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Politics : Politics for Pros- moderated
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To: LindyBill who wrote (510883)10/2/2012 12:39:23 AM
From: skinowski3 Recommendations  Read Replies (3) of 793998
 
We are in totally uncharted financial territory. Spending money like drunken sailors with no major inflation happening.

If you flood the country with paper money, like Rwanda, people will notice. If you bring the concentration of silver in a coin from 99% down to 5% - people will notice. Our debt, however, is neatly tucked away and hidden out of sight - as DEBT. We are not printing - we are "borrowing".

Banks "borrow" money very cheaply from the Fed, and use it to buy T-bonds. Their books look clean - assets equal liabilities. This way it is possible to "park" a huge amount of debt in the banking system. For as long as the low interest gets paid, no one makes waves.

What goes unnoticed is that the Fed "creates" the funds that it lends to the banks.

The reason there is no price inflation is because the wages are stagnant. The population would not have the money to pay higher prices. It takes two to tango - you cannot have price inflation if buyers don't have the money to pay those higher prices.

Most likely, we already are in a deep recession, maybe even depression - which is covered up by deficit spending - which is made possible, for the most part, by the Fed. Without the Fed's printing we would probably be in a deep deflationary slump.

Unfortunately, the Fed will not be able to keep up this game forever. I think things will begin to get into trouble in the course of the next presidential term.
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