Mainstream economists define inflation as the rate at which prices of goods and services rise. However, the truth is that inflation is an increase in the money supply.
Austin, TX (PRWEB) August 16, 2012
In a Wall Street Journal Op-Ed penned by Alan Blinder last week, basically called for the Federal Reserve to put the final inflationary nail in the coffin.
Is Alan Blinder calling for hyperinflation?
The Elevation Group Exposed released a report this week detailing the concern they have with Mr. Blinder's editorial last week. Click here to read the full report from Elevation Group Exposed.
"Here's the crux of the problem with Mr. Blinder's theory," says Bob Samms, writer for the Elevation Group Exposed. "Mainstream economists define inflation as the rate at which prices of goods and services rise. However, the truth is that inflation is an increase in the money supply. The reasoning is a simple case of supply and demand. When there’s less supply of something in high demand, the price goes up."
"Now many, including Mr. Blinder, fail to believe this is true because the Fed has tripled the money supply in the past 4 years and prices haven't tripled...yet. The real reason is, the banks haven’t let the money flow into the economy," continues Mr. Samms.
Here are Mr. Blinder's comments (From the Wall Street Journal Opt Ed):
“Lower the interest rate paid on excess reserves. The basic idea is simple. If the Fed reduces the reward for holding excess reserves, banks will hold less of them—which means they will have to find something else to do with the money, such as lending it out or putting it in the capital markets.
“My suggestion is to push it lower in two stages. First, test the waters by cutting the interest on excess reserves (…) to zero. Then, if nothing goes wrong, drop it to, say, minus-25 basis points—that is, charge banks a fee for holding their money at the Fed. Doing so would provide a powerful incentive for banks to disgorge some of their idle reserves.”
What would happen if Mr. Blinder got his wish? The Elevation Group's Report called "Does Wall Street Really Want Hyperinflation?" will answer this question.
To read this report, visit http://elevationgroupexposed.com/why-wall-street-wants-hyperinflation/