First I want to say that this is my first time posting a thread in this forum. I have been lurking for quite some time and I am amazed at the thoughtfulness of all of your responses. I respect all of your responses.

So here it goes.

Old numbers - but you get the idea.
http://www.gather.com/viewArticle.ac...81474976753606

"According to USA Today and bankrate.com, the average debt of the American household is $84,454 and one out of every 73 of those households had to file for bankruptcy protection in 2003. The average credit card debt is around nine thousand dollars, triple what it was in 1990."

"For instance, medical debt is the cause of one in every 20 bankruptcies. The average medical debt for someone that files bankruptcy for that reason is around $25,000."

"If you knew that a $1,000 charge on a credit card would take almost 22 years to pay off, and would cost over $2,300 in interest in you only made the minimum payments would you only make the minimum payments? Most people do."

http://moneycentral.msn.com/content/...ebt/P70581.asp

"Consumers owe nearly $2 trillion
American consumers owed a grand total of $1.9773 trillion in October 2003, according to the latest statistics on consumer credit from the Federal Reserve. Thats about $18,654 per household, a figure that doesnt include mortgage debt. The number is up more than 41% from the $1.3999 trillion consumers owed in 1998."

The average American is in debt. And we hear that inflation is bad and how the fed and their wild printing presses are going to cause inflation. But is it bad for the average American? Inflation kills the value of savings but debt is the best hedge against against inflation. Could inflation actually ease the burden of the average American by effective reducing the percentage of debt to income ration?

http://truthfullending.com/debt-hedg...nst-inflation/

Hope I did a good job for my first thread in this forum. Please discuss.

Umm...yes. Wages will not rise as quickly as everything else...so now Americans will have to suffer with paying $10.00 for a loaf of bread, while still making $8.00 and still owing $10,000 in debt. Inflation fucks everyone over.

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If god dropped acid, would he see people?

Wages will lag - but they will catch up quickly because people will not be able to afford to go to work and seek higher paying jobs. Now you are making $16 and have the same $10,000 in debt. You have literally cut your debt ratio in half. With hyper-inflation you could make $10,000 a WEEK which further cuts your debt ratio.

lag is not the word. It will be impossible for wages to rise in a stagnant economy.

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If god dropped acid, would he see people?

The biggest problem with Inflation is when it gets so out of hand people stop accepting the currency as payment. Instead they will only take a barter trade or gold/ silver. What happens when you have nothing but cash and no one will take that cash? You will starve.

Inflation does make the house payments easier for the general public and any loan with set payments also will be easier for the consumer to pay off. that is IF he has any money left over after buying food. When you get paid 10,000 per week, but just a loaf of bread costs $10,000, which are you going to do first? Eat or lose your house, you can live without a house so it makes that question a no brainer.

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It is far easier to ignorantly control others than it is to wisely control yourself.

MY MISTAKE.

The concept I was trying to express is the increased money supply. We are fixated on inflation as it relates to prices but that phenomenon is lagging - I want to focus on the initial change when the market is flooded with cash. Prices fluxuate as a response to excess money in the market. The money is in the market long before menu prices are changed upward.

While we are talking about inflation though - Remember that the Fed targets 1.5-2% inflation. Which sounds like a small reasonable number.

But think about that for a second. We know that the rule of 72 shows us the doubling time based on annual percentages. http://en.wikipedia.org/wiki/Rule_of_72

1.5% is a doubleing time of 48 years.
2% is a doubleing time of 36 years.

That means that everything (cpi) will be double the price in 33-48 years. That also means that your savings account / retirement accounts will have half the purchasing power in 33-48 years as it does now.

What you don't see is that this is an EXPONENTIAL function so as time goes on it spirals out of control.

Increased money supply IS the definition of Inflation. The first thing that happens is unjustified exuberance as people put their money into another bubble, it happens every time. As long as we have Fiat currency it will never change. The money in the market is first used by the banks as they issue the loans and create even more money in the process. Because they are the first to use it, there isn't much inflation adjustment of prices, not until it gets circulating do prices go up. You can stave off inflation the way the US does, by exporting Dollars in the form of T-Bills to foreign nations and also the currency itself so that other nations can purchase oil. You can only buy oil with US Dollars, its the product of being the worlds reserve currency. China, Russia, Brazil have already began trading for oil not using Dollars. As the rest of the world realizes that the Dollar is going to be worth nothing they will cash in their T-Bills and then the inflation will REALLY get going. Thats called "When the chickens come home to roost".


We normally run a 4-7% inflation, so prices double every 7-10 years. But one shouldn't really look at it as increase in prices, but devaluation of the dollar, because thats what it REALLY is. The dollar is worth less, which is why prices go up. From 1776 to 1913 the dollar held its value and only wavered by a grand total of 16 cents from high to low over that period, since 1913 and the Inception of the Federal Reserve the dollar has lost 95% of its value, with the single greatest period of devaluation begining in 1971 after Nixon closed the Gold Window and the Dollar was thrust upon the world with no backing other than a promise.

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It is far easier to ignorantly control others than it is to wisely control yourself.

No it is not. Inflation has to do with prices.

If the money supply doubles and the population doubles during that same period ceteris paribus - there will be ZERO inflation.

People can invest in a bubble, they can pay debts - but the government is essentially monetizing the debt to pay back obligations with devalued currency.

It is funny cause I was talking to my grandma and she was saying that in the old days everything was cheap - but nobody had any money to buy anything. She was saying nobody had stuff like they do now. So our currency may not be worth what it was in 1913 but we have a LOT more of it laying around.