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More liquidity is a fancy term for "printing money." The more you have of something, the less each individual item is worth. This devalues our dollars, which results in inflation.
There are a lot of factors involved in inflation, not just the printing of currency. You're really showing your lack of understanding of economics if you just focus on QE and the printing of green backs.
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Originally Posted by WestCobb
Have you noticed how much the price of food has gone up this year? It's gone up because it takes more American dollars to get milk. Why? Because there are more American dollars in circulation.
No, that's not the only reason why. Yes, there are more American dollars in circulation, and yes, that *does* have some inflationary effect, but there's also the danger of deflation, which is just as bad if not worse. The circulation of dollars and more liquidity is necessary in a weakened economy to stave off deflation. Inflation is a problem when you have economic growth.
Quote:
Originally Posted by WestCobb
This sucks. This has exactly the same effect as if Obama said, hey folks, we're going to levy a 4 percent sales tax on all items and then ship the money we collected to rich bankers in Europe. As you know, that would go over like a fart in church. Fortunately, this way, most don't even realize what's happening.
Pisses me off. It pisses me off enough to support Ron Paul.
If we were to do nothing, it would be worse. I don't expect Ron Paul isolationists to get that, but it's the truth.
In times of more liquidity the people with money and cash put it into commodities, which increases your cost of living...
This is a buzz word for money printing.
People are predicting the end of the Euro, which is probably true.
But AMERICANS ARE NOW BACKSTOPPING LIABILITIES DENOMINATED IN THE EURO... WE HAVE BAILED THEM OUT, BUT WE ARE BROKE TOO
Uh, in times of liquidity, people borrow money. People spend money. Companies spend money. Companies keep people employed...which keeps employees, uh, spending money, which keeps customers coming into stores, which means that businesses, uh, make money.
I don't disagree that there are times when excessive printing can lead to inflation. This is not one of those times. If consumers had stockpiles of money saved up and were spending what they'd normally spend despite a downturn, then yes, excess money would be a problem. If the demand curve were normal, yes, excess currency would be a problem. But consumers are spending money just to pay off the necessities and to pay off debts. That doesn't mean that some of these consumers aren't making dumb decisions and deciding to incur yet more debt -- that could be. But in general, these are not the economic forces at work. We're living in a time when a sizable chunk of American adults are underemployed, over-indebted, and in one form or another, dependent on government stimulus. That's not an economy that's ripe for inflation.
The world and Wall Street rejoiced that the US is going to "loan" money to Europe.
So, Europe has a debt problem and the US is going to let Europe take on more debt to cover the debt they cannot pay off and this is a good thing ?
The debt is just mounting and growing here and the DJIA went up almost 500 points because easy access to more debt will solve all our problems ?
There are a lot of factors involved in inflation, not just the printing of currency. You're really showing your lack of understanding of economics if you just focus on QE and the printing of green backs.
Great. Explain to me what I'm missing chickenfried. What else causes inflation? Please be specific. I'm pretty ignorant when it comes to enconomics so please feel free to break it down for me as you would a third grader.
Huh? There is NO doubt obama is "leading from behind" on this. You think Bernake would make this move without the consent of obama?
Sorry Sanrene, I have to highly disagree. Barnanke does not care what Obama or any other POTUS thinks. He is Federal Reserve chairman and he does what he wants and Obama could not have stopped him anyways.
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