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| 'A printing we will go' |
"If the Federal Reserve purchases bonds directly from the United States Treasury, they are electronically creating dollars (current obligations) in exchange for future obligations. This is inflationary if the amount of obligations (money) is increasing faster that the amount of capital (goods, services, products and ideas). But the Federal Reserve doesn't buy bonds from the Treasury, it buys them from 'primary dealers.'" (TheStreet)
Q: For Mr Ben Bernanke. What became of the German Mark during the Weimar Republic? (circa 1923)
A: Well, finance is a very complexin' subject and thankfully I'm an expert , so sleep easy friends...but to answer your question: Ah now, hmm...well, if my memory ain't goose steppin' an' playing Aryan tricks on me, er there was a little bitsy inflation goin' on.
Q: Oh Mr B, don't be modest. Show your prowess with the ol' number crunchin' routine.
A: Well if you insist. Now let's see. E=mc something...no, that's not one of mine. Er.....Yes, I remember now. It's kinda like the equations that brain box Hawkins uses when calculatin' comological type things.
So using my Fed addin' up gizmo....hmm....looks like a largish number. Excuse, while I hit the desk a couple of times...gives the ol' battery a bit extra life. Now let's see...hmm. Gone pretty big again.
Q: How big Mr B?
A:Well... it says here in the little window of my Fed all purpose calculator...oh, there just has to be a malfunctioning occurance goin' on here. There just ain't enough room for all the little, though of course very important, zero number things.
Q: Well, how big Mr B?
A; Ok, ok... I'll start with the er, Rate of Inflation: 3.25x10 to the power 6. Hey, what d'you know. That's surely a cosmological stars in the Milky Way number! Geez. Can't wait to a inform ma President. If we keep them good old printin' boys wokin' 24/7 we'll sure beat THAT number!
OK ,so I'm illustrating a serious point with hopefully a bit of humour, but the serious side is that this was the actual rate of inflation in 1923 mainly created by doing EXACTLY what the FED is now doing!
PS: The Bank of England is doing the same, so no smuggery from the Brits.