Government salaries are sure inflating and have been for the last 2 years. I believe this happened in zimbabwe before their hyperinflation. We are having inflation in food prices because look at the money supply being thrown into food in the form of food stamps. If I remember right, a family of four gets over $450 worth of food stamps and some of those people still put some of their cash toward extra food. Then you have 39 million people on food stamps and pretty soon we are talking about some real money every month going just to the supermarkets. Yes its true that the banks are getting all the money now, but dont worry...that money will trickle down eventually. A trader makes a 100 million dollar bonus, even if he just rolls it back into his account to buy more stocks, the company that gets the money is going to spend it on something which will keep trickling down and down.
It's a lack of "velocity", the amount of money that changes hands per unit time. I'm sure somebody can link to a chart that shows this. My fear is that velocity and inflation will pick up like crazy just when the economy starts to recover.
Well technically the seller of the securities is the one who receives the cash, not the company. This seller now decides where to allocate funds....Saving will help depress inflation, or spending will increase...
question is what will happen when housing goes back up into the uptrend; aka banks balance sheets go back into positive? Can the fed reverse-split the money supply both digitally and in fiat form.
There is damn inflation, people just aren't seeing it yet, that's what happens when you print money like a loon, it's going to take awhile for the markets to realize they're being screwed. I'm no goldbug because I know it doesn't have to be gold and silver that has to be a currency. However fucking hell you lot, any idiot can see that the current banking system is a fucked up mess waiting to happen.
Broad money creation isn't done just by the govt. The private sector has pulled back to such an extent that the govt's printing press can't make up for the shortfall.
Have you ever wonder why the stock market keeps going higher and higher? Zimbabwe stock market went up 12,000% from 2006 to 2007 as Robert Mugabe printed more money. The Fed have tried to inflate the economy back to normal.
Investing cash will create new jobs, spending will preserve jobs and saving cash will destroy jobs & economy. Interest rates in banks Japan 0.1% USA/Canada 0.25% UK 0.5% EU 1% India 5% Pakistan 12.5% http://worldinterestrates.info