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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era
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To: Freedom Fighter who wrote (1328)2/23/1999 12:55:00 PM
From: Freedom Fighter  Read Replies (2) of 1722
 
Porc,

I just thought of one more effect of central bank credit inflation that is not as understood. When credit is created out of thin air (money printing) as opposed to from savings, prices will be higher than they would otherwise be. This does not mean inflation, but prices will be higher than they would otherwise be. These "higher than they would otherwise be prices" do not occur uniformly because it takes time for the new money to make its way through the whole system. That means that those that get the new money first are at an advantage over those who receive it later or last in terms of purchasing power. In other words, it is a wealth transfer mechanism. Banks, brokers, and government get the new money first. It's no wonder they love it and support it.

Wayne
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