Less Than $2.3k To Go!!
Just A Reminder
Please Don't Forget
To Donate To FR
Posted on 05/16/2011 10:23:53 AM PDT by Graneros
New inflation figures were released by the government last week, and the news was not good. The headline inflation number was 3.2% in the 12 months that ended in April. That is more than a percent above the Federal Reserve’s “target” rate of 2% and the first time it has been more than 3% in over than 2 ½ years. Of course, the accounting gimmicks used by the Bureau of Labor Statistics (BLS) understate true inflation, so things look better than reality. Nonetheless, in the latest report from economist John Williams of Shadowstats.com, even the government’s own “official” numbers will likely show double digit inflation in the next three months or so. The reason is continued money printing in the form of another round of Quantitative Easing (QE) by the Fed to prop up the struggling economy. Williams said, “The underlying pace of official inflation is accelerating, and could move into double-digits in third-quarter 2011. Preceding or coincident with that likely will have been some move to QE3 by the Fed and intense—if not panicked—selling of the U.S. dollar and dollar-denominated assets. Such a circumstance could be a base from which a hyperinflation might begin to unfold with some rapidity.”
And get this, inflation is already in double digits, according to Williams, if it was calculated the way BLS did it more than 30 years ago. Williams said, “. . . based on reporting of 1980, the April 2011 annual inflation rate would have been about 10.7%.” But, the double digit inflation story is not the one the mainstream media likes to tell. Instead, it usually focuses on what the government calls “core” inflation that excludes food and energy. The “core” inflation rate is .2%. Who lives in a world where the core of existence is not food and energy?
(Excerpt) Read more at usawatchdog.com ...
I never thought I would look back on the Carter Presidency as the good old days, but I’m beginning to.
Oil prices started up way back during the Bush Administration. Oil prices were IMHO the primary cause of the 2008 financial crisis. And in turn, the primary cause of the mortgage crisis.
Bush couldn't move on oil because the 'rat congress had his hands tied. He should have moved on nuclear but he didn't.
Obama is going backwards on oil and moving very very slowly on Nuclear. (I'm really surprised Obama is moving at all on Nuclear but there have been a couple of small approvals.)
As long as both numbers are reported and they are it does not matter that one number has food and energy stripped out. It is done not to fool people but to take out factors which vary rapidly.
The list, ping
Let me know if you would like to be on or off the ping list
Prices are measured in dollars therefore changing the latter changes the former. Inflation is the change in the general price level produced by increases (disproportionate in your definition) in the money supply. An increased money supply is not automatically reflected in the price level nor is inflation just an increase in the money supply. Only when it is reflected in the general price level does it become inflation.
Alternative theories of inflation point to demand-pull and cost-push causes although all three: cost-push, demand-pull and monetarism are not completely separate from each other. Nor are they mutually exclusive.
No one would care if the price level does not change.
It should also be noted that only in the last forty years or so has inflation been considered a bad thing in this country. In fact, we had political parties (Greenback Party, Populists, Bryan era Democrats) founded and calling for inflation as well as other political movements (The Free Silver movement.) As long as we had a currency based upon a commodity base (gold or gold/silver) hyper-inflations such as Germany in the 20s or China in the 30s or Latin America in many times were not possible.
I am one who believes anyone not a deaf-blind-mute could beat Urkel and I am not sure about the deaf-blind-mute.
So, my daily lunch routine has been a Subway salad for a year or so now...Two weeks ago I went in and paid my usual $5.26 for that salad.
I went on vacation last week and when I went to buy another one today, the same salad cost me $8.21.
That new cost may or may not be entirely inflation, or it may be financial gimmickry at Subway or with the local franchise to increase profits, but it sure felt like inflation.
For better or worse, however, I will be buying a head of lettuce every other day now and pre-making my salads at home...There’s no way I’m dropping the better part of 10 bucks for a crappy salad every day.
That is not what my statement said. Purchasing power has declined but it is hard to argue that the average man today cannot buy as much as ever.
If the dollar was 1/4 of a pound sterling and was devalued to 1/5 of a pound it was what is generally in economics and finance thought of as a true devaluation. Today the relative values are determined by the international monetary markets on a daily/hourly/minute-by-minute basis rather than governmental decisions.
Keynes? Keynes!!!!
That bogus government rent boy is the reason this country is going down the toilet.
Him and his “theory” was the perfect excuse that gave government the green light to START what we are now in the mist of. The US dollar is so abused, is not being accepted outside this country, and is on the way out LIKE ALL FIAT CURRENCIES HISTORICALLY DO.
There is nothing new under the sun, including currency collapse.
“Keynes showed in the 30s that it is not always possible to increase the volume of loans merely through decreased interest rates. This is the ‘liquidity trap’ wherein the extra money is not lent out because no one has the confidence to undertake loans.”
Liquidity traps are indeed real, and one of the few Keynesianisms that aren’t figments of his imagination. But many an economist has sunk on the reef of your line of thinking in this post. We’re bumping up against a fundamental deficiency of empirical disciplines here: the problem of the seen and the unseen. You see credit expansion unable to reinflate the bubble to. What remains unseen is how low prices would be had credit not been expanded to where it is. Just because lower interest rates are not able to stimulate growth does not mean they aren’t causing inflation.
Pre-’08 prices are not the yardstick against which to judge whether there’s been inflation. Current market prices are. Since there is no free housing market, it’s impossible to say what they’d be. But I’m guessing they would be a lot lower
“Notice that inflation is not the rise in prices”
True, we call that “price inflation.”
Housing prices have collapsed by at least 30%. Even low interest rates have not stopped the slide which, if it continues, will decrease any rise in inflation. While the collapse cost me a couple of hundred thousand it also allows younger people such as my sons to afford a house. I guess it is passing on my legacy in another form.
Keynes attempted to explain why the traditional methods of the Neo-Classical school of Economics (Marshall for example) did not seem to be working to revive the Western democracies’ economies from the Great Depression.
I wonder what "theory" you believe he advocated which you believe has caused such damage? Keynes NEVER advocated continual deficits run by governments and, in fact, argued strenuously against such policies. He would not be what is considered "Keynesian".
It is also worthy of note that he warned in 1920 (In "The Economic Consequences of the Peace") about imposing the punitive Treaty of Versailles on Germany. He was dead on about that and universally ignored.
“Oh well. Big deal. I tried to get people to want to cut the budget and was shown that they will not get rid of their goodies. I was on many threads today trying to show FREEPERS that we are in trouble and they all shrugged their shoulders and said “who cares”.”
The FREEPERS should have more sense. If FREEPERS do not have sense, there is no hope for the general population. Perhaps FREEPERS are just reflecting the dismal entitlement syndrome with more than 50% net service receivers.
Ah yes, America is repeating the Jimmy Carter years....
Ah yes, America is repeating the Jimmy Carter years....
My belief is that there will be no inflation until housing recovers because it is such a huge sector of the economy. New housing starts are at the lowest levels in decades and not rising sufficiently to allow any general price increase. Unemployment will not drop until this market recovers. This will, in turn, restrain wage increases and materials industries production.
Keynes’ ideas were not limited to the liquidity trap and pointed to many other reasons that the economy had not recovered. I suggest you read his General Theory... It is elegantly written and shows why he was set up as a target for economists for half a century. Even when he was wrong his discussion and argument was formidable. I am not a Keynesian but respect the man's intellectual achievements. The butchered pastiche of ideas which passes as “Keynesianism” has little relation to reality.
Gotta love our disingenuous politicians. Who but politicians would cut out food and energy from the inflation numbers.
Definitions of “inflation” can vary in depth and complexity but what cannot be gotten around is that the MEASURE of “inflation” is % increase in prices. It isn’t percentage increase in monetary or credit aggregates but prices. Same is true in Deflation it is measured as % decrease in PRICES.
There is little that can be said about inflation/deflation without speaking of prices.
You won’t find “price inflation” as a term in Economics Dictionaries.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.