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27
Sep

What is Inflation

   Posted by: chris   in Fish Talk

What is Inflation

Inflation is generally regarded as price increases, however price inflation is merely a symptom of inflation.

So regardless of what your favorite economist would have you believe inflation is an increase in the money supply or in America’s case and increase in the debt supply.

How is Inflation Regulated

Inflation is regulated by restricting the supply of money in the economy, and seeing as money is debt, inflation is regulated simply by making borrowing undesirable, by making the repayments unpalatable, by raising the interest rates.

Why is Ireland Screwed

In Ireland’s case neither the historic boom nor the nuclear burst is the fault of the current politicians. Their demise can be traced to Albert Reynolds trading Ireland’s sovereignty to the EEC for 8 billion that turned into 4 billion.

When control over Ireland’s money supply moved from the central bank in Dublin to wherever the European Bank sits, Irealnd’s control over its economic conditions was lost.

While Ireland’s economy was in a runaway boom, France and Germany where in mini recession, so naturally the European central bank kept interest rates low in an attempt to stimulate the economies of its largest members.

However keeping interest rates in Ireland low stimulated borrowing which stimulated the money supply which had people falling over themselves to make inflated offers for very ordinary houses.

When a 3 bed 800 sq ft terraced house without parking in a very average neighborhood is selling for 600,000.00 Euros you have to ask yourself questions.

Ireland is/was awash in money which in fiat currency terms is debt.

The economy is at its base a country sized market where its citizens interact.

Regardless of what the citizens want to believe or think the market is always right, and just because you want to pay more for something than its worth doesn’t mean that the market should or will validate your stupidity.

A very wise Greek gentleman who made his living buying out hardware stores that got into trouble and reselling the items at outdoor markets told me once and I quote: “The day you buy is the day you sell”.

I wonder what he would have thought of the sheep who lined up to buy mickey mouse dog boxes masquerading as luxury apartments off the plans at inflated prices in areas of Dublin that only the brave would have set foot 10 years earlier.

Why is America Screwed

Unlike Ireland which has  since 1922 being governed by incompetents who are elected by incompetents, America has a rich history of knowing how to make a buck.

America’s problem lies in an electorate who have come to believe that in a deluded fashion that the world owes them a living.

Remember the market that was country sized, turns out that it is planet sized and it also turns out that the cheap labor sources that made America great are eroding at an alarming rate. Soon the average American will have to pay unsubsidized prices for thing  like food and gas.

Enter George Bush rather enter Dick Cheney who believing in his right the free control over the earths resources and the American people’s  right to cheap stuff, decided to rewrite the history of the world in relation to colonialism and came up with the brilliant idea to invade Iraq and free its “”people”” sorry I meant  oil.

So he get’s America into a fight it can’t win, and the American electorate hates voting for politicians who get America into fights it can’t win almost as much as politicians who run up the deficit. So what to do.

Simple!!

Get  Greenspan on the phone and convince him to keep interest rates low just when they need to be increased to slow down a runaway housing market, and Greenspan being the good Republican did that thing for his “don” and hey presto just like that $200K houses where being bid up to $400K by nobody white trash awash in cash/debt and when the dust settled Cheney ran for the hills, Bush spread his stupid trademark grin and skedaddled to his ranch in Crawford and Greenspan looks like a has-been washed up, didn’t you used to be someone type, and a once great nation is now an asset held by the people’s republic of China.

And to think of all the life’s lost and dollars spent fighting communism and now they own us hook line and sinker thanks to money that is based on debt and incompetents controlling interest rates.

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This entry was posted on Monday, September 27th, 2010 at 1:56 pm and is filed under Fish Talk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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