Saturday, July 25, 2009

Do You Think Our Money Supply is Safe?

I try to keep track of economic data as economics has been a lay study of mine since college. In recent years I notice our money supply increasing at an alarming rate. Why is this important you ask? Well if oil were not rare and hard to get it would not be nearly as valuable as it is. Just think what would happen if tomorrow we discovered an easily accessible oilfield in the United States that roughly doubled the worlds known oil reserves? Well first thing our dependence on foreign oil would be solved but also the world price for oil would be cut in half!

Now, what happens when you increase the supply of money?

If you guessed that it's purchasing power would decrease you would have been correct. Just as oil producing nations trade their oil for dollars (or Yen, Euros, Pesos, Pounds, Franks, Rubles, or any other currency) they then trade those dollars for what they want. So in the scenario above if you double the known oil reserves and the price of oil is cut in half the oil producing countries can only buy half of what they used to be able to buy. The other side of the coin is what about the money. If, as is historically the case, oil producers traded their oil for U.S. Dollars then they would want twice as many dollars for their oil as they had before if we had doubled our supply of money.

This is called inflation. You have seen it since you were small. Just remember back to when you were a child. What did you pay for a soda, a hotdog, a movie ticket,.....

Now below is a chart from the St. Lois Federal Reserve about the sum of all money in aggregate. What do you notice?

To see the full report go to:

Do you notice that big spike in 2008/2009?

What does this mean?

How does this affect you?

It means that your dollars will buy less now than before the huge increase in money supply. There is a lag between the increase and when people feel the effects but it will come.

If you want to learn more simply Google any of the following: money supply, inflation, hyperinflation, dollar devaluing, ......

By the way this is not being done by the Federal Government, Congress,or President Obama. This is being done by the Federal Reserve.

By the way the Federal Reserve has NEVER been audited since it's inception in 1913. This means that no one knows exactly what the Federal Reserve is doing!

There is currently a bill in Congress known as HR1207 and S604 to audit the Federal Reserve. The bill calls only for a disclosure of information and an audit of the Federal Reserve that all govt. agencies and most corporations undergo annually. It is not an audit like the IRS does to people. It is a check by an independent person or organization of the accounting methods and practices they use. This will also disclose how the Fed does business.

Don't you think that after almost 100 years we should know what they are doing?

If you agree please call or email your Congressman and Senators. Ask them to support HR1207 and S604!

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