Fed Kites 600 Billion. (if you are a math atheist skip this blog)

The Official US GDP is currently 15 Trillion dollars.


One can immediately cut that in half because if I buy a car from you and you sell a car to me the price of the car shows up twice in the GDP. So on the high end we can say the actual Gross Domestic Product is 7.5 Trillion dollars.

Now to take a lesson from the Economics textbook the ratio of "real" dollars to "apparent" dollars. {i.e. reference the electricity textbook AC Trig section} is defined by the ratio of the federal reserve to lending.


The amount of a deposit that a bank is not allowed to re-lend. This amount was 20% in 1970 but a sheaf of laws and special exceptions has lowered that to an average of 3% {best I can tell}

This means the apparent dollars in the economy is somewhat larger than the real dollars. 7.5 Trillion times 3% is 225 billion.

Compare this to 1970 when the GDP crossed one trillion for the first time with a 20% reserve and we see the real dollars in 1970 to be about $100 billion dollars. (1/2 of one Trillion times 20%)

Adjusting using the BMI {big mac index} the popular sandwich cost $1.70 in 1970 and $3.19 in 2010. Giving us a real dollar inflation figure of 1.9 so 100 Billion times one point nine is $190 Billion dollars..

So we are looking at a low end estimate of $200 Billion dollars of "real" GDP.

If it feels like you are treading water there is a reason.

What all this means if you care to look at it is that we have a real economy of about 200 Billion dollars in this country and we always have had. If you throw a 600 Billion dollar "infusion" it can have no effect except to drive the value of the dollar to 1/3 of its previous value.

33 cents for 2014 dollars vs 2010 dollars.

Now to make you feel better the stock prices will go up .. Possibly even double. The ignorant and uninformed will look at that newspaper and say wow! I doubled my money in that GM stock! (well GM may be a bad example now that China is buying most of the IPO.) But, fail to notice that the electric bill has gone from $300 to $900 and the cost of a big mac is now near $9.

The result of course is all those plastic whitchamcallets you buy at Wal-Mart will now cost three times as much imported from China which should make our American products more competitive.

Provided of course that labor can be held to current levels with prices at three times the 2010 levels.

But the end result .. International goods .. ( energy is an international good) will triple in price. Domestic goods .. (homes and land are domestic goods) - will remain stable in inflated dollars.

In my humble estimation monied nations and individuals will seek the shelter of hard currency forcing gold to stabilize at $2000 USD and Platinum at $3000 (2014 dollars.)

The same result could be achieved by simply withdrawing from the WTO and putting huge levies on imports forcing Americans to buy American. Without all the inflation and drama. And, with the pleasant side effect of eliminating the federal income tax.

Of course the American public could just choose to buy American but that would be asking too much.