market ace

Buffett's Latest NYT Op-Ed: The Greenback Effect

I think the inflationist are missing a very important point They mistake those green pieces of paper that Bernanke keeps printing and dumping on the banks so they can buy US Treasuries as money and this "excess" money will cause inflation.

The reality is that these pieces of paper have not been "money" in the US for a long time, because in reality "credit " is our money. Evrything is bought with credit by gov't and the people. Our "money" is the plastic in our wallets, mortgages, home equity loans, car loans etc.

While FR$ are being printed the credit contraction of our real money is sharp and will continue and this can only bring deflation. Shorgages and lack of supply may cause future prices increases and a currency devaluation, voluntary or otherwise, may appear to cause inflation (price increases) but inflation as we know it is almost impossible as credit disappears. The Bond markets know this in spite of the media constantly ringing the inflation bell.

Until a new type of stable monetary system is found for the US and indeed the world it appears that inflation is not the biggest worry around.