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The Death Of High Inflation

Wednesday, July 24, 2013 - 6:52 PM
I know the economist Paul Krugman isn’t a friend to savers, but he offers some interesting information on inflation. He makes the case in  his NYT opinion piece that hyperinflation and double-digit inflation are rare in today’s world. I hope he’s right. Few things hurt savers more than high inflation. If he's wrong, savers will pay a heavy price.
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
1. Wednesday, July 24, 2013 - 7:10 PM
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
2. Wednesday, July 24, 2013 - 8:19 PM
Despite the Federal Reserve’s vast, 4½-year program of quantitative easing, the economy is still weak, with unemployment still high and labor-force participation down. And with all the money pumped into the economy, why is there no runaway inflation? . . .

The explanation lies in the distortion that Federal Reserve policy has inflicted on something most Americans have never heard of: “repos,” or repurchase agreements, which are part of the equally mysterious but vital “shadow banking system.”

The way money and credit are created in the economy has changed over the past 30 years. Throw away your textbook.

Collateral Damage: QE3 and the Shadow Banking System

ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
3. Wednesday, July 24, 2013 - 9:10 PM
Repurchase Agreements were sold through the teller windows of banks like CD's in the 1980's. I refused to sell them to my customers (buying a portion of debt for a specific amount of time) and my boss stood behind me. They were usually sold at 1/4% more  interest than a CD. How this was allowed to be sold not by a broker but by a teller to customers that did not know what they buying I have no idea. This is not a new producct. 
Ally6770Ally6770932 posts since
Jan 16, 2010
Rep Points: 2,710