Hugh

Hyperinflation, Here We Come

Inflation is sometimes caused by the printing of fiat money, however, the inflation that we have experienced is an inflation of "checkbook money," the money that gets multiplied by the fractional reserve system.

You put $100 in your bank, your bank loans out $90 of your money, that $90 winds up in another bank, that bank loans $81, that money gets into another bank, and then $70 of that money is loaned, etc.

This is the modern cause of inflation. Because of this, some argue that we are in a deflation, in that banks are more reluctant to loan and the public reluctant to borrow. This winding down of credit extinguishes the fractional reserve's money creation abilities. There may be more paper money but less total money.

13 Predictions for 2008

Ron Paul has the right ideas, ideas that he didn’t invent, but were already there, given to us by Locke, Jefferson, Adam Smith, von Mises, Rothbard, Rand, etc.

All he has to do is regurgitate these ideas in an effective way. What does he do? He stumbles over the questions, looks very weak and afraid. The other night on CNN with Jeff Beck, Paul had a full hour. He answered questions with a, “yeah,” instead of a “Yes.”

He is the last chance for Freedom, and is blowing it. I sent him money, worked the town, etc. Not any more. Paul is a little Jerk, a huge disappointment.

My Ten Predictions for 2008

One feature of free markets is the tendency of commodity prices to average over entire markets. In free markets, gold will not be $900 in one area and $700 in another, freedom of movement will dictate a price of $800.

On thing Tan doesn't mention is that labor is a commodity, and American's labor will further merge with the world's price for labor. A low-skilled American can no longer count on selling his labor-commodity at $25,000 per year when those in India demand $5,000, and billions of people in other countries demand even less.

Expect prices for many goods to inflate, except for real estate and American labor. It doesn't look good for millions of Americans.