Pro Inflation video(1933)

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[youtube]http://www.youtube.com/watch?v=99Dzdc1H0wM[/youtube]

Deflation was the big evil at the time... and how do you cancel out deflation? Deflation is making a comeback today. So this movie may have to be remade!

No, it's not. We're going to have hyperinflation. You can look up graphs online of how the US money supply has exploded in the past decade.

you can't dump nearly a trillion into the economy without some unintended consequences.

Problem is, when you introduce a buck into the money supply, it gets spent several times, each time creating another dollars' worth of activity. This is called the money multiplier.

Prices are declining. Spending is declining. People are putting more money into paying debts. More people are unemployed and cannot spend. This is deflationary. There is no hyperinflation at all threatened.

Unfortunately there is a strategy for re-inflating the housing bubble... because this is supposedly a store of all value and of course the debts must be paid back in full because no risks are supposed to exist for the very wealthy.

The problem was inflating this bubble in the first place to replace the jobs and economic activity shipped overseas. This deflation that threatens to pick up will serve to undermine what other productive activity that remains. If printing money helps keep this activity going, then it serves a very useful purpose and should continue.

Yes and no. In the short run, deflation continues to be something of a concern I gather, and God bless the greenback's still pretty okay. But in the long run, enough people worry that after recovery gets going there will be serious inflation.

Right now, that increase in the money supply is not increasing consumer spending or inflation at all - and no sign that such inflation will happen anytime soon. What is going to enable and convince people to go out and spend? I don't see it happening.

I'm not convinced that the long term prognosis is hyperinflation, either ... even some of the right wing economists believe that if the money supply is reduced as the economy recovers, there will be little to worry about. Where is most of the increased money supply going to? Banks, for inter-bank and commercial lending. Those markets had run dry of capital, and would have crippled the economy if not dealt with.