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Back to reality: Inflation is coming

Discussion in 'U.S. Politics' started by Little-Acorn, May 3, 2011.

  1. Little-Acorn

    Little-Acorn Well-Known Member

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    Inflation happens when you have a lot more printed money chasing the same amount of goods and services. It can happen when people work less and produce less... or when the government prints a lot more money while people's work and production don't increase enough to cover it.

    Guess what: The government has recently been printing more money. A LOT more.

    Here's a chart from the Federal Reserve. According to the Federal Reserve, "The Adjusted Monetary Base is the sum of currency (including coin) in circulation outside Federal Reserve Banks and the U.S. Treasury, plus deposits held by depository institutions at Federal Reserve Banks." (from http://timeline.stlouisfed.org/index.cfm?p=data&rd_id=18)

    [​IMG]
    Chart is from http://research.stlouisfed.org/fred...e&width=1000&height=600&preserve_ratio=true&s[1][id]=AMBNS

    .

    Uh-oh.

    .
     
  2. steveox

    steveox Well-Known Member

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    Blame bush!!!!
     
  3. PLC1

    PLC1 Moderator Staff Member

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    or obama, or perhaps FDR. The fact of the matter is, overspending is a fault of the Congress.

    Will there be inflation? Beyond doubt, yes. How bad will it be? That is anyone's guess. Deficit spending may bring on inflation, but there are other factors at work as well. One oft ignored factor in trying to predict inflation is the price of oil, which is still pegged to the dollar, and which then creates a feedback loop: Lower dollar value translates into higher oil prices, which raises costs and creates lower dollar values. However, there are many factors that affect the price of oil, so there is no easy way to predict how high inflation will be.

    But we do know that rising oil prices increases the price of everything.
     
  4. Dr.Who

    Dr.Who Well-Known Member

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    Yes, all four had a hand in this.
     
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