Where did all that Quantitative Easing go? Right here.
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| Author | Content |
|---|---|
| Bob_Robertson Dec 18, 2014 12:40 PM EDT |
This is normal. The Federal Reserve has quadrupled the supply of money since 2008. The effects of this inflation are seen in commodity prices. Not _all_ commodity prices, and not all at once. Stock market prices (stocks are just another commodity) went up, now the VCs are desperately seeking returns since their bank accounts earn nothing because of the artificially low interest rates. And so on. Why is anyone surprised? This is exactly how an inflation fueled boom-bust cycle works, and it always has. http://mises.org/library/does-austrian-business-cycle-theory... |
| BernardSwiss Dec 18, 2014 8:48 PM EDT |
Wait-a-minit... - - - Money supply: up (x4) Commodities: up Wages: ??? |
| jdixon Dec 18, 2014 9:05 PM EDT |
> Wages: ??? http://www.epi.org/publication/a-decade-of-flat-wages-the-ke... And for a longer historic period: http://en.wikipedia.org/wiki/Real_wage Real wages peaked in 1973 or so and have been level to down since. |
| BernardSwiss Dec 19, 2014 1:08 AM EDT |
Actually, I meant that as a rhetorical question. In fact, someone already pointed me at this link, earlier today: http://www.advisorperspectives.com/dshort/charts/census/hous... |
| Bob_Robertson Dec 19, 2014 9:51 AM EDT |
I got rid of the broken link, silly escape codes. Anway, Bernard, you said rhetorical, it's still a question that many people ask. The printing of a currency does not (and cannot) effect everyone and everything equally. If for no other reason, _someone_ gets to use the new money first. Those who get the new money spend it at the _old_ value. They are able to utilize resources and consume real things without having produced anything first (to earn the money they're spending). So the quantity of real good and services decreases at the same time the quantity of money increases. That new currency percolates through from one sector and industry to another, prices adjust upward in response both to the new demand created by the spending of the new currency, but also to the greater currency in circulation. The last people to get the new currency have, until then, been spending their savings, which was earned at the old rate, to pay the higher prices. Inflation of the supply of money is a method of transferring real wealth (the stuff, rather than the fiat currency) from the many to the few. |
| linuxscreenshot Dec 19, 2014 12:53 PM EDT |
Quoting:And so on. Why is anyone surprised? This is exactly how an inflation fueled boom-bust cycle works, and it always has. It's great to see someone who truly understands economics, and doesn't simply believe the talking heads on CNN, etc. I'm impressed. Gold is your friend. |
| jdixon Dec 19, 2014 3:35 PM EDT |
> Gold is your friend. Yes, but it shouldn't be your only friend. Gold is only one part of a diversified portfolio. But this isn't really the place for that discussion. |
| number6x Dec 19, 2014 4:10 PM EDT |
The value of gold fluctuates, wildly at times. It is subject to the psychological manipulation that creates the boom and bust of all commodities traded in markets. Gold futures can drive you crazy, and do affect the price of gold. Treat it like all other investments. A good part of a portfolio, but do not fall for the glorification of gold as some kind of salvation for security and stability. |
| Bob_Robertson Dec 19, 2014 5:23 PM EDT |
ScreenShot, thank you. You are too kind. The only safety is in diversity. All commodities change in relative value over time, because all value is subjective. One of the problems with inflation is that since the quantity of currency is changing, it becomes impossible to rationally calculate. Exactly like a carpenter trying to work with a ruler that changes its length. |
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