The Money supply (M3) between 1980-2005 increased 20 fold. M3 include the following components of money: treasury bills, savings bonds, commercial paper, and other assets readily convertible to cash. Much of the money that has been created has gone abroad and so consumers have not felt it in prices. "If we didn't have China, if we were a closed system and we were printing money that way we are, not producing, and spending it all here, consumer prices would already be off the charts." "But our trading partners, by accumulating dollars, haven't stopped inflation; they have only delayed its effects. One day the flows will reverse, with the Chinese and other using their dollars to buy consumer goods as well as properties in the United States." "In effect, the Chinese will merely repossess all those goods they sold us on credit." "Actually, in the case of China, the yuan-dollar peg has artificially kept US import prices low, temporarily suppressing US consumer prices." The Chinese currency will rise reflecting higher raw material costs and higher labor costs.[Learn More ...]

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