Monetary Tsunami In America!!

Crashfrog,Your graphs are deceptive. I suspect that this graph is based on the common economic principle that says inflation is an increase in the average price of commodities (is that right?). Lots of major economists teach this.But the other side of the story is that many major economists define inflation as an increase in the aggregate money supply. These economists define then as the root cause of inflation the printing of money, or perhaps an increase in the percentage of money printing (because naturally, for the value of the dollar to remain constant, more must be printed to keep up with population growth). Some say an increase in prices and an increase in the money supply are synonymous. Not necessarily.Printed money is not necessarily invested in the U.S. economy. Some of the money can be used to prop up dictators in foreign countries, such as Mubarak of Egypt. Or it can be invested in an attempt to knock them down, as in the case of Gaddafi of Libya. Its all political. We decided at some point that we like Mubarak (even though he is no less tyrannical than Gaddafi) and we hate Gaddafi. The solution is neutrality, but that is another subject for another thread.Or the money could be used to build squirrel bridges (about this, I am not kidding). Or it could be used to study the effects of marijuana on men living in Turkey. Or $10,000 worth of it could be used to put up one sign informing passers-by that stimulus money is being used to improve a runway. Yes, $10,000 for one sign.Spending money like this won't show up in the price of goods immediately. It just wastes wealth by investing it in useless places. Which economy do you think will do better? The one investing in squirrel bridges, or the one investing in the establishment of justice? The source of our economic theory is not in John Maynard Keynes, or even in Ludwig von Mises. It is in God.

---

"For since, in the wisdom of God, the world through wisdom did not know God, it pleased God through the foolishness of the message preached to save those who believe...But God has chosen the foolish things of the world to put to shame the wise, and God has chosen the weak things of the world to put to shame the things which are mighty; and the base things of the world and the things which are despised God has chosen, and the things which are not, to bring to nothing the things that are, that no flesh should glory in His presence. But of Him you are in Christ Jesus, who became for us wisdom from Godand righteousness and sanctification and redemption that, as it is written, He who glories, let him glory in the LORD. (I Cor. 1:21,27-31)"Oh, the depth of the riches both of the wisdom and knowledge of God! How unsearchable are His judgments and His ways past finding out! For who has known the mind of the LORD? Or who has become His counselor? Or who has first given to Him and it shall be repaid to him? For of Him and through Him and to Him are all things, to whom be glory forever. Amen." (Romans 11:33-36) ~ Sola Deo Gloria

Crashfrog, I was alluding to the graph of U.S. yearly inflation since 1900. I accuse you of no dishonesty, nor anyone, merely that inflation as defined in that graph (and as in Keynesian economics) does not directly correspond to the change in the value of the dollar. I know of at least one: Richard Maybury. Even in as radical a case as you suggest, the persons burying it in their backyard would at least know it was there, and would possibly feel some sense of security from it, possibly leading to different spending and selling habits. But that is too radical a case to be pertinent to the discussion anyways. My statement was meant to demonstrate the irrelevance of the size of the money supply to the price of goods and services, not to demean you in anyway. Even in the case you suggest of dropping printed money from helicopters, the prices of goods and services fluctuate based upon other variables as well. While they do fluctuate based upon the size of the money supply, they do not correspond directly, their price being based also on international and global availability of raw materials, and on demand, which is based upon numerous variables.Yet inflation of the money supply does directly devalue the dollar. Yet the devaluing of the dollar does not directly correspond to the price of goods and services, though they will generally correspond to one another. As an example, the arbitrary price of oil can change by 100% in a matter of months (as we have seen), though the dollar may not have been devalued. Inflation of the money supply causes the devaluing of the dollar, which leads generally (but not at all directly) towards an increase in the cost of goods and services.While the short-term effects of drastic stimulus plans (such as your's) may be quite profitable, the long-term effects are devastating.