US Monetary Base Expansion

US Monetary Base Expansion will lead to Hyperinflation

Since Last couple of Months, I am worried about the US Monetary Base Expansion. Now, Monetary base in Simple terms means Money in Circulation + Bank Reserves. (Money Supply)

Many of you may not even know that What Happened with our Money Supply in the past 2 years.

Well, see the above Diagram. The US Government has printed almost $ 2 Trillion After August 2008. And given the bailouts and economic stimulus to other countries of the world and to itself from this newly printed money.

The problem is that, this newly printed money is diluting the purchasing power of the existing dollars in the economy.

In short, the US Dollar is the Monopoly Money. Means just like in the game of Monopoly, The Governments and Central Banks around the world can print as much money as possible according to the need of the economy.

Thanks to President Nixon, who removed the Gold Standard in 1971 and made the Dollar the Free float currency. Now, the US Dollar is just a piece of paper only without any Intrinsic value in it. Many analysts call it ‘Xera’ as a Nick name of Dollar (Xerox + Zero + Dollar).

The problem with this kind of activity by Bernanke is that, sooner or later it will cause the Hyperinflation just like,

01) 1920’s Germany Hyperinflation
02) 2008’s Zimbabwe Hyperinflation

Still most of the printed money around the world is sitting in the Bank reserves. And Banks are not lending it so there is not as such hyperinflation right now. But once the Banks start lending this newly printed money, the US Economy & the world will face the Hyperinflation.

Since 1971, The Dollar has loose 97% of it’s value. It is becoming worthless day by day. In 80s the bailouts were in Millions, in 90s they were in Billions and today they are in Trillions. Now What Next? In the future, the Bailouts may be in Quadrillions.

What I think is that, Printing Money won’t solve the Financial Problems of the world. But in fact, it will worsen the Financial problems of the world. This is because your salary or earnings won’t increase as fast as the governments and central banks all around the world are printing money. Just tell me that how many of you have noticed the 100% Salary rise in past 2 years? Ideally it should be because we have doubled the money supply of the world now right? But the Salary increases in Linear Proportion and the money is printed in Exponential proportion.

And all of these printed money is going towards bail outing larger Businesses and Financial Institutions because they are now “Too Big to Fail”. Individuals don’t get anything from this newly printed Monopoly Dollars.

This is very unfair. If money is printed than the newly printed money should be equally distributed.

Anyways….. These are my Personal Feelings, Thinking & Opinions. What do you think about Massive US Monetary Base Expansion? Please reply me or comment on this Post. I am eager to wait for your reply…!!!