The coming inflation, explained.

If you produce A LOT of goods and you do not increase the money supply, well then the value of the the dollars that are already existing goes up, in that those are the only dollars that can buy all the goods in the economy.

However, if you print off a ton of money, WITHOUT a proportionate increase in the amount of goods you produce in an economy, well that’s MORE dollars chasing after fewer goods.

The second scenario is the one we face today.

With Our Lord Obama printing off money like there’s no tomorrow; with the compensatory collapse in RGDP growth (on track to decrease by about 6% this year) we have a very simple “numerator/denominator” relationship that bodes ill for the nation;

The numerator (money supply) is going up.

While the denominator (RGDP growth) is going down.

Which will result in inflation.