Business and Marketing

Posts Tagged ‘New World’

Monetary inflation is simply an increase in money supply. It is not measured by the Index of consumer prices, but the money supply. Speak of “quantitative easing” is the government for him. Inflate the money supply usually encourage spending and most economists see the government as a way to keep the economy rolling to increase spending. A currency that is in reference to a tangible substance (as gold or silver) is defined less likely to experience inflation. Although a rapid increase in the supply of gold is possible, as when Columbus opened the importation of gold from New World, it is highly unlikely in modern times.

“Monetary inflation” leading to inflation, but the two terms are not synonymous. The best known effect of increasing the money supply is a decline in the value of each unit of currency. Since each unit of value will destroy the purchasing power of money. But while almost everyone sees inflation if it happens, some people notice the monetary inflation that is the cause.

Inflation dollar United States provides economic reality since 1913 when the U.S. Congress, the Federal Reserve was created. This is because when the Federal Reserve buys U.S. Treasury that newly created money is injected into the financial system. Another way to create money from the sky are the actual debts by the reserve system, banks hold on the amount of money in circulation represents only a fraction can multiply.

Central banks hold it for a panacea to combat all kinds of economic difficulties. If this is too much debt, print more money, allowing the debtor to the debt with “cheaper dollars”, ie refund dollars are worth less than the original debt. This is a disguised form of theft of creditor and benefits primarily the government, since it is by far the most indebted country. Creation of money is the best ally of a debtor, so that debt repayment easily.

As the supply of cash inflation, one would think that if the price of all goods and services enjoy proportional, or at least roughly proportional, the value of the dollar declines. But this is not always the case because the flow of money is not distributed uniformly throughout the economy. So if most of the money will have been the first to spend it on the old perceived value, while those at the lower end of the food chain receive U.S. dollars later, and suffering. Again once created, since the new money the government has the advantage that they come first.

All monetary inflation is politically and perpetrated by the government (or more precisely, the central bank). It is unhealthy for economic and ethical. All that has created new money to go anywhere and there is often the next bubble in the making. Monetary inflation is the seed in all asset bubbles. It is destroying the economy through booms and busts, and creates incentives for depositors and creditors. It also causes the misallocation of funds by companies and individuals who cultivate their income only if it is indeed their real purchasing power of exercise while maintaining or even decreasing. So it causes waste and short-sighted economic decisions.