All You Need to Know…

According to wikipedia, inflation is a “rise in the general level of prices of goods and services in an economy over a period of time.”   As the article notes, the term used to be applied more specifically to increases in the money supply.    I think the more specific term is the more important one… since that is the cause, not the effect.

If you’re curious how the recent bailouts have affected inflation, ask your kids if they want to see a picture of a hockey stick and then click on this link, courtesy of the Federal Reserve.

Anyone think it’ll be business as usual next year?  Oh, and not to be outdone, our Chinese banker overlords are now unveiling a ginormous economic stimulus plan of their own.  We rely on our Chinese friends to buy truckloads of Treasury Bonds every month to keep the governmental lights on.   I wonder how eager they’ll be to keep buying our debt when they are starting to dig into their own piggy bank to keep things going at home?

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2 Responses to All You Need to Know…

  1. Jim says:

    Attention should be drawn to the scale of the hockey stick graph, since the vertical axis doesn’t start at zero. Shocking, nonetheless.

  2. Bart says:

    True… I’m guessing if we look farther back in time we’d see some other swings as well… still, we’ve basically jacked up the money supply by 50% in the space of one month, and we’re just getting started with the bailouts.

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