Controlled Inflation American consumers are not only feeling good. On Monday the Federal Reserve released its latest report of consumer credit outstanding. According to the Fed’s bean counters, U. 28 billion in new credit card debt and in new student, auto, and other non-mortgage pt realtime forex in November.
8 percent increase in consumer borrowing. Academic economists and central planners consider 2 percent price inflation to be the sweet spot for attaining economic heaven on earth. Controlled inflation, or what is sometimes called financial repression, is what the Fed is after. Because controlled inflation is the grease that keeps the gears of the debt based monetary system turning. You see, through controlled inflation, and the subsequent slow erosion of debt burdens, borrowers can make good on their debts with dollars of diminished value.
And, of course, the biggest debtor of all is the federal government. Controlled inflation benefits Washington more than anyone else. The government can borrow massive amounts of money and inflate its debts away. It is merely a claim on future production. The interest that a Treasury bill yields is paid with taxes drawn from the labors of citizens. Creditors are certainly aware of the inflationary character of government deficits.