Quote from: stochastic on February 08, 2013, 03:18:21 AM

Quote from: alexeft on February 07, 2013, 11:34:25 PM

I don't really understand how inflation is going to happen if people already have too many loans?

Central banks printing money is one thing, but for that money to go into circulation it's quite another,
since there are not that many people able to take new loans and hence, help the newly printed money
go into circulation and ultimately cause inflation. I'd say that for the time being, it is only banks
that are being helped to remain afloat.

But then, I'm no expert and I am always willing to learn from more knowledgeable people.

It is not just inflation that is the worrying thing, it inflation along with a stagnant economy, stagflation. Stagflation is the phenomenon of high unemployment, low economic growth, and increasing prices of goods and services, these are things that should not happen according to Keynesian economics. In that economic model high unemployment should mean less people have money which would lower prices, and when the economy is booming it should make more people employed and thus increase inflation.

What most people fail to realize is that there are 2 economies of the world. There is the traditional lending business that banks do and the other business of speculating in financial markets, such as FOREX. If you compare the FOREX market with the traditional lending market you will see it is several times larger than the traditional economy.

http://www.henrymakow.com/margrit-kennedy-bernard-lietaer.jpg
source

What is happening is that the central banks of the world are lending money to banks at low rates and instead of banks lending the money out for traditional loans, the banks are using it on speculative investing. This flow of capital into commodity and other markets increase the price of commodities and stocks, which causes inflation.

+1 , well said

@alexeft
Also note, that SHOULD the vast amounts of money created at the moment, at some time in the future get into the real economy as well, then brace yourself. We're running the risk of hyperinflation by then.