Thread: Quantitative Easing, Money Velocity Inflationary Armageddon

Quantitative Easing, Money Velocity Inflationary Armageddon

Economics / Inflation
Sep 01, 2010 - 04:00 PM

By: DeepCaster_LLC

“The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation -- whether the early 1920s in Germany, or the Korean and Vietnam wars in the US -- starts with a passive expansion of the quantity of money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.

People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason", causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks…

"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr. O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".

Some might smile at the Bank of England "surprise" at the recent the jump in British inflation. Across the Atlantic, Fed critics say the rise in the US monetary base from $871bn to $2,024bn in just two years is an incendiary pyre that will ignite as soon as US money velocity returns to normal.

Morgan Stanley expects bond carnage as this catches up with the Fed, predicting that yields on US Treasuries will rocket to 5.5pc…

Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding…

Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to understand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments…

Great numbers of people failed to see it coming. "My relations and friends were stupid. They didn’t understand what inflation meant. Our solicitors were no better. My mother’s bank manager gave her appalling advice," said one well-connected woman.â€

U.S. Unemployment reported August 6, 2010
9.5% 21.7%

U-6 Unemployment reported here as 21.7 percent. Several other sites list it as 22.6. Either way... we are SCREWED and this megalomanic governments wants AMNESTY

Let the fricken Trials Begin .. or then again.. you can just sit on your ass again America .. pull out a prayer rug and give it a chance .. OR just start calling everyone Comrade