Get Ready For More Inflation

What Will It Buy You?

There’s a new report by CNBC that the Federal Reserve is considering some more “quantitative easing,” also known as “firing up the printing presses.” They’re going to make money cheaper again, and when it’s cheaper, it’s necessarily worth less.  For those of you who don’t really follow how all of this works, let me remind you of a few things I’m sure you’ve heard, but which you may not pay much ongoing attention.  The idea is to try to stimulate the economic activity by putting more cash into circulation, theoretically making it easier for banks to loan money for new home construction, businesses, and all manner of things.  The notion is that with more cash flowing, more economic activity will result, and more jobs will be created.  That’s the theory, and it sounds simple enough until you recognize some complicating factors.

First, every time the Federal Reserve follows this procedure, what’s really happening is that for all intents and purposes, they’re flooding the economy with new money.  There’s really no new value being added to the system, so what this effectively accomplishes is to devalue all existing money by some amount.  What this causes in turn is a diminution of your money’s purchasing power.  A loaf of bread costs $1.20 instead of $1.10, or a gallon of gasoline goes from $3.50 up to $4.00, or a 2″x4″ down at the home improvement store goes up in price, but the total effect is that money is less valuable.

Back when QE2(Quantitative Easing, Round 2) was announced, back in late 2010, Sarah Palin came out and warned against it, and was scoffed at by the geniuses who push this inflationary policy upon us. Of course, with predictable regularity, she was right about it, as we who pay attention knew would be the case, so now the Federal Reserve is considering more of the same. As with last time, most of the inflation has been hidden by the fact that amazingly, energy and food are not counted in the CPI(Consumer Price Index) but of course, that’s an absurdity since it’s where much of our spending is concentrated.  This helps the politicians and the Federal Reserve shield from your eyes the true cost of their stimulus, but what you should know is that it amounts only to a delaying tactic.  What they’re hoping is to buy time until the economy can somehow catch up, but the problem is that the policy they’ve undertaken ultimately leverages against that end, since it will take ever more dollars for you to fund your energy and food costs, and those aren’t things on which you can really do substantial trimming if you intend to go to work each day.

The whole thing is a colossal fraud, and it’s one of the reasons I agree with Ron Paul that we need to re-examine the role of the Federal Reserve.  It’s become obvious that they’re just as willing as most politicians to lie to you about the end result of their policies.

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13 Responses to Get Ready For More Inflation

  1. I am glad I took time away from all my reading the state of our world and economy to buy a washing machine (old one told me to eat $h*t and die mad) Only thing wrong was a drain pump. Wouldn't you know… have to buy the whole moter assembly just to get the pump. Bought a washer from a friend, appliance repairman for less than repair. Ya think this is on purpose? Disposable washers? Like electronics and telephones, too expensive to repair so buy new? But I got over it and back again, reading your 4th post of the day with the anticipation of clean undies.

    Things are moving more quickly now. News and information is being more condensed, more talking and writing their opinions you should agree. It is almost overload…so much is going on. I wonder of the govt is making it this way, confuse you with so much input that you just listen and go along.. My, my.. Wake up my friends. Our time is getting short. I bought a loaf of bread and it was $3.19….. I am considering taking an early retirement and leaving the country where $3.19 will buy you two dinners. I certainly am glad I don't want much, so will not miss much. I want to smile again…from inside.

    • Dave says:

      When the economy collapses and the dollar is no longer worth anything, it won't matter where you go. As has been said before, America is the last bastion of freedom. If we lose it here there is no where else to go.

      • In a 3rd world economy, many don't have money already, live in what we say a dollar a day already. Work and live on a barter system like we did long ago. Many Asian countries already are planning to save their economic survival by trade agreements and treaties between themselves. They will still make and send goods between themselves. Manufacturing, selling items to other countries causes a country to grow and makes a more stable country. Even if the dollar collapses, I still will be able to support myself. it is those who rely on the US to buy from them will be hurt the most.

    • Tracy says:

      I want to smile again too, bdwatcher. It's getting to the point that I can't keep track of all the crap going on. Bombard us and just keep us spinning. Too much to try to take care of and all of us are becoming overwhelmed. We need to clean this up from the top. What do we do and how do we do it?

  2. neilalxb says:

    I think the way forward is to allow privatised competing currencies within the same state, for example in Britain the golden standard is long since dead, so why not let Barclays or some other bank create currency? This I feel would encourage competition and discourage inflation!

    Ron Paul wanted more competing currencies right?

  3. Thought for a moment after my last post.

    Food and water will be the most sought after commodity if the dollar fails.

  4. If anyone really wants to know how it will be if the dollar fails, if a crisis occurs, if obama calls martial law… If you download torrents or watch online television, look for a television show called Jericho. It was a show a few years ago, two seasons. The venier of civilization is lost within 3 days when people run out of food and water. Survival of the fittest and the most organized. (smile) not a zombie flick.

    Yes, guns, ammo, it will be to find and "take" food, water and medicine. Even now you should make friends, alliances if you haven't already.