The Federal Reserve and the banking system have been monetizing (buying) U.S. government debt at an accelerating pace. So why haven’t we seen greater increases in prices?
The fact is, some prices, like food and energy, have increased over the past 2 or 3 years. Having lived much of that time abroad, I notice it when I return. The reasons why price increases have not so far been more general are (1) the unemployment and business failures have left a large portion of the population with reduced incomes. Their diminished ability to buy and consume has offset, to some extent, the increased volume of dollars being lavished on the military, industrial, and financial sectors, (2) it takes time for those dollars to trickle down from the favored recipients who get to spend them first, and (3) the savings rate has gone up because in a depression, such as we are experiencing, people who do have money are more cautious about spending it. These savings are largely absorbed by government borrowing but they will never be sufficient to forestall debt tsunami that is building up. Add to this the fact that the rest of the world seems no longer willing to finance U.S. government deficits as they have in the past, and the outlook for the dollar is bleak. There will be no alternative to massive monetization.
A useful article titled, The U.S. Path to Collapse, was posted recently on the website of the National Inflation Association. Unfortunately, they blame social spending like unemployment insurance, social security and medicare for the budget deficits, but ignore the massive spending to maintain the American empire and the pursuit of “full spectrum dominance” around the world. –t.h.g.
Pingback: The Latest Financial News from Beyond Money : Chelsea Green
i see many who doubt govt statistics and data. so what you are saying may be based on wrong figures or just plain not true.
i have read that various products and sectors at differnt times have increased and decreased. walmart canned veggies are significantly cheaper than delmonte…as is their canned pasta. i havet seen much of an increase at all. in fact, nv energy says my electric rate decreased. urnaium from heaven i guess.
if some types of productivity methods have come to maturity in broad sectors that may lead to unemployment as fewer people are need for a given task, reducing manufacturing costs and some costs staying low due to decreased sales.