Here is a question for you: If inflation occurs, why would people want to save money and clear debt? In an inflationary environment, debt is great because you only have to pay it back in future dollars. Likewise, saving money is bad in an inflationary environment because your money is worth less.
Right now we are in a long-term deflationary environment as trillions in fake value are erased from the residential and commercial real estate market.
Even if the Fed gave $1 million checks to every american, it probably wouldn't cause as much inflation as you think because a lot of people would just pay off their mortgages and credit card debts, then save the rest. Right now all of the Fed increasing their balance sheet is just sitting in reserves at banks, not being spent.
In order to really cause inflation, the Fed has to increase the velocity of money changing hands. They haven't been able to do this yet.
PGMs = platinum group metals, i.e. platinum, palladium, rhodium, but not gold or silver.
"If inflation occurs, why would people want to save money and clear debt?"
Because those credit agencies that keep calling are really annoying. Deep down people know that the only way to be secure is to be debt free. Inflation really creates insecurity - you're getting squeezed from under (as in the bottom line to pay for necessities). In that environment, having to make debt payments is scary, ESPECIALLY when the economy is crap and you could lose your job or not get pay raises.
Most people (rightly so) are not interested in taking on new debt during an inflationary period. It's crazy right, economists prescribe inflation as a way to deal with "sticky wages" so that the real cost of employment goes down without having to negotiate wages downward. You cannot at the same time argue that will encourage people to borrow, because debt payments are exercised nominally (and creditors often - punitively or capriciously - rack up the interest rate on top of that) so while more of your salary is going to pay for basic necessities, that debt burden still floats on top of the budget, and possibly gets worse.
Comments
What are PGMs? Did you mean precious metals?
Here is a question for you: If inflation occurs, why would people want to save money and clear debt? In an inflationary environment, debt is great because you only have to pay it back in future dollars. Likewise, saving money is bad in an inflationary environment because your money is worth less.
Right now we are in a long-term deflationary environment as trillions in fake value are erased from the residential and commercial real estate market.
Even if the Fed gave $1 million checks to every american, it probably wouldn't cause as much inflation as you think because a lot of people would just pay off their mortgages and credit card debts, then save the rest. Right now all of the Fed increasing their balance sheet is just sitting in reserves at banks, not being spent.
In order to really cause inflation, the Fed has to increase the velocity of money changing hands. They haven't been able to do this yet.
PGMs = platinum group metals, i.e. platinum, palladium, rhodium, but not gold or silver.
"If inflation occurs, why would people want to save money and clear debt?"
Because those credit agencies that keep calling are really annoying. Deep down people know that the only way to be secure is to be debt free. Inflation really creates insecurity - you're getting squeezed from under (as in the bottom line to pay for necessities). In that environment, having to make debt payments is scary, ESPECIALLY when the economy is crap and you could lose your job or not get pay raises.
Most people (rightly so) are not interested in taking on new debt during an inflationary period. It's crazy right, economists prescribe inflation as a way to deal with "sticky wages" so that the real cost of employment goes down without having to negotiate wages downward. You cannot at the same time argue that will encourage people to borrow, because debt payments are exercised nominally (and creditors often - punitively or capriciously - rack up the interest rate on top of that) so while more of your salary is going to pay for basic necessities, that debt burden still floats on top of the budget, and possibly gets worse.