Monday, April 06, 2009

Letting the inflation genie out of the bottle


Calling on the Animal Spirits of Inflation: Forcing the Inflation Genie out of the Economic Bottle. Germany Hyperinflation of the 1920s. » Dr. Housing Bubble Blog
Anyone thinking that breaking a one-dollar bill into four quarters is a method of creating more money is simply trying to create something out of thin air. Yet that is the path that we are following. The Federal Reserve and U.S. Treasury who seem to be tempting the ire of the demons of inflation are now targeting the U.S. dollar with every weapon in their arsenal. As a nation, we still have a difficult time realizing that we have consumed too much for too long and debt only provided an illusion of prosperity. Some time ago, I walked into a staged open house. In the air the smell of bread baking, beautiful furniture adorned each room, and what would any home be without a nice mounted flat screen television? Yet none of this was real. The visceral feeling of this staging of course is to give you an idea of what you want. Or better yet, what you don’t have and should buy. The advertising machine is designed to keep you perpetually wanting. The staged home visually makes you forget the dollar and cents of the deal. Those that control the levers of power of our economic system have decided that tempting inflation is a small price to pay to continue on a spending spree that is clearly unsupportable.

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