Once Covet is knocked down, you are going to find out how “phantom” inflation really is. You can’t increase the money supply the way we have and hope that a lower velocity of money is going to continue to be slow enough to save you.
You had better hope that the Fed will be able to sell those bonds to soak up the extra money it has given to the Federal Government to spend. If not, look for the Day when the “new dollar” is issued to replace the old dollar at some rate, like 100 or more to 1. France did it with the Franc in the early 1960s.
Like most leftists, you think that you will get the bad politics to work this time. They won’t and never have, but when you fail again, you will blame on Trump and the Republicans.
Why can’t increased productivity be the result of an increased money supply? Are you aware of some sort of constraint? If the fear is that labor is the constraint and a wage spiral is what you fear won’t companies innovate if the cost of labor increases? Automation is something that’s been happening for hundreds of years and wage prices have encouraged greater efficiency.
When the Fed retards the market by trying to slow the economy with higher rates, not only does it not work, it makes the problem worse. Why should anyone with wealth be able to purchase unproductive government bonds and earn free money for doing nothing at an increasing rate?
Raising interest rates slows purchases for the middle and lower classes, those that don’t have investments, but for the investor class it has the opposite effect. I’d rather keep rates low to encourage investors to look for more productive (albeit riskier) investments. Bonds are always an option, but they will pay real rates that keep pace with inflation.
Primary dealers are obligated to buy bonds from the Fed.
That said, the government, when it sold the bond took dollars in trade when it redeems them, it simply gives them back plus a little interest. In real terms (when factoring interest in) the amount returned can be very small.
Has nothing to do with my political persuasion.
What “bad politics”?
Are you suggesting that the left controls Trumps pick as Fed Chairman now?
Yes, I do. There are only so many workers and only some many goods available for them to process. This is especially true when the government imposes bureaucratic rules and regulations which limit the amount the economy can grow. After you have added so many dollars to the money supply, inflation is inevitable.
Over the last six months, the Fed has increased the money supply by more than $2 trillion dollars. One trillion is an unbelievably large number. I will try to contextualize it for you.
If you were to jump on a time machine and set it to take you back in time by 1 trillion seconds, you would go back time 31,710 years. That is well before recorded history.
Are you starting to understand the problem we face given this massive increase in the money supply?
Probably not. But for the rational people who read the messages on this board, you can see that the money situation is getting quite frightening.
Here’s the math for those who wish to follow my example:
60 seconds per minute X 60 minutes per hour X 24 hours per day X 365 days per year = 31,536,000 seconds per year.
1,000,000,000,000 seconds divided by 31,536,000 seconds per year = 31,709.79 years.
Now that Congress is looking to another bill that will increase these number of one or two trillion, when could be up over $4 trillion dollars. Using my dollar per second numbers that means that we will be well of 100,000 years in dollar-seconds.
Ruining the monetary system and making the dollar worthless because of inflation, that’s bad politics because it hurts every person in this country except those who are smart enough to know which hard assets they should be holding to maintain their financial situation.
You know who gets hurt the most? The poor for whom you claim to have infinite compassion.
It would not be the first time a Republican president got stabbed in the back by his appointments. Just look at clowns on the Supreme Court. Gerald Ford appointed John Paul Stevens who bellowed loudly when he couldn’t give the 2000 election to Al Gore. And then there was David Souter who fooled John Sununu and got on the Supreme Court to become another far leftist. The man was totally dishonest about his true judicial philosophy.