August 27, 2014

Charting the Course to $7 Gas

gas-hike

I'm not an economist but the the essay below makes a lot of sense. The author, J. Kevin Meaders, says this is the cycle we are in: The Fed has tripled the money supply and reduced interest rates to zero. A stronger economy is trying to get off the ground but can't because all the newly created money is being retained by the banks in reserve. Eventually the banks will start lending again, and the velocity of money will increase. When that occurs, inflation will begin to show signs that even Bernanke can't ignore, and he will respond by raising rates. Eventually, increased velocity, inflation, high oil prices, and interest rates will conspire to crash the market again. And we start the whole thing over again — if we can. Source: Ludwig von Mises Institute | J. Kevin Meaders Let's go back to the beginning of the current economic crisis — yes, it is still a crisis for many millions of Americans who lost their jobs, ruined their credit, … [Read more...]