Howcome US is printing money like crazy but there is no change in inflation? (student loan, 2013)
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Inflation is masked by products not being compared on a per unit cost basis i.e. the incredibly shrinking package at same or slightly greater price or dilution of product in real terms or quality.
I challenge anyone to examine closely the items you buy. Here's just a few examples noticed recently on everyday items.
Juices in a can: real juice content from same manufacturer (Jumex) brand diluted from 35% juice to 21% juice.
Cans themselves shrink 12 oz to 11.5 oz to 11oz
Ice Cream half gallon 64 oz shrinks to 48 oz
Oyster Crackers 12oz 59c a year ago now 89c at cheapest
Spaghetti Sauce used to be 32oz bottles then 30oz then 28oz then 26 oz noticed it is now 24oz
Foot mat for Kitchen floor: the backing and foam reduced in quality same price.
Toilet Paper width of roll reduced 1/4 inch the package is shrinking - same price
All these little reductions / dilutions in quality mean significant more inflation than it seems and overall declining product quality. Couple this with the $85 billion a month that is printed by the Fed which dilutes the buying power of those dollars in the average consumers hands.
Check John Williams Shadowstats site to see a lot of government economic data calculated as it was historically and normalized over time and you will see a different story than much of what is shown / reported.
Couple this with generally stagnant wages / incomes and well the average person (I'd guess 80-90% of people) are getting squeezed from both ends and eaten like Pac-man.
Printing does not cause inflation or currency devaluation. It is not a simple fraction with supply on the denominator.
Inflation is a market phenomenon; the product of supply and demand. MV=PY
Printing only affects the supply (M). Tight credit and anemic velocity has kept demand (V) significantly lower since the crisis.
The forces counteract, ergo minimal inflation.
To put that in colloquial terms, current monetary policy is designed to cover the black hole left by the cockamamie social and credit policies (housing, consumer credit, student loans) of the past 20 years or so, peaking in the mid-2000s, and to keep those heavily indebted afloat.
All the printing of all that money did was re-inflate the banking system back to the point it was before the crash.
to see real inflation we need strong job growth and wage increases which we are not seeing.
banks create money to be loaned out because they get to loan you money, you put that in your checking account and that counts as an asset ,the loan counts as an asset and they can loan against those 2 assets even though only one really exists.
when the demand for loans dropped that created money went away and vaporized so much of what was printed just filled the existing hole.
Most "money" is created from bank credit. Considering we were adding a trillion in HELOC and mortgage money per year and have been paying it back by some 200 billion a year there is 1.2 trillion to make up for.
People believe what is said over and over again. The ole "money printing" accusation makes one sound savvy and hip. The problem is it really isn't true in the domestic economy. Abandon the economic riddles and depend upon the old reliable scientific methods: Observe first, and then explain.
Current employment, demands and output levels are just too low right now to ignite onerous inflation.
I suspect the money printing myth has to do with confusion about QE, where the Fed is doing all these swaps.
The Fed does indeed create money from nothing, but that money is essentially swapped and only within the banking system for like amount paper. So there is no net gain at the banks, and certainly no increased money into the general circulation. Now if banks were lending like no tomorrow we might begin to see a problem.
All the money we're printing is to replace the money we lost buying Chinese crap over the last 20 years. The Chinese work till they die, and we cheat by printing money to keep up with them because we refuse to work to create value, instead we print money to create value.
All the money we're printing is to replace the money we lost buying Chinese crap over the last 20 years. The Chinese work till they die, and we cheat by printing money to keep up with them because we refuse to work to create value, instead we print money to create value.
p.s. "shhhhh..don't tell the Chinese."
There should be no secret that China prints Yuan so that they can employ millions of their people to make us our stuff cheaper than we can. So we trade our fiat for real stuff. Huge net gain for us. Just ask that what's his name Austrian. Oh, Henry Hazlitt.
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