Does inflation exist?

To admit to the idea that inflation exist, we must analyze the demand supply curve and see how it can relate to an increase in price. That is if we in fact do believe that any increase in price somehow relates to inflation. But as I will show you, an increase in price does not necessarily must relate to inflation. The identifiers that are usually associated with price are demand, inflation & deflation.

Most often price increase because of demand, the only time inflation cause price to increase, is when there's too much money in circulation. If we look at it on a broader sense, which involves the amount of good and services that are available in the market in relation to the amount of money in distribution, then we can say, it is not the price of the product that has increased, but instead the amount of money that has become available in the market. In a way, the product still worth the same, except this time we need more paper money to buy the same product. This by no way excludes the fact that inflation exist.

I know that in school we were thought that inflation is when prices of goods and services go up. Since we are now reeducating ourselves, we've found out that inflation is the consequence of an increase in the money supply. When more money is printed out, it means that we’ve inflating the market with new money, but how does it relate to an increase in price is the question?

Price goes up because there is more money in circulation than there are goods and services, which then cause people to lose wealth as a result. So that we understand, when cost increased, your income and I stay the same, which thereafter caused our wealth to depreciate in value. The $10.00 hr we’ve received, can no longer purchase what $10.00 use to buy. So in that sense, we say that our wealth has been depreciated in value. Which also mean that inflation has gone up?

Wealth can be described as money that is left after debiting that is owed from what is earned. So you see ...it’s really those of us whose income remains the same that has experienced the inflation, why? Since an increase in the money supply does not place more money in our hands, it diminishes the value of our wealth. Our wealth decreases because price goes up while our income stays the same, leaving us with less money to buy very few goods. In a way, inflation is directly related to a person income. As long as more money is being printed while our income remains the same, we’ve been inflated.

Therefore, we can say that the price of good and services does not increase in value, it is only the currency which increases in quantity. In reality, we should expect goods and services to cost cheaper as technology improves, for the simple fact that technology facilitate productivity, but that is not what’s happening? Instead, prices continue to rise as technology cost cheaper to produce.

To my knowledge, base on the research that I have done, there are two driven forces that affect the economy, and they are Inflation and deflation. Although there are opposite of each other, they both can coexist and cause an effect on the economy. Deflation is described as a decrease in price. It is also described by some economist, as a decrease in the money supply which causes price to decrease in the market. That can be a problem because prices can decrease to a point where it causes the system to crash, which is the stage we've experienced so far, if continued can cause a depression.

One must understand that goods and services are not sold at true values. The value of goods and services, reflect the amount of money we have in circulation. Therefore, if you decrease the money supply, corporations will not be able to pay their dept, unless of course you decrease the interest rate on that debt, then if that happen, someone will lose out. Who will it be, is the question?

Inflation does exist, and it’s decreasing the value of our currency, and what will our money worth in years to come, is undeniable to think in terms of worthless than valuable. We can only blame ourselves for we're the one who have taken substantial amount of loans which can't be paid back. However, others can argue otherwise, whether they'll be right or wrong sorely depends on their arguments.

When the super rich engulf all of the money, it creates a problem. And this problem somehow contributes to more money being printed. Since we can all agreed that not all rich people who possesses substantial amount of money will reinvest it back into the economy, than we have the right to conclude that it’s a problem. As it is known, some of them do have their own vault, where they keep some of their money. Think about a million of rich folks doing the same thing. It would create a shortage in the money supply, a small one maybe but a shortage nonetheless. That shortage is directly related to a decrease in the money supply which can contributes to a lack of money in the market.

As the national debt continue to increase above the $45 trillion, we starting to see prices of some financial stocks, commercial stocks and homes depreciating in value while necessities like oil, natural gas, health insurance increasing. That is the dividing factor between the super rich and the poor. The fact that both, inflation and deflation can coexist, will cause the dividing factor to widen, and as a consequence, shrinking the middle class. I think you should have noticed that by now, if you haven’t, you’re either too well off or you’re not paying attention.

I don’t think the Federal Reserve print money for no other reason if not to help sustain the economy. It maybe a naive thing to say, but when you looked at the overall spending that this country has incurred, it maybe reasonable to say that the Fed is not the only 1000 pound gorilla in the room. It may seem as though, no matter how much they print, they is always a need to print more. What’s contributing to this continuation of money being printed, relates greatly to a lack of productivity on our part as a country. I know that some of us maybe able to argue differently, but while at it, one thing we should keep in mind is that without productivity there are no activities.

We are not producing enough; we’re import more than we produce and as a result not enough money comes back - which then increase the capital flights. Capital flights are monies that has left the country which may not come back. We need to stop lying to ourselves; this process has somehow caused more money to be printed, because if we're not producing, we can't possibly be gaining. Therefore, our lack of productivity has added to the crisis that we are now face which has caused China to continuously buy numerous amount of American debt.

Plus the super rich no longer trust the American banks; too many US banks have failed. They’re depositing their money into foreign banks such as the people’s bank of China. JPMorgan now acts as depository bank for China Sunergy Co. "Having JPMorgan and its strong and highly experienced team acting as the depositary bank for China Sunergy gave us full confidence in a successful ADR program listing," commented Fischer Chen, Deputy Head of IPO Office from China Sunergy.

What does all that mean - well it means that American banks are forming partnership with foreign banks as a mean to sustain the wave of this economic Tsunami. Therefore, when Americans deposit their money in JPMorgan banks with China Sunergy backing them up, gives depositors a sense of confidence. On the same token, we can also say that the money that Americans deposit in JPMorgan can also be vested in Chinese companies and their infrastructure. The collection of all these monies being privately saved in foreign banks indicates that it might not always be reinvested into our economy. When that happens, it produced a shortage in the money supply while stimulating the need for Federal Reserve to print more money, which does not always work in our benefit.