As  we’ve mentioned before, we welcome any and all questions from our readers about anything…. the market in general, individual stocks, rules and regulations, and whatever else is on your mind. So, don’t be shy - send ‘em in when you’ve got them. On that note, when we get a question that would be worth sharing with all our readers, we take your name and e-mail address out and post the Q&A publicly. Here’s the latest round of your questions and our responses.

First up……

How does pumping billions into the economy cause inflation?

Thanks for the question, which was in response to something we mentioned in the April 10th newsletter. Without getting too far into the philosophy, the government can print more money and put it into circulation within the U.S. economy. However, they can’t control how much those dollars are worth.

Think of it as making change….if you trade in a $10 bill for two $5 bills, you’ve still only got $10. Well, that’s not too far off from what happens when the Fed puts more dollars into the economy by buying Treasury bonds.

The Fed’s goal in doing so is to increase liquidity by supplying a few extra bucks that will eventually end up in everyone’s pockets (to various degrees). It sort of works, but the side effect counters most of the positive effect. What side effect is that? Prices of everything go up, as there’s no such thing as wealth creation…. at least not like that. For instance, the dollar that was worth $1.00 before the cash injection is now worth $0.50 after the cash injection. So, it then takes two “$0.50″ dollars to buy a loaf of bread that used to be bought with one true “$1.00″ dollar.

There’s still an upside to the Fed’s practice, but it’s not one without the negative consequence of inflation. Ideally, the lesser of two evils prevails.

Here’s a more technical explanation: http://www.economicshelp.org/macroeconomics/inflation/persistent_inflation.html
We also got this question about restricted shares…..

I purchased some shares 30 months ago from 2 U S Companies. They were restricted, I think under 144 or some such thing. I understood after 24 months restrictions have to be lifted, but this has not happened, What gives?

Great question. In a nutshell, you have to ask for the restrictive legend to be removed, as nobody will volunteer to do it…. at least not in my experience. The SEC site says you should contact your transfer agent, but I’d first try to contact the brokerage firm where you’re holding the stock and ask them to make it happen. It could take anywhere from a couple of weeks to a couple of months. (Note that the company you bought shares in also has to sign off on removing the restriction.)

Here’s the SEC page that explains more of the details: http://www.sec.gov/investor/pubs/rule144.htm

And finally….

At one time we could have a portfolio on the small cap network site and view the progress of the stocks every day. Are you going to initiate that option to your readers?

You may have noticed a change in the Small Cap Network’s scope and flavor lately. However, you ain’t seen nuthin’ yet. Within several weeks the Small Cap Network is going to be a true community.

Will that mean we bring back the original position table? We can’t say yet, but we can say you’re going to like what you see when it’s all ready to roll. I suspect what you’re looking for will be available, though it may not look a little different… for the better.

That’s it for now, but again, you’re always invited to contact us with your questions.