Interesting PM. Thought I’d share. Someone tell me why I’m wrong. 
The only thing I know for sure about thoughts on economics is that they’re like assholes…
My take is that Glen Beck is just another alarmist reporter. If what he was saying were true then a cheeseburger would cost $20 dollars, wouldn’t it?
The way I see it is that when the economy collapses the money supply shrinks, you get deflation, and suddenly stuff companies are selling is worth less than it was and companies can no longer turn a profit, they go out of business, fewer people buying stuff means less demand so lower prices and more companies out of business and then more people without jobs and it snowballs. It’s sort of an exponential growth, and why the economy will never be in steady-state, always growing or shrinking.
The consumer price index supports my theory. Despite all this “helicopter money” getting dropped into the economy by bailouts and stimuli and whatever, stuff hasn’t started costing more due to inflation (i.e. diluting the value of the dollar by just making more.) The CPI has actually been stable for the last 6 months.
The government and the federal reserve are actually fighting like hell against deflation so that the snowballing downward I described doesn’t happen. Granted, there’s going to be some pretty nasty inflation once we recover and all the helicopter money takes hold, but it’s better than the economy going into a death spiral.
Another interesting thing to note is that since Nixon took us off the gold standard, the dollar has been inflating but stable. The CPI had some pretty wild swings on the gold standard because we couldn’t effectively use monetary policy (control the money supply) to keep our dollar stable. Now the swings are much less wild.
If I understood it right, part of what won Milton Friedman a nobel prize in economics was his argument that the federal reserve letting the money supply shrink during the great depression significantly lengthened and deepended the depression.
Don’t keep a million dollars in cash because it’ll be worth a lot less in 2011 when inflation starts to kick back in, but who keeps retirement money in cash in a fiat money system anyway? You keep it in real estate, or stocks, or mutual funds, or anything else that has real value and isn’t subject to the dollar’s value.
The good news is that inflation will make our national debt worth less in terms of real value. :mamoru: Stupid Chinese…
That’s my take anyway. I’m sure an intelligent argument could be made to the exact opposite of how I see it, but my interperetation makes the future seem less bleak than Fox’s, so I’m sticking to it.[/quote]
I double checked, and the CPI hasn’t exactly been stable, but swinging between inflation and deflation so there has been no net change since this time last year. I.E. stuff costs the same as it did in January 2008.