Steve Saville: Recognition of the US Inflation Problem
Another good article by Steve Saville. Here is an excerpt.
Recognition of the US Inflation Problem
by Steve Saville
December 14, 2009
When the banking system (the central bank and the commercial banks) creates so much new money out of nothing that the total supply of money rises rapidly, it can be likened to counterfeiting on a grand scale. This counterfeiting distorts price signals, brings about the undeserved transfer of wealth to the first receivers of the new money, and depletes real savings. It therefore damages the economy. There are times when the economy is in good enough shape -- due to an existing large pool of real savings -- that the total amount of wealth is able to grow despite the hindrance of monetary inflation, but there are other times -- now, for example -- when earlier inflation and other central-bank/government-imposed distortions have already weakened the economy to such an extent that adding more inflation into the mix causes an irresistible drag.
The US currently has an inflation problem, meaning that there has been enough growth in the money supply to do substantial damage to the US economy. The crisis of 2007-2009 is evidence of this damage in that it was a natural and inevitable consequence of the preceding inflation-fueled boom. And yet, US officialdom is attempting to overcome the inevitable adverse consequences of monetary inflation by creating even more money out of nothing. The inflation problem is therefore set to become even more troublesome over the years ahead.