Market "experts" and CNBC talking heads may have many of you worried about runaway inflation resulting from the massive amounts of cash our wonderful Fed Chairman Ben Bernanke, with the help and encouragement of our bankster-controlled political mafia, dumped into the financial system. Whilst inflation, or the threat of hyper-inflation, would be a very valid concern if these enormous amounts of surplus cash ever made it into the real economy; that simply is not, and will not be, the case.

    The cash, in the form of TARP, TALF and a slew of other less memorable acronyms, originally intended to spur along lending to businesses and consumers (or so we were told), was actually nothing but a crutch to make our bankrupt financial sector appear solvent enough to continue the irresponsible practices that nearly destroyed them in the first place. The capital has not, and most likely will not, find its way into the real economy, and believe it or not, that is a good thing.

    Economics, as most of you already know, is the study of choices made concerning the allocation of scarce resources (make a note of the word scarce here). In short, it's the study of supply and demand, and the effect of each upon the other. In theory, economics helps us to efficiently allocate resources to extract maximum value with minimal waste.

    However, returning to the subject of scarcity, it is impossible for scarcity to exist when there is an unlimited supply of something, namely fiat currency. When currency is backed by nothing but the full faith and credit of the issuer, then said issuer may expand and contract the supply at will. This allows our government to borrow, at interest, from our central bank to cover whatever financial shortfalls it may encounter. But what it means for you and me, the little people, is that our incomes are being debased on a daily basis.

    For the last 40 years, wages have failed to keep pace with inflation, meaning that Americans had to work longer and harder for less to take home. As some of you may remember, there was a time in America when one income could actually support a family, credit cards didn't exist, and folks, as a general rule, didn't want to borrow money.

    Not a good environment for you if you're a banker trying to make a living, right? So, what do you do? If you're a smart banker, you work very hard to change the public perception of your products. You sell dreams to people. "What? You can';t afford that new car/house/fur coat/refrigerator/or some such nonsense you want? We can help, just sign right here!"

    So it began. Debt didn’t appear as burdensome anymore, the water seemed warm, folks jumped right in, and before anyone noticed it was time for the wife to head to the office to help pay the bills.

    When this occurred, the labor force grew, and, as a rule, when the supply of something increases and demand stays the same, or grows slower than the supply, prices (in this case wages for workers) go down until equilibrium is reached.

    So our debt laden consumers continued to toil day after day, digging the hole deeper and deeper by living well beyond their means, all the while having the value of what little they could manage to save stolen by inflation. So maybe a little asset deflation wouldn't hurt, eh? Well, the answer is yes, it would hurt for awhile. But, that being said, running 5 miles a day hurts, doing 100 pushups hurts, not eating your favorite (but horrible for you) food hurts, but in the long run it's good for you right?

    This article provided courtesy of our sister site: Beaufort County Now