Some investors are worried about inflation because of the substantial amount of government spending and money supply growth fueled by the Federal Reserve.
I am in agreement with a previous Merrill Lynch RIC Report that a basic economic rule of thumb is that money growth alone is unlikely to fuel inflation. The fuel for inflation is the combination of monetary growth and credit growth. Needless to say, credit growth is still dormant even though the monetary aggregates have expanded at an enormous rate.
In other words, money supply is growing but money velocity is shrinking still and this portends a "liquidity trap" and deflation (look at the deflation in the housing market).
Once the credit access is fully functioning again and housing has rebounded then inflation may be a concern due to the excessive money supply growth but it does not appear to be a concern in 2010.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.