How is it possible to print money like hell and cause no inflation

Discussion in 'Economics' started by misterno, Apr 29, 2010.

  1. Yet, this is right now happening

    Can someone explain how this is possible?
  2. Because contrary to what the gold bugs would like you to believe, most of the money being printed is not getting into the money supply in the American economy. First, it is plugging big giant holes in bank balance sheets. So a good portion is basically replenishing bank reserves for bad loans and assets that have permanently devalued.

    Second, a good portion is also going to foreign banks for the same reasons.

    Third, look at the crisis the Euro is in right now with Greece? So the demand for Dollars is actually increasing around the world. This provides another "outflow" of this money being printed going into foreign hands.

    Combine that with a change in consumer habits by many Americans, and you have the recipe to NOT have inflation. :)
  3. The above post is excellent. I would add that the current money printing is basically offsetting the massive deflation that hit worldwide. So, in reality it was a huge transfer of wealth from small businesses, and middle class, to anyone with access to global debt and equity, multinational corporations and banks.
  4. pspr


    Besides, there is usually quite a lag time from running the presses until inflation makes its way to consumer products.

    I'm still waiting for UPS to deliver my box of money from the
    FED. How about you?
  5. jem


    Salaries and real estate will go back to 90s pricing.
    Gas and food and health care are inflating.
  6. BVM88


    In addition to what has been said above, the banks have used the money to trade/invest in stocks and bonds.
  7. Great post. Exactly. And, as stated the money has directly been "put to work" in equities/bonds. Is there money making it's way to Main Street?
  8. you are all fools

    and soon you will see why
  9. The inflation is caused when too much money is chasing too few goods. In current environment industry utilization is only 70%, far from full running capacity. This keeps inflation under control plus people are saving more instead spending.
  10. BVM88


    Instead of a name calling, ego boosting reply, why don't you answer the OP's question, so the world can see what a true genius you truly are? Let me guess, you are a troll and have delusions of grandeur, am I right?
    #10     Apr 29, 2010