"An increase in the supply of money will lead to an exactly proportionate increase in the price level. Thus, money supply expansions only cause price inflation."
- John Locke's Quantitative Theory of Money
You just got a lot poorer this month. Did you notice? You will.
The amount that you got poorer can be shown very simply in this graph.
If you wanted to see what the dollar will look like in about 6 months, all you need to do is to take this chart and flip it upside down.
The claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. - Nouriel aka Dr. Doom Roubini
I woke up this morning to see the blog buzz word of the day is Nationalization as Economics bloggers hunt for thesolution to the financial crisis.
Just over a week ago the SEC took an "emergency action" and banned all short selling on 799 financial companies.
Short sellers borrow stock with the aim of selling it, then buy it back at a lower price, hoping to pocket the difference. The commission said short sellers add liquidity to the markets during normal conditions, but recent unbridled short-selling has contributed to the recent tailspin in the stock market.
What the SEC didn't bother to consider was that short-selling also adds liquidity during the tailspin as well.
The SEC has made things worse, not better.
While Nancy Pelosi and Barney Frank hold Press Conferences claiming the Republicans won't modify the bad bankruptcy bill to enable renegotiation of bad primary residence mortgages.... and Barney Frank claims the Paulson plan is the only plan that can pass in some modified form....
Other economists are writing up their own alternative plans and posting them online.
It's Friday and now we're all going to watch debates supposedly on foreign policy. The posturing, political football season is upon us. Democrats are now claiming:
Without Republican cooperation, we cannot pass this bill
I guess this latest sound byte is working on the assumption that Americans cannot add up the number of Democrats in the House and Senate.
Like a bad High School fumbling, the Political Football is bouncing around the field. Few are bothering to analyze what will work and what will not. Real solutions seem to be off the table.
Senator Shelby (R-AL), has come out and said this entire bail out deal is fatally flawed. He claims to have over 300 Economists agreeing with him.
Richard Shelby is the ranking GOP member of the banking committee and what is more interesting is he used to be a Democrat and switched parties in 1994.
CNBC's Charlie Gasparino is now reporting that McCain is saying the deal is "dead" in it's current form. This marks another flipflop from the senator, who just the other day says some sort of bailout was needed. This also comes in light of the Democrats in both houses coming to an agreement as to what they want. Indeed, even 40 out of 49 Republicans said they would go along. McCain had met with Republican leaders. He or his handlers have been in constant contact with the White House, particularly Paulson. So I'll tell you, if this is true, it's a shocker.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy! 
I guess this latest sound byte is working on the assumption that Americans cannot add up the number of Democrats in the House and Senate.
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