Tuesday, March 23, 2010

Dear Inflation Alarmists

Read this, and then either explain to me why inflation is something we're all extra worried about right now, or find something else to be concerny about.

1 comment:

  1. At the moment we are experiencing something a bit different from either inflation or deflation. In fact what is going on is rather unprecedented, prices are going up to be sure, but the availability of money is going down. As the banks bring the leveraged asset ratio's from the 45:1 stupid area that they where at in 2007 to something sane the amount of available credit on the market has decreased, As available credit decreases people begin to hit up their savings which increases the leveraged asset ratio of banks forcing them to further contract credit availability. As you can see this is a bit of a circular problem.

    This is the true conundrum of the banks created by the repeal of glass-stegall(thanks republicans/Bill Clinton), The banks are quietly holding the economy hostage by allowing their leveraged asset ratio's to linger in the stupid ratio area on purpose in order to force the Fed to keep rates low and keep the government money flowing.

    Less credit means in effect that their is less money available for use in the markets. so the fact that their is inflation going on as well is just an odd qurk, Whats going on would be better termed "stretch-flation" as its causing price inflation during a period of currency deflation.