Federal Reserve chairman Ben Bernanke needs to spell out how he plans to head off hyperinflation.
So how is Fed chairman Ben Bernanke going to get all that toothpaste
back into the tube? The Fed has been cranking money out like water over
Niagara Falls. The monetary base has increased by a trillion dollars in
just the last six months. And he's not done, furiously printing dollars
(bank credits, really) and buying Treasuries in an attempt to flood the
economy with dollars. When will it end? $3 trillion? $4 trillion? And
then what? A functioning economy doesn't need all that cash sloshing
around. Is runaway inflation our next crisis?
Let's go back to fundamentals for a second. Money is a placeholder of value--the price of a cold Heineken or the value of work already done, a hole dug, a piece of software written, whatever. When things work just right, prices seek the right level and we get a match between that cold beer and the sweat from working for it.