Bitcoin Forum

Great quote from this article (http://www.moneynews.com/Economy/Morgan-Stanley-currency-war-likely/2013/02/07/id/489334#ixzz2KFPp0KO5):

Too bad people are oblivious to what's about to happen.

I don't really understand how inflation is going to happen if people already have too many loans?

Central banks printing money is one thing, but for that money to go into circulation it's quite another,
since there are not that many people able to take new loans and hence, help the newly printed money
go into circulation and ultimately cause inflation. I'd say that for the time being, it is only banks
that are being helped to remain afloat.

But then, I'm no expert and I am always willing to learn from more knowledgeable people.

I think the idea is to reflate the bubble so people can borrow again against their equity.

Bernanke even said that this is his goal, to reinflate the housing bubble so people can borrow out their new equity and spend it and he is trying to achieve this by purchasing 40bil/month of mortgage securities.

You're on the right track.  To properly calculate or predict inflation, you need to factor not just the money supply but also the velocity of money.  If you Google "velocity of money" it should give you more than enough information.

It is not just inflation that is the worrying thing, it inflation along with a stagnant economy, stagflation.  Stagflation is the phenomenon of high unemployment, low economic growth, and increasing prices of goods and services, these are things that should not  happen according to Keynesian economics.  In that economic model high unemployment should mean less people have money which would lower prices, and when the economy is booming it should make more people employed and thus increase inflation.

What most people fail to realize is that there are 2 economies of the world.  There is the traditional lending business that banks do and the other business of speculating in financial markets, such as FOREX.  If you compare the FOREX market with the traditional lending market you will see it is several times larger than the traditional economy.

http://www.henrymakow.com/margrit-kennedy-bernard-lietaer.jpg
source (https://realcurrencies.wordpress.com/we-are-in-stagflation/)

What is happening is that the central banks of the world are lending money to banks at low rates and instead of banks lending the money out for traditional loans, the banks are using it on speculative investing.  This flow of capital into commodity and other markets increase the price of commodities and stocks, which causes inflation.

That is the most fantastic quote about inflation I've ever read :D

I agree. The best statements are true and funny at the same time. This one qualifies.

Here's another one from the wall thread:

+1 for that post stochastic!

That chart is a great example of why inflation is USELESS for the majority of people (poor and 'working class') when all it does is deplete the value of their savings (in cash), while maintaining the wealth of the rich, who just hoard the new inflationary money into speculative investments for 'further' gains.

Thank you for the competition, Bitcoin  ;)

Isnt one of the reasons the soviet union went bankrupt that they just kept printing rubles? Isnt that what we are doing now with the dollar just printing more money with nothing to back it ? If this is the case wouldnt it be expected that we too will have a large scale economic downfall?
I'm really new at this economic stuff so, take it easy on me if i sound retarded. I do appreciate any helpful feed back though, the simpler the better. I just learned what fiat meant if that gives you any idea where im at

simple feedback: what you say is correct.

simple but nuanced feedback: what you say is correct, but there are far more factors contributing. the analogy suffers from oversimplification. just keep delving into economic theory and you'll get a better grasp of the scope of the situation.

I appreciate it thank you

Another simple answer:

The central banks are creating more debt, and they hope that this will stimulate the economy within each country, and not reduce the value of the respective money units.

However, when the market (me, you and all the other persons) start to mistrust the debt, the value of the debt (the bonds) will go down, and may have to be replaced by outright base money printing.

The value of the money unit is of course directly connected to the number of units issued, but some mainstream economists deny even that.

Those of us that have already accepted this fate will soon be the next leaders guiding everyone out of this complete and total shit-show economy, because we already planned on it. At least I am.


It is a mathematical certainty that fiat will fail, and soon. The next ripple in the world marketplace will start a contagion that will bring it all down. Bets are out on whether it will be the EU, China, Japan, or basically every country as they are all a large economic bubble. The debt will eventually be effectively infinity as there is literally not enough money on Earth to pay back the debt. Just the downfall of a single major bank holding a stack of risky derivatives will sound the death knell of the global economy. Unless Bernake plans to print up about $1.5 Quadrillion to pay off the debt (which wouldn't work), there is nothing anyone can do.

Except move on to a new and better system. We have one now. 

While I agree all fiat will fail, the reason is certainly not a mathematical one. Keep hearing this and it's just wrong. Math has an unlimited amount of zeroes for us. The exponential function might be hard to grasp for man, but math has no problem with it.

The fractional reserve system only goes deeper and deeper into debt as the debt plus interest on that debt is always larger than the return. Soon we will not be able to even afford the interest on the FEDs loans to the US Government because the Government is several Trillion dollars in debt. Eventually the debt will skyrocket into what might as well be infinity and no amount of money will be able to satisfy the debt. All fiat currency will break down and become completely worthless at that point as inflation will completely devalue it. Exponential debt is built right into the financial model. Those zeros are being added to the debt that is growing out of control at this point, making every dollar in your pocket more worthless by the minute.

The reason is absolutely a mathematical one. The system was unsustainable from the start.

+1 , well said

@alexeft
Also note, that SHOULD the vast amounts of money created at the moment, at some time in the future get into the real economy as well, then brace yourself. We're running the risk of hyperinflation by then.

mmmmm hello guys..... the thing is...... currency wars have been around for a few years now...... deflations and hyperinflations is just one aspect of it.... just wanted to let you know...

One example is the intentional inflation caused in Japan to undervalue Japanese government bonds bought by the Chinese so they can buy them back or resell them higher.

Really, it is like the FED and the politicians peeing in OUR BEDS.

debt = money system will fail...period.

its only a matter of time.

People will stop supporting it.

I've always said that when we can pee in our beds and not worry about it, then we will truly be living in the future.

USD followed by Euros followed by Yen, basically all the major economies are devaluing, wonder when will be China's turn to complete the cycle.

Love the quote at the beginning, but the over-printing *quantitative easing* has been going on for past "N" years now.  This is nothing new.   

It is actually Quantitative Easing Unlimited, even Bernanke was quite honest about this.   I don't see how they can stop the QE, the money markets are all addicted to QE like Opium.

So then, how does one protect their money against inflation.  Obviously leaving it in a fiat bank is not a good answer anymore for several reasons.   I think they are trying to cattle-prod people into gambling in the stock market.  I'm going to invest in alt currency, but I'm guessing they'll try to shut that down at some point.  "Shut down all escape routes" for the money, right?

'protect money from inflation'

change that to 'protect wealth from inflation', to protect wealth, you need to look at things as a 'store of value'

commodities usually shine here but not 100% since supply demand will still alter the price (plus manipulation)


the EASIEST way for the avg joe to protect from inflation is to buy up as many non-perishiables that that person will eventually use.
Sound silly, but with all the people acting smart and chasing stocks, etc if they just rather invested heavily in toilet paper during sales and stocked up they would probably be better off in the long run (or runs as the case may be)  :P

You are assuming the cost of storage isn't increasing (or is free)
Another idea could be to invest in technology that reduces you monthly expenditures. Just an example wind or solar power.

Or in practical things that are scarce.

yes, energy conservation..  just hooking up wattage meters can wake people up to savings.

it is like spending $3000 to host a business meeting but only making $2000 out of it..  people forget input costs..etc  sometimes you get away with that on tax writeoffs, but many things that you can't or don't pay attention too

homeowners waste tons of money on DIY since they don't have a lot of time and experience so they spend a lot more on tools and stuff but figure they save on labor..  if they spent their time more wisely on things they are good at and just pay someone to handle each project then they would come out ahead..  but there is the fun aspect of DIY so entertainment can creep in to thinking until it goes to hell