Sunday, February 21, 2010

Red Shift

Printing money causes inflation. Everybody knows it. And prices keep going up. So I guess they've been printing too much money. Everybody knows. Everybody but me.

Here is what I know to be true:

The quantity of money reached a peak in 1946 and has been falling since. The volume of debt pyramided on money hit bottom in 1947 and has been rising since.

If they've been printing money, it wasn't enough to cause the inflation we had. If money causes inflation, inflation in our time has been caused by borrowed money.

Money is green. Debt is red. The one graph shows money falling -- less green -- since 1946. The other shows debt rising -- more red -- since 1947. Less green and more red, for six decades. Our money is the wrong color.

What is the real cause of excessive credit use? The cause is economic policy.

It is policy to withdraw spending-money from the economy. It is policy to encourage spending. It is policy to encourage the use of credit. It is policy to encourage the accumulation of debt.

Why do we have all this debt? Because we use all that credit. It is policy.


jbmoore said...

Interesting article. States that the US has a structural economic crisis.


The Arthurian said...

Hey, JB, good article. Thanks for the link. Ya got me thinkin' maybe I'll do a review of Duncan's view here.