors.

John Ward opines, “…there is no such thing as a gradual panic. Those ahead of the panic are openly opting for the last place left offering financial long-term and physical short-term safety: top-end property.” Not all of us can afford it. It’s the small saver who is being hauled to the stone table.

Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.


Source:


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Lion’s Mane Mushroom Nootropic

Mushrooms are having a moment. One fabulous fungus in particular, lion’s mane, may help improve memory, depression and anxiety symptoms. They are also an excellent source of nutrients that show promise as a therapy for dementia, and other neurodegenerative diseases. If you’re living with anxiety or depression, you may be curious about all the therapy options out there — including the natural ones.Our Lion’s Mane WHOLE MIND Nootropic Blend has been formulated to utilize the potency of Lion’s mane but also include the benefits of four other Highly Beneficial Mushrooms. Synergistically, they work together to Build your health through improving cognitive function and immunity regardless of your age. Our Nootropic not only improves your Cognitive Function and Activates your Immune System, But it benefits growth of Essential Gut Flora, further enhancing your Vitality.



Our Formula includes: Lion’s Mane Mushrooms which Increase Brain Power through nerve growth, lessen anxiety, reduce depression, and improve concentration. Its an excellent adaptogen, promotes sleep and improves immunity.


Shiitake Mushrooms which Fight cancer cells and infectious disease, boost the immune system, promotes brain function, and serves as a source of B vitamins.


Maitake Mushrooms which regulate blood sugar levels of diabetics, reduce hypertension and boosts the immune system.


Reishi Mushrooms which Fight inflammation, liver disease, fatigue, tumor growth and cancer. They Improve skin disorders and soothes digestive problems, stomach ulcers and leaky gut syndrome.


Chaga Mushrooms which have anti-aging effects, boost immune function, improve stamina and athletic performance, even act as a natural aphrodisiac, fighting diabetes and improving liver function.


Try Our Lion’s Mane WHOLE MIND Nootropic Blend 60 Capsules Today. Be 100% Satisfied or Receive a Full Money Back Guarantee. Order Yours Today by Following This Link.

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.