Deficit spending is theft.

[ribuck]

What's the problem?  Inflation is still low.

I'm not sure if you're serious, but ... price inflation is positive, and greater than interest rates. Because of this, most people can't effectively build up a low-risk nest egg for the future security of themselves and their families. They therefore become dependent on the state, and to help fund this the state creates even more inflation.

[Hawker]

Sure money is being printed, but a lot of money was also destroyed.  

What's the problem?  Inflation is still low.

The problem is that a lot of people here believe in what's called the Austrian school of economics and it insists that inflation must be high as a result of interest rates being low and the Fed printing money.  Its one of those cases where reality doesn't match theory so reality gets ignored.

[publio]

Let me try to explain why I think inflation is low.  Please correct any flaws in my reasoning.

It has generally been observed that, in the short term, there is an inverse correlation between unemployment and inflation.  Unemployment is high.

Another argument can be made, when we acknowledge that there is a natural rate of unemployment.  The unemployment rate oscillates around this natural rate.  Now, if we hold the rate of inverse correlation to inflation constant, we can see that the inflation rate similarly oscillates.  Perhaps the average can be called the natural rate of inflation.  This is a non-zero number.

Before saying that printing money and low interest rates cause inflation, we have to look at the circumstances.  Much money was lost when banks cut lending.  This money was replaced, and then some.  In order for the replacement money to cause inflation, it must first be spent.  Due to low demand and reluctant lending, this is not happening.  So inflation remains low.  Increased demand would increase inflation.

It is true that we have a negative real interest rate.  This does not mean that inflation is high; interest rates are low.  The idea is to make other investments more attractive.  Investment here can mean real estate, stocks, increased lending, or a new tv.

[TECSHARE]

The problem is your lack of understanding of the federal reserve fractional banking system. Every dollar created is backed only 10% in "real capitol", but even that "real capitol" is based upon inflated dollars that have already been leveraged several times as it snowballs upon itself. The network of major federal reserve banks are literally handed the money by the federal reserve out of thin air, just digits punched into a computer. Even if they are not lending they are STILL buying up capitol at fire sale prices so they can leverage that even further to take advantage of the fractional reserve system while it lasts and before the ponzi fails.

BTW look up "Shadow Stats" for some interesting data analysis.