The deflation hysteria is in full effect along with the infamous “double dip.” I can’t help feeling that I’ve heard this all before. Déjà vu?
Well, funny I found this article Deflating the deflation myth: Fed chief Alan Greenspan is claiming that the specter of deflation is upon us. The truth, however, is that Fed-created inflation, not deflation, is threatening American prosperity from 2003.
History is repeating! What is the next asset bubble the Fed is creating. They are holding rates too low for too long yet again. The deflation fear is a fallacy.
Further more the article states:
The government, however, perpetually desires inflation because it benefits enormously. First, it uses depreciated dollars to help float away the national debt; i.e., it pays interest to the holders of Treasury securities with dollars worth less than the dollars used originally to purchase the securities. Second, the government uses the newly created dollars first before they become worth less by increasing the amount of money already in circulation
How to steal from the poor and give to the rich? Therein lies the dirty little secret the Republicans don’t want you to know. The Fed is funding the Bush tax cuts with the poor and middle class. Prices on everyday goods, like um… food, are being “taxed” with inflation and nobody even realizes it.
