With a trillion dollars of government spending floating around on balance sheets and waiting to burst into the general economy, extreme inflation is a virtual certainty once the deflation of the recession is over. But when? Ironically, that uncertainty is part of the reason for the recession in the first place.
But when the monetary floodgate finally opens, we will probably end up with no pennies, nickels, or quarters but rather one-, two-, and five-dollar coins in their place. That’s how it’s happened in country after country around the world throughout history, but some people never learn.
While prices keep going up, quality and quantity keep going down. Such things as liquid soaps are watered down so you have to use twice as much to do the same job. But “There is no inflation”. RIIIIIIGHT!
Earl: While it is certainly reasonable to talk about prices, I hope you don’t think inflation IS rising prices, because that confuses cause and effect. (Let’s hope your house never catches smoke and the smoke department doesn’t set up fans to blow the smoke away while your house burns to the ground.)
Inflation is an increase in money supply without a corresponding increase in wealth (that is, the total mass of goods and services being bought and sold). When that happens, virtually all prices rise, like ships floating on an incoming tide, regardless of whether any one wave is lifting or dropping any particular boat.
The result is what I’ve observed in my lifetime, when “five and dimes” have become dollar stores (and that only thanks to cheap Chinese manufactures). Can’t buy a new house for $10,000 anymore? Or a $2,000 new car? Or a ten cent comic book? Thank almost a century of inflationary Fed policy and Congressional deficit spending.
But a bigger problem with inflation is that this legal counterfeiting robs everyone who ever tried to save money. So you thought the $10,000 you put in the bank was enough to retire on? Not after the government took 90+% of your purchasing power.
I recently saw a Zimbabwean banknote for $100,000,000,000,000. One hundred trillion Z-dollars. And nearly worthless. Hope the US dollar never gets that bad, but that’s the end result of the process we follow. (BTW, pretty ironic of Obama thanking the Indians for inventing the zero. No, it wasn’t the Arabs.)
Makes me think of Back to the Future II, Marty goes into the soda shop and it costsed (or whatever past future tense conjugation is) 50 bucks for a Pepsi.
@Fishstix: I’m worried that someday we’ll have to round to the nearest yuan.
RevvieQuar almost 14 years ago
Half-dollar for your thoughts…. ?
Lyons Group, Inc. almost 14 years ago
And soon it will be dollars.
jkoskov almost 14 years ago
so how are we going to cover of that .999 thing at the gas pumps?
pschearer Premium Member almost 14 years ago
With a trillion dollars of government spending floating around on balance sheets and waiting to burst into the general economy, extreme inflation is a virtual certainty once the deflation of the recession is over. But when? Ironically, that uncertainty is part of the reason for the recession in the first place.
But when the monetary floodgate finally opens, we will probably end up with no pennies, nickels, or quarters but rather one-, two-, and five-dollar coins in their place. That’s how it’s happened in country after country around the world throughout history, but some people never learn.
EarlWash almost 14 years ago
While prices keep going up, quality and quantity keep going down. Such things as liquid soaps are watered down so you have to use twice as much to do the same job. But “There is no inflation”. RIIIIIIGHT!
pschearer Premium Member almost 14 years ago
Earl: While it is certainly reasonable to talk about prices, I hope you don’t think inflation IS rising prices, because that confuses cause and effect. (Let’s hope your house never catches smoke and the smoke department doesn’t set up fans to blow the smoke away while your house burns to the ground.)
Inflation is an increase in money supply without a corresponding increase in wealth (that is, the total mass of goods and services being bought and sold). When that happens, virtually all prices rise, like ships floating on an incoming tide, regardless of whether any one wave is lifting or dropping any particular boat.
The result is what I’ve observed in my lifetime, when “five and dimes” have become dollar stores (and that only thanks to cheap Chinese manufactures). Can’t buy a new house for $10,000 anymore? Or a $2,000 new car? Or a ten cent comic book? Thank almost a century of inflationary Fed policy and Congressional deficit spending.
But a bigger problem with inflation is that this legal counterfeiting robs everyone who ever tried to save money. So you thought the $10,000 you put in the bank was enough to retire on? Not after the government took 90+% of your purchasing power.
I recently saw a Zimbabwean banknote for $100,000,000,000,000. One hundred trillion Z-dollars. And nearly worthless. Hope the US dollar never gets that bad, but that’s the end result of the process we follow. (BTW, pretty ironic of Obama thanking the Indians for inventing the zero. No, it wasn’t the Arabs.)
taker48 almost 14 years ago
heck I can remember when penny candy actually cost a penny not a quarter and candy bars were a quarter not a dollar
hossblacksilver almost 14 years ago
Makes me think of Back to the Future II, Marty goes into the soda shop and it costsed (or whatever past future tense conjugation is) 50 bucks for a Pepsi.
@Fishstix: I’m worried that someday we’ll have to round to the nearest yuan.
anserman38 almost 14 years ago
I wish I could win the lottery, buy a store, and give the candy to the poor kids in a dish on the checkout counter