Hey Mike; Thanks for the comment, I thought maybe you guys had split the scene. Looking forward to your input.
Hi Pat; The problem with leaving the country is that when you come back it’s worse than when you left. That subject would make a really good post. Thanks for your comments.
There something wrong when a redneck like me can figure out what’s coming in the economy. I can see it as see if it were playing out right in front of me. Maybe that’s because it is. You know the old saying, common sense will take a long way in this world. The alarming thing to me is that I can see why they’re doing what they do, if I were stupid I’d do the same thing.
I know in the last post I said, the next post would be about hyperinflation, I’ll get there but I need to go over one more fundamental to try and straighten out the misconception about the velocity of money. Fortysomething years ago I remember a tutorial in a micro economics’ class about the velocity of money. At that time the definition was, the speed at which the money flows to new goods and services. I also remember writing off that theory as a determinant in the calculation of the consumer price index as just so much hogwash. The concept itself is left to be defined by the user and by the circumstances of the use. Way too complicated for me and the calculation only works in history not in the future, only when a set of circumstances are already know. The reason I bring this up is because there’s a lot of mention of the velocity of money to defend the Federal Reserve’s position on “operation twist”, the program of injecting 85 billion dollars a month into bad mortgages and Federal debt. Remember this when we start talking about hyperinflation. Back when I learned about it the calculation was for a unit of money over a period of time, the results being a number that represented the speed that money transformed to gross domestic product over time, that is still the classic definition of the velocity of money. In recent articles people who should know better are using something I don’t recognize as the velocity of money, GDP over money supply, which they say is a low number that indicates hoarding of money by manufacturing and the banking industry and it indicates that there is no forward movement in inflation. That my friends is total hogwash, if they’re going to mutate calculations they should take the money supply and divide it by GDP which will yield an indication of the rate of inflation. All this explanation when it would’ve been easier to say the calculation for the velocity of money is total fiction, has no bearing on anything and should be totally ignored. It’s like the theory of relativity, who cares, no one understands it anyway. The problem is they actually use this number in the computation of the inflation rate, which intentionally lowers publicly accepted rates of inflation.
Hyperinflation is a condition in the economy when the rate of growth of the money supply is higher than the rate of growth in the gross domestic product. The gross domestic product is the sum of all new manufacturing and services produced in this country and money supply is the amount of money the Federal Reserve prints out of thin air and injects into the market, currently by buying bad debt produced by the banks and Federal debt in the form of bonds and Treasury’s. A good example of hyperinflation is the price of renewable energy. The wind and the sun have been producing energy since the beginning of time but with the advent of petroleum refining and the great amount of power advancing technology required, wind and sun technology lost out to cheap and abundant petroleum, in other words it wasn’t cost effective. The price of petroleum rose, as a simple supply and demand issue – demand higher than supply( price inflation ).The Federal government decided spending billions of dollars in energy production, in the form of renewables, was a great idea. Any idiot could have told them it cost $4.84 a kilowatt using wind or solar as opposed to 5 cents for petroleum or water. So they raised the money supply to produce energy but the production of energy from renewables has remained inconsequential over the last four years. So an increase in the money supply to produce energy and a very slow growth rate in the production of energy equals hyperinflation in the cost of renewable energy, so high in fact that the government has made sure that sun and wind energy will never be used as a significant source of anything other than wasting tax payer money in subsidies still to this day. Same deal as bio-fuel, same deal as with the overall economy. It’s there in plain sight and no one sees it, I guess there’s some validity to hiding things in plain sight. According to the published numbers in 2010 the gross domestic product was $14,000,000,000,000, two years later at the end of 2012 the gross domestic product was $15,000,000,000,000, that’s roughly an increase in GDP of a little less than 4% per year. The money supply in 2010 was two trillion dollars, today it’s $10,000,000,000,000, I’m not telling you the percentage of the increase its so ridiculously high, you figured out. Remember when the increase in money supply is greater than the increase in the GDP, that’s hyperinflation. I’ve given you the numbers you figured out.
So why doesn’t anybody talk about hyperinflation? Panic. Everybody knows that the government manipulates any kind of information that would make them look bad and with the continued trend of the dumbing down of America it’s increasingly easy to do. The politicians have a plan, how would I know? It’s in plain sight, you see it, you hear it, you pay for it every day. If you and I had no clue about economics’ and didn’t have a whisper of common sense, no morality, no business experience and were only interested in self preservation, the plan they have hatched would be the exact thing that we would do. To figure it out you have to think stupid, I mean box of rocks stupid. We’ll discuss the plan next time.