Sunday, July 20, 2008

Stimulating Inflation

I was watching talking heads on TV yammering about the need for a second stimulus package while griping about the sudden emergence of inflation. The talking heads seemed to miss an obvious connection.

We had a stimulous package where the Feds borrowed a pile of cash which came largely from China, oil producing nations. There were also investors who pulled their money out of risky investments in the stock market and in mortgages.

Not surprisingly, after the stimulus packages we saw the value of the dollar drop, and the price of gas skyrocket. As smart investors yanked their capital from risky investments in the stock market and mortgages, the market tanked and the housing crisis worsened as borrowers find that investors would rather own treasury bonds than investing in housing.

It appears to me that the stimulus package was a qualified and quantifiable flop.

Of course, not all of the economic news is bad. Apparently, many Americans have taken conservation to heart and they reduced their fuel consumption. The result is that oil inventories rose when the pundits were predicting a decline. Oil prices tumbled on that news last week.

Energy is currently the limiting factor for growth. Each and every step that we take to reduce the waste of energy at this point in history has a magnifying effect. The Pelosi stimulus failed to address the problem. In fact, one might argue that the artificial stimulus simply subsidized bad behavior.

Anyway, since Nancy Pelosi voted for inflation, I decide to inflate my prices. I decided to increase the listing fee for SL Sites from $10 to $12. That is a nice round 20%. Art organizations, non-profits, content sites and blogs can still list for free.

I actually wrote the program so that I can easily adjust the price. Since I figure that the Democrats will have complete control of Congress and the White House, I programmed the site so that it will automatically inflate the price at a rate 20% a year.

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