Are you a Monetarist or a Keynesian?

Recently I decided to read a bit about Inflation. I went to wikipedia and realized that the reason why we are constantly finding bubble after bubble is because we’re in one big bubble, so naturally wherever you’ll look you’ll see…Bubble. We’re in an Inflation Bubble.

Inflation is simply when there’s too much money to go around so everyone has more than they need, they throw it around and people feel “wealthier”. It’s almost like a stock split. Nothing changes other than peoples sentiment.

Inflation is a hidden tax since a) it makes people believe they have more b) it simply pushes people into higher and higher income brackets.

So we have to fight inflation right? How? Here’s what I found: Wikipedia Inflation

“Monetarists emphasize increasing interest rates (reducing the money supply, monetary policy) to fight inflation. Keynesians emphasize reducing demand in general, often through fiscal policy, using increased taxation or reduced government spending to reduce demand as well as by using monetary policy. Supply-side economists advocate fighting inflation by fixing the exchange rate between the currency and some reference currency such as gold. This would be a return to the gold standard. All of these policies are achieved in practice through a process of open market operations.”

So from what I understand, whether your a Monetarist, a Keynesian or approve of the Gold standard… we’re in trouble.

Higher Interest Rates would mean “more expensive” money, less money in circulation, less spending, less income, even less money, deflation of Dollar (people feel poorer).

Increased taxation or reduced government spending will mean more harsh living conditions due to decreased benefits.

A Gold Standard? This would either put gold at over $36,000 an oz. (gold supply/m3) or would seriously depreciate the dollar.

I think we’re in for the 70’s all over again. High interest rates (18%?) and then some drastic move in gold – Gold Standard (1934)? Gold Rush (1980)?

More on the Gold Standard in the coming articles – as well as that argentum I was telling you about.

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