E.D. Hart

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  • Independence Day: Decoupling Gold and Silver from the Dollar
    GDP is calculated after subtracting for inflation. if inflation is rising, then it impacts GDP more. If government uses bogus inflation data, then it can show growth, when in fact real inflation adjusted GDP would show a recession. Therefore it is to the governments advantage to use artificially low inflation 9for a number of reasons) to make growth look greater than it is.

    Global GDP could contract and "go down" to negative value, and this is completely consistent with rising inflation. in fact, as inflation accelerates further, it incrementally subtract from GDP. Iflation is not causes by growth, but by increasing money and credit.

    it is true that money and credit have been contracting recently--but over the last 8 years, iflation has been galloping ahead. The credit and money supply growth contraction of the last 18 months does not reverse the collosal rising in credit and money supply.

    Much of the US currency reserves (of our own government and other governments) are recycled into bonds. This is a an ocean of money sitting on the sidelines--4 to 5 trillions dollars. Some of these holders of bonds are getting nervous and realizing that their "safe haven" status of bonds is not so safe--as inflation is a guarantee of loss over time.

    This inflation that was impoted to China, Japan, and MiddleEastern bond holders will now be unwound as we import our inflation back home. Inflation can have a long lag time between the creation of the money and the rise in prices.

    In summary: it is possible to have negative GDP growth (recession) globally and still see a rising inflation trend.

    And, due to the lag time inherent in the creation of money and the subsequent off shoring of those reserves invested in bonds, and the further eventual repatriation of those dollars--it is possible to have a contraction of the (recent) money supply and of credit creation--and still see global inflation.

    In fact that is just what we see, and it will get worse as the bond trade for excess dollar trade unwinds and foreign holders of dollars wise up and see inflation as a biggest threat to their capital. They are both a cause and effected by this rising inflation trend.
    Aug 27 16:11 pm |Rating: 0 0 |Link to Comment |View article

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