pendennis

The way the Feds keep their books would get a CFO in a private company tossed in the clink. Since the Federal government is tax exempt on its face, there's no reason to demand accuracy in accounting methods. There's also no central method of generating financial statements. The Feds also do things like pull appropriations accounting forward into current accounts, dimming the view of out year costs. While this isn't the only sin of the GAO, it's among the most egregious. As such, they have to stay in a deficit condition, otherwise risking deflation.

There are also too many items "off the books" that add to the debt/deficit, and there's no real accounting for them. Add to that "black spending" from intelligence services, and the whole thing becomes a farce. And when they do, we're left with budgets and deficits.

This all arises from a lack of precious metal backed money. Right now, there's not enough gold in the world to establish a gold standard, thus "honest" currencies. The number is on the order of about $22 trillion in gold v. a global product of around $80 trillion.

You make a good point on deflation. We last saw it during the Great Depression, and we didn't recover from it until after WWII.

Fotoartist Loc: Detroit, Michigan

Conspiracy theory for sure, to keep the masses dumbed down and it's apparently working on you.

Your definition is the one for popular consumption. I was getting to the economic root cause of the issue. Economists use the term Monetary Inflation. Look it up. It's an increase in the money supply (M-1).

And when that's done does that article also tell you how the government gets the new money that is printed into circulation? Does the Fed throw it out of windows while driving around corners in the community? When you can answer that you are beginning to understand the system of how the Fed controls the economy.

bersharbp Loc: Texas

AGREED

Fotoartist Loc: Detroit, Michigan

One more thing. What I have said is not propounding a theory. It is a stone cold reality that only the govt. is responsible for creating inflation by increasing the money supply.

robertjerl Loc: Corona, California

I took Econ classes paid for by LA Unified School District while I was teaching, the Professor was more than a bit to left of me and though he mentioned gvt creating money as a factor he stated that the main cause was when demand exceeded supply. More money contributed in that more people can afford to "demand" the particular goods.

pendennis

Your professor was a typical Keynesian. Government spending spurs the economy. FDR was a Keynesian, and he grievously erred in the remedy to the 1930 recession, just as his predecessor did. Demand is created only in the private sector. The National Recovery Act was an absolute disaster. It created legal cartels which squeezed out legitimate small businesses which could have led the road to recovery. Instead, we languished in a depression until 1946.

Contrary to popular opinion, the war materiels spending during WWII only masked poor economic conditions. Folks accumulated money, but not wealth.

stonecherub Loc: Tucson, AZ

I am the "Deep State," which means I know how to keep things working. I am the smallest "c" in "small-c conservatism." You hate my trumpin' guts! HATE!

After you have hurt me, smashed me, crushed me, humiliated me; how are you going to persuade me to turn the electricity back on for you so you can watch Fox (pronounced "fear," it's French)? Just askin'.

Fotoartist Loc: Detroit, Michigan

To answer my own question, The Fed prints money out of thin air. Then sells it to the banks at face value plus what they call a prime rate. The Banks then put that money into circulation by lending it to us at a still higher rate.

We end up paying for it all which in Fed-speak means taking excess liquidity out of the system. In other words, the interest paid back to the Fed is retired from the money supply. Supposedly a balancing act. If it doesn't balance (it never does) it's inflation.

During the Obama administration they were parcelling out money to the banks at an almost zero interest rate.

Fotoserj Loc: St calixte Qc Ca

Keep in mind NO political party is in power for you, their one and ONLY allegiance is to whom gave them the money, usually the upper most richer organizations