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Thursday, February 26, 2009

The Monetary Bubble... The Invisible Phase

While a plethora of economists semi-blindly examines the current deflationary macro-economic trend, reality speaks to the fact that a massive wave of inflation is here. Before anybody calls me crazy... this potential monetary bubble is cycling through the economic phase which I theorize as the "Invisible Phase."

Television propaganda barks to the converted about company x laying off 50,000 individuals while company y economically disperses another few billion dollars. Soon, overly emotional laden talking heads take stage while basically adding to the simplistic theory of deflation. Because Keynesian and Austrian economists are at odds philosophically when it comes to the subject of inflation, their solutions radically differ.

As typical Keynesian do not give credence to the connection between money printing and the case being high inflation, these economists/bankers/activists indoctrinate to the world that printing high volumes of money has positive employment consequences. While their simple minds conclude that inflation is a pure macro-economic price elevation without any reason, various Austrian economist's [Ludvig von Mises, F.A. Hayek,etc.] theory of inflation says in a nutshell that the economic laws of supply and demand also apply to the printing of money. Hence... the more monetary units that is reproduced, the more expensive commodities eventually become.

Yes... the year of 2009 has definitely been documented as a highly deflationary year. Prices have heavily slumped, unemployment has risen while businesses big and small continue to bleed. The armchair Keynesian are shaking a finger at the idea that throughout the history of mankind, correlations have been drawn that by printing massive amounts of banknotes,inflation, including hyperinflation during the rare instance, has a high potential to come into reality.

So... where and when does this monetary bubble start to show signs of movement? Gaze at the St. Louis Federal Reserve System's Inflation Chart [m1]. Take note of the high monetary ascension during the past year [2008-2009].

It is time to give fair warning to citizenry. Keep one eye on the deflationary descents and the other on the monetary inflation. While it is not directly evident that inflation is coming, in reality, this market force is quickly adding up. This "Invisible Phase" of inflation is a warning to customers of the global economy that change is around the corner. During this period of deflation, money is rapidly being printed out of the thin air... meaning money is printed heavily, yet business is declining while unemployment is on the rise.

The central planer's blueprints are in front of us. By spending lots of inflationary money, this "Invisible Phrase," will in time lead the global economy towards the later version of this artificial growth; high and potentially artificial prices.


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