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Printing… Printing ….FED and ECB are PRINTING MONEY IN THREE SHIFTS DAILY
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We are presently enjoying a most exceptional advance of productivity thanks to both unprecedented technological innovation and economic progress resulting from globalisation.
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Under a gold standard such massive productivity gains would result in rapid increase of buying power. Under the present system without any gold backing our real living standard is on the contrary declining despite this most exceptional progress.
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Why is there still inflation when it is presently costing only half the price to produce it did cost 10 years ago for products like electric and household equipment, textiles and air travel, down even to 10% only for items such as or picture prints, computers, mobiles, printers….?
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The reason is that the monetary policy of the FED (as well as the ECB) are deliberately targeting an inflation rate of about 2% and thereby deliberately prevent the average price level from declining and people’s buying power from rising. For the purpose of the matter central banks keep interest rates at an inflationary low level, generating excessive credit demand an (asset) inflation. By targeting inflation at 2% central banks prevent increased productivity benefiting to the average consumer.
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As long as the gold-backed money standard is not restored only a money supply rate near to the growth rhythm of the real economy could prevent inflation and allow purchase power to keep up with productivity. Any growth rate above this rhythm is inflationary in the true sense. Inflation targeting therefore in practice means nothing less than institutionalised confiscation of all prosperity gains resulting from progress.
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The FED’s August M3 money supply rate is not at the growth rate of the real economy of some 2%, but has just reached its fastest rate in 35-years (about 14%). This means that for the moment a 14% larger amount of money is chasing a quantity goods and services that is hardly 2% larger than twelve months ago.
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Consumer Price Indices are not representative for real inflation. By definition they cover consumption items only as asset prices are unaccounted for. The CPI also does not ponder the lowering quality of goods as it compares today’s low quality import stuff with the top quality domestic produce we were used to a few years ago. In Europe the fastest rising items such as oil or cigarettes and MOST IMPORTANTLY TAXES do not even figure on the CPI list just as if these were unimportant details in the family budget….
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The exorbitant money growth rates both of the FED (14% /yr) and the ECB (12%/yr) are the only cause of the credit and housing bubble. The present rate cut is fighting fire with fire and is paving the road for the next bubble in raw materials and run away inflation very soon…
Read more at …
here at Workforall.net
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Paul V.
I live in Canada, Québec James. I completely agree with your analysis. So I live in the neigborhood. I am really preoccupied for ordinary people in the US. I can't understand how the middle class here, like in the US, is being lied to. The lie is still working. Hopefully USA is still a democracy. There is still time left. I hope!
The problem is far worse. All paper currencies will eventually be worthless. The context is almost the same as in 1929. Competitive devaluation syndrome. Every country scared of having a too strong currency tries to export the unemployment to other countries. Japan has been doing this for ten years. China is doing the same. Personnally I think others countries will be soon doing the same. In this context I would not be surprised to see gold at 3,000$ and silver at 100$.
Wouldn't printing USD solve the problem of the Chinese etc holding all those greenbacks by making them worth less ?
No Mark, you are completely correct about Asia--I was just venting. If Korporations gave a crap about their home countries instead of looking for the cheapest labor, real estate and tax shelters, we wouldn't be in this problem in the first place. But that wouldn't be "globalization" or "free enterprise" I guess. I try to look on the bright side of things, but there's just so many negatives right now. I don't know where you live, but I live in Amerika, and believe it or not, work as a gas-station attendant in Arizona! I do know that if the Republicans win the in upcoming '06 elections, I will be making some SERIOUS hedge moves--much more than my slowly growing ounces of gold, silver, euros, etc. That is, unless something else really bad looms on the horizon. Good luck to everyone. America wake up!!
No the morons at the FED will deliver the new digital money by Yahoo and Google. I must disagree with you on Asia. Asia is trapped also with their stupid policies of sterilization of the rate exchange. Letting drop the US dollar like the way it should, will kill their exports to the US. And these morons don't have a replacment export market. Gold is going up bur soo is everything correlated negatively to bubble currency about to implode on itself. What should have had been done the last few years? A global currency tied to raw materials and many commodities like suggested Robert Mundell. The chaos is just starting. General De Gaulle and Jacques Rueff were right about the USA. The US deficit and the US dollar as reserve currency are the monsters that must be slayded. Central banking too should be liquidated.
If Bernanke and Co. can save the United States from the impending financial meltdown, it will be a miracle. Hopefully he won't "drop paper bills from helicopters," meaning dump even more money into the system, but what choice does he have? The economic slowdown is coming and the Asians have us by the balls. Even if interest rates fall to increase investment, isn't the American citizen already spread too thinly? Will our President suddenly realize the errors of his ways and attempt a new policy of fiscal responsiblity? Roasting 17+ Pakistanis over the weekend was really smooth. Will we ever resolve our problems with the Middle East/Terrorists? Buy gold, buy gold, buy gold!!
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