Thursday, March 12, 2009

Glenn Beck on the Monetary Base Hockey Stick

See below a well-made video by Glenn Beck about the monetary base hockey stick (HT Division of Labour). This unprecedented money supply surge is for now mostly mirroring the huge fall in the velocity of money, meaning that its inflationary consequences are not yet taking place. However, all this money will have to be taken back at the exactly right moment as velocity recovers, or we'll find ourselves in really big economic trouble.

Central banks' track history is not encouraging when it comes to correctly timing monetary contractions. I really hope that this time we'll be luckier than before, but as Benjamin Franklin once said, "he that lives upon hope will die fasting."

1 comment:

ENNYMAN said...

I remember an article in The Atlantic during the "Reagan Recession" in which an economic liberal argued that printing more money was better for the poor, because there is more money being spilled like milk in a barn for the barn cats.
Essentially it is good for the poor because people with nothing to lose aren't losing their life savings... they don't have any.
This is going to be a very eye opening piece of history this coming few years.