US Economic Outlook 2008-11+ (Updated 28 May 08); Discussion of Money, Federal Reserve, Dollar as World's Reserve Currency, Inflation, Deflation, Oil, OPEC, Debt, Saving Rate, Housing Bubble and Future Outlook for US Economy
3. Money — what is it? Money is a good that acts as a unit of account, a store of value, and a medium of exchange
4.
5.
6.
7.
8.
9. INFLATION — what is it? Wikipedia defines Inflation as : a rise in the general level of prices over time. It may also refer to a rise in the prices of a specific set of goods or services (e.g. energy, food, housing, etc). In any case, inflation is measured as a percentage in the rate of change of a price index . But that inflation definition (like most others you will find) is like putting the cart before the horse. Inflation is caused by a net expansion of money supply that “ causes ” rising prices -- by devaluing a currency Stated differently: the expansion of a nation’s money supply increases available currency beyond the proportion of available goods and services – causing more dollars to chase the same number of goods/services. Thus it creates a supply/demand situation that drives prices higher. In Reality:
10. Growth of US Money Supply 1959-2005 Came off gold standard here $10 Trillion $700 Billion
11. Growth of US “Fiat” Money 2004 + Fed is printing money at 20% annual rate; money supply to double in 4 years Yes, $14 Trillion Dollars! Yes, a 20% rate of growth !
12.
13.
14. By “understating” Inflation US GDP is “overstated” Gvt’s “massaged” figures say we’re not in recession The Real figures say we are in Recession ** Negative Growth **
15. Total Credit Market Debt Came off gold standard here 2008 is ~ 400% - Debt ~ $53 tril - GDP ~ $13 tril
16. Total US Debt Through 2007 Note that income hasn’t kept up with Debt levels
21. History of Home Values 1890 benchmark factoring out inflation
22. US Mortgage Rate Reset Chart We’re here today (Note: 6-9 month lag to future foreclosures) Exploding ARMs to be next wave; many were “pick-your- payment loans”
![Agenda ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)