For you and me, we generally can only add to assets by working hard and then get a salary for the work or make a profit for the entrepreneurship. Company-was such, his net asset is only increased when the company worked hard and succeeded in making a profit. Not so with the institution whose name is the central bank, they can print money out of the clouds or even completely unnecessary print it - just type a few digits on his computer - that their assets grow - hence their asset-even counting!.
Want to see real proof?, Consider the graph below which shows the U.S. central bank's assets or called the Fed. At the end of 2008 when United are top of financial crisis, it suddenly jumped the Fed's assets. This asset in the form of receivables to financial institutions of American who was hit by a storm battered the crisis. So from where the Fed suddenly has a wealth (money) is so much to rescue these actions?, Yes it was printed from the clouds (in English often called printing money from thin water) or even do not need to print it at all - just type a few digits on a computer - then the market called quantitative easing with a cool name.
How the hell they actually do this?. Here is a simple description of how they work.
For example, the central bank of a country (in the example I use the United States alone fed him, let no one get mad at me) are concerned with inflation will hit this country, then the meal will issue bonds in countries like U.S. $ X billion.
So these bonds-not purchased by public institutions or financial. The money that was originally there in public institutions or finance is now sucked into the central bank. That does not suck as little as U.S. $ X billion, but can be up to three times - because it is usually double their money through a bank loan process. Money bank banking money creation is the result of even the part that sucked in by the Fed when they issue debt.
So these bonds-not purchased by public institutions or financial. The money that was originally there in public institutions or finance is now sucked into the central bank. That does not suck as little as U.S. $ X billion, but can be up to three times - because it is usually double their money through a bank loan process. Money bank banking money creation is the result of even the part that sucked in by the Fed when they issue debt.
On the contrary also happens, in situations where the threat of crisis-stricken country that is very serious and even into a recession - then the Fed doing the opposite to that above. This time they will buy the debentures in countries such as U.S. $ X billion, you know where his money?, Easy - yes from the air earlier. So the 'new money' from the clouds are pouring into the U.S. financial system and to the market. When it came to the market in number is no longer U.S. $ X billion, but many times due to the process of money creation through credit banking world that they provide. The second process is the background of the first graph above.
The problem might not be worse if if money from the air can be proportional to the real economy moving by increasing the product of goods and services reflected in the increase in GDP. But it seems also not occur in the U.S. because when the Fed's assets increased more than 160% of the range of U.S. $ 850 billion before the crisis to around U.S. $ 2.3 trillion after the crisis, the country's GDP grew only in the range of 2% only!.
That is what, in ensuring the Fed's Money which should encourage economic activity measured by GDP growth -? The effect is not significant. Indeed for a while managed to overcome the crisis that is reflected in a negative growth of GDP during the crisis, the positive direction after the crisis - but because GDP growth is not worth the money from the clouds are made - there arose a new problem that the threat of inflation.
How inflation or rising prices generally occurs as a result of the creation of money out of the clouds I wrote two years ago with the article titled The Wreck of Monetary Studies and the prosperous. Summary can be described by a formula called the equation of exchange: M x V = P x Q. M is the amount of money, V is the velocity of rotation, P is the price level and Q is the amount of goods and services.
P x Q represented by GDP just as in the second graph above. When M increases dramatically as reflected by the first graph, V is relatively fixed, which means not able to boost the Q - legible from the second graph. So when in an equation on the left side increased sharply (because of M), one of the factors on the right side is relatively fixed (Q) - then one other factor on the right side would rise sharply as well - namely P or the prices or called inflation .
But according to the U.S. government's official inflation data they really low?, That's according to the government because of its political interests. Fortunately for the American people because there was a grandfather who often publish data for comparison are very popular now known as the Shadow Government Statistics (SGS). According to data of this SGS, the country's inflation can be much higher than officially published by the government. Notice the comparison in the third chart below.
When inflation occurs, there are other indicators that are very accurate - certainly more accurate than even the SGS data mentioned above - namely the development of the gold price. Consider now the gold price chart below that I give the background of the first graph above.
Now you can see it very clearly, that the impact of money creation from the air by the Fed are slowly but surely overtaken by rising world gold prices until now valued in U.S. $ or the money the Fed.
So how about the future?. What is clear the Fed will continue printing money out of the clouds even with a much larger number of more famous through the process with quantitative easing 2 - hence the four graphs above inshaAllah you can guess where relatively accurate about the direction of gold price movements world in the coming years. Wa Allahu knows best.
