February 3, 2009 The video linked below features an excellent graphic depicting what the Federal Reserve is doing.� Remember hearing about the law of supply and demand when you were in school?� As the Federal Reserve increases the supply of Federal Reserve Notes within the system those Federal Reserve Notes in one's possession become worth less and less due to the law of supply and demand.� The process is called "inflation" and inflation is actually just another form of taxation.� Look at the unprecedented inclination of that line on the graph!�
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Note, despite the fact that the word "depression" is now basically employed as an indicator of the severity of a severe recession, the fact remains that the causes of a recession and depression are opposites.� The Great Depression was caused by a purposeful restriction of the money supply subsequent to exceptionally loose credit policy; suddenly there simply was not enough money in the system.� One who had money during the Great Depression was in for a fine time.�
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Conversely, a recession results from too much "money" in the system and a severe recession impresses me as being far worse than a depression because even if one has "money"; during a severe recession, a wheelbarrow load might be needed just to purchase a single loaf of bread.� Unfortunately, the monetary policy of this country is currently heading in the direction of a severe recession which might make the Great Depression look mild by comparison.
