usa overspending causes hyperinflation

James Turk: Government overspending causes hyperinflation

Submitted by cpowell on Fri, 2009-12-25

Dear Friend of GATA and Gold:

In commentary published this week, GoldMoney founder James Turk, consultant to GATA and editor of the Free Gold Money Report, argues that hyperinflation is not caused by too much bank lending but rather by government overspending. Turk writes:

"Much has been made of the huge bank excess reserves 'sitting idle' at the Federal Reserve. It has been said that hyperinflation is not possible when the banks are sitting on such huge reserves, instead of lending them into the economy. This thinking is flawed because it ignores that there are two sides to the Fed's balance sheet. Those reserves are not just sitting there, as if they were in a vacuum. Those reserves have funded the Fed's purchase of U.S. government debt, putting it and the U.S. dollar on the road to hyperinflation."

Turk's commentary is headlined "Hyperinflation Watch" and you can find it at the FGMR Internet site here:

http://www.fgmr.com/december-23-2009-what-causes-hyperinflation.html

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

I obtained the above from http://www.gata.org/node/8180

James Turk imo has clearly refuted and called "flawed" the views of some who also post here consistently arguing that because the US banking system is sitting on large reserves and not lending there will be no significant US inflation.