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Is this why they say there's going to be hyperinflation?

I think I finally understand why Schiff and Rogers are saying there is going to be hyperinflation.

Banks loaned out way more than it had (because of the low reserve ratio) --> People defaulted A LOT --> Banks are going bankrupt --> Fed gives them money to cover their losses (5 trillion or so plus bailout $) --> Banks are at almost full reserves --> Banks hold on to the money because they don't know how much more they are going to lose --> As soon as the massive defaults slow down to a trickle, banks feel comfortable loaning out money again --> 5 trillion becomes 500 trillion (5 trillion x 100 because of the reserve ratio) because banks can loan out a certain amount more than they actually have in reserves --> hyperinflation

Here's what I don't understand though, if the banks lend out the money slowly, can we just have inflation instead of hyperinflation? Have the banks learned a lesson about lending out significantly more than they have or will they end up loaning out just as much as before (plus, they have an incentive because the Federal Reserve has given them the cash to make sure they won't go bankrupt)? Can the Federal Reserve halt the hyperinflation by increasing the amount of money they destroy and thereby deflating the dollar? Will they do that?




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My friend was a little bit pregnant once.

Apparently they had sex real slow.

"if the banks lend out the money slowly, can we just have inflation instead of hyperinflation"

*****

www.women4ronpaul.com

Ron Paul "Sign Wave Across the USA" -- November 5th!

They are preparing people for inflation

My local television news did a segment today on why "inflation is good for the economy as a whole." It reminded me of this New Deal propaganda film that was posted on iTulip yesterday.

http://www.youtube.com/watch?v=99Dzdc1H0wM&eurl=http://www.i...

Couple this with the interest rate cuts and the UDX falling off a cliff, and pretty soon we will be back to $4.00/gallon gas. I guess on the upside, everyone will be a millionaire--just like in Zimbabwe.

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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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Sure, very good

So with everything else, people can just figure their paychecks purchasing power will be cut in half. Yes, and they are already beating the drum about raising gas prices to come. A loaf of bread is up to 200 m in Zimbabwe, IF you can find one.

Republicae's picture

The mass endoctrination

The mass endoctrination within this country is simply astounding. It boggles my mind to think that people and politicans are so damn dupped.

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

reminds me of this

"...People say, "If the Congress were more representative of the people it would be better." I say the Congress is too damn representative. It's just as stupid as the people are; just as uneducated, just as dumb, just as selfish. You know the Congress is a perfect example, and created to be a perfect example.“
--Dean Acheson

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"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."
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That quote is very well put.

That quote is very well put. When you look at the rate our personal debt (as a nation) has grown put against the Federal debt, the government isn't looking so bad. We as a people are in even worse shape than our government. Sad but true.

The insanity of it all

Jim Kramer is actually praising the FED for the interest rate cut. He basically says "throw all the money at everything and don't worry about it"
WHAT!!!!!

"Paper money eventually returns to its intrinsic value:zero." - Voltaire

" Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master. " - George Washington

Republicae's picture

How true....I honestly think

How true....I honestly think Dr. Paul is constantly astonished at the stupidity he hears on the floor of the House. I can just imagine how he must shake his head in absolute horror at the shear ignorance he must witness there.

He is a better man than I; I would be tossed off the floor in a second after saying what I thought of the lunatics in Congress.

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Republicae's picture

Well, the reason the banks

Well, the reason the banks aren't lending is they are reaping huge risk-free rewards by holding the bailout money in the FED's reserve accounts at 1.5% being paid on those hundreds of billions.

The FED has been taking steps to implement a program that amounts to a hybrid-quantitative easing and have injected over $1 Trillion into the system since Sept. Now, the FED, according to the news this morning, will embark on a pure quantitative easing program which by-passes the fractionaly reserve system completely. In other words, they will no longer be monetizing debt nor will the money supply be dictated by the rate that banks lend money; the FED will, in essence, become a direct lender to businesses and consumers.

Once hyper-inflation begins it is impossible to stop until sound monetary policy is restored. Hyper-inflation is not only a monetary event, but it is a psychological event as people lose all faith and confidence in both the money and the government. Once that is lost there is little a government or central bank can do to restore it. Usually, the government falls in such cases. Hyper-inflation will mean the death of the Central Banking System and the Federal Reserve Note, it will also mean the end of the corrupt political system that maintains it.

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Republicae, just read the statement

and the interest on both required and excess reserves has been moved down to 1/4%, this could force the banks to resume lending and we could see a vicious move in the multiplier and the money supply, do you think the banks will still be willing to hoard at 1/4 %??....Euro already up to 1.40 currency markets should be going crazy tonight in Europe......just another thought....it is possible that we could see the carry trade form through USD as opposed to the Yen which had a great unwind, if the carry trade resumes through the dollar, it could be even a steeper drop then most expect,......I would never say that I am sure, but i have a feeling that 1.60 gets taken out with ease on its next trip up, with gold leading the way, things could start getting downright nasty here in the new year

Republicae's picture

I think you might be on

I think you might be on target with your assessment. The problem of course is the fact that there are a combination of factors all converging. One of the primary factors is the push by the FED toward pure quantitative easing....I would say the first quarter of 2009 should be very interesting.

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Yes but....

Normally this would be true:

Hyper-inflation will mean the death of the Central Banking System and the Federal Reserve Note, it will also mean the end of the corrupt political system that maintains it.

However, our New Deal savior, Obama, will save the system by centralizing it even more. The NWO fascists will help him to save the day by replacing the failed NATIONAL systems (including ours) with a robust INTERNATIONAL system funded by the loot they have amassed over the last 100 years.

In exchange, all "we the people" will have to do is give up the tattered remnants of American national sovereignty and a few "meaningless" constitutional rights. I'm sure They will even let us keep having "elections".

After all, isn't that the whole idea?

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Money As Debt

http://www.youtube.com/watch?v=vVkFb26u9g8

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The Virtual Conspiracy

Republicae's picture

More centralization will not

More centralization will not be a solution if hyper-inflation takes place. If the United States falls due to hyper-inflation the rest of the world also falls, there will be no NWO fascist to help him, they will be in the same boat. Hyper-inflation is a societal killer in such proportions that we simply cannot readily imagine its extent, it is a government killer. The entire economy is so woven together that not one country, not one international power or corporation would be able to intervene in this or other countries to assist. In such an extensive collapse, everything falls a part, no more government checks, no military, no police. Everything that is dependent on fiat money collapses with the money itself. The wealth of the elite will be wiped out just as the paltry sums of the poor. The power of the elite is completely dependent upon the fiat economy and the power it allows them, once that is gone they have nothing else to build upon.

We must remember that the United States has been under a One-World Currency for the last 38 years, it is called Total Fiat Money. Back in the 1940s two men, two very powerful men who held no public office discussed the desire for a single global currency. Those two men were Dexter White [a Marxist] and John Maynard Keynes [a Fabian Socialist]. The discussion was to employ a single currency to achieve the goals of global Socialism, but after a great deal of debate they came to the conclusion that the very same thing could be accomplished and done so much easier by transforming each "national" currency into a Total Fiat System. This way each country and the people of those countries would remain in the dark and readily accept the system without questioning the transformation, that happened. They used each of the "national" currencies, transforming the entire global currency system into one single currency system. National sovereignty appeared to remain intact, but the fact is that the One-World Currency was implemented and that began in 1971. Any transformation today would not accomplish anything more than has already been accomplished.

People are up in arms about the prospects of such a single currency when in reality they should have been up in arms in 1971 instead, that is when the U.S. Dollar was completely replaced with a single global currency. We haven't had a sovereign currency in the last 38 years therefore, I simply don't see any advantage of the introduction of one that would only be cosmetic in nature and would not be able to accomplish any substantial effect either politically or socially. Nor would such an introduction promote any more power with an elite structure as the fiat system does now.

I see a panic within the halls of power, within the houses of the elite, within the CFR and Trilateral Commission…just read their correspondence, their white papers, follow their discussions and you can see that they are more worried today than at anytime in the history of this country. Their power depends on maintaining the current system, it is a system that has effectively created a very profitable, very productive Feudal System of Serfs who actually think they are making lots of money because the face value of that money looks as though it is a lot. The fact is that the American People and the peoples of the world who labor to eek out a living do so for pennies per hour. The elite have had a perfect system, one that is floated on illusions of wealth and prosperity.

Judging from my research and what I read, they would not intentionally kill the goose that laid the golden egg for them. They don’t want a Socialist Slave System, they want what they have now, a Socialist Serfdom of highly productive peons. The problem is that economic law can only be subverted just so far and then it kicks back; the fiat monetary system, like all before has an inherent terminal point, but they actually believed they could control it, that they could maintain it and use it to their advantage and they have, but times up…they lose!

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

You may be right...

I made my post with more than a little tongue in cheek.

But I can't believe that They are as oblivious to the laws of economics as you think.
I am not saying that They are omnipotent, but in the land of the blind the one-eyed man is king.
They have succeeded in blinding 99% of the world to their manipulations for the last century.

OUR "wealth" consists of bank accounts filled with fiat currencies, hyper-inflated real estate, stock in companies that don't produce anything, etc.

THEIR wealth is in gold bullion, oil fields, factories manned by servile peasants, and control of the armies and police forces that keep it all intact.

You are correct that it could all come crashing down.
But it appears to me that they are methodically implementing strategies to consolidate and solidify their power.

I would feel a lot more hopeful if I detected any real discontent among the soldiers in our armed forces or even the cop on the beat in our cities.
Or even my co-worker down the hall who owns a shotgun.

All I really see, however, is the same old grumbling; like complaining about the quality of school lunch, and probably just as effective.

******************************
Money As Debt

http://www.youtube.com/watch?v=vVkFb26u9g8

******************************

******************************
The Virtual Conspiracy

Republicae's picture

It is not that they are

It is not that they are oblivious it is that they are true believers in a quasi-Keynesian Socialistic Construct...they honestly believe that what they are doing is absolutely the correct path to take. It is called complete indoctination.

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

"we simply cannot readily

"we simply cannot readily imagine its extent, it is a government killer."

From your lips to God's ears. Deliver us from this sorry beast!

SUPPORT OUR FOUNDERS' AMERICA
Support the Constitution of the United States

SUPPORT OUR FOUNDERS' AMERICA
Support the Constitution of the United States

Republicae's picture

It will be a tough road

It will be a tough road toward Freedom, but we say we want to be Free.....

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

So how long do you think

So how long do you think this will take until hyperinflation occurs?

Republicae's picture

While inflation is

While inflation is relatively easy to predict based on the rise of economic activity after a BUST, hyper-inflation is almost impossible to predict because it is a hybrid-event, not just a monetary event as inflation.

It is also dependent on just how deep this slump becomes, most hyper-inflationary events happen during, actually near the a deepening deflationary slump partially as a reaction to that slump. There is however, a great deal of things that could easily happen and cause such a complex chain of events that who knows.

http://www.1776solution.blogspot.com

"The principle for which we contend is bound to reassert itself, though it may be at another time and in another form." ~Jefferson Davis

http://militantjeffersonian.com

"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun

Hopefully

When I get out of college, but the situation looks very bleak right now.

"Paper money eventually returns to its intrinsic value:zero." - Voltaire

" Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master. " - George Washington