Posted on 06/22/2013 1:25:44 AM PDT by blam
My take is they acted in '08 because of rampant deflation --the Fed's primary task. Unemployment (secondary) came later.
Many have already argued that, and my guess is if it were ever possible to independently verify his theory with actual gdp/tariff records then the idea would be more widely accepted. Hasn't happened yet, and I'm thinking most people still expect what's actually happened in the past with tariffs and production would happen again.
Most of us don't like paying the taxes we got even without adding new ones.
“Okay, the mythical 1.7% figure doesn’t include food or fuel, you know, the stuff that keeps us warm, fed and well lit.”
In addition, government inflation accounting assumes you will change your buying habits in response to rising prices. If you drive a full size car and when it comes time to trade you find the full size vehicles have increased in price you’ll buy a mid size. By government inflation accounting rules that may actually result in a decrease in price. Same thing with housing, you’ll move from a 2000 square foot home to a 1500 square foot home. When you buy detergent at the grocery store you’ll switch from Tide to the store brand. As a result of these decisions to “trade down” on your purchases your household rate of inflation is diminished.
The sad truth in America today is average household incomes are declining for the first time in our history and inflation is rising rapidly. If there was a true opposition party it would be screaming this fact everyday. As James Carville said when orchestrating the 1992 Clinton victory over Bush I, “It’s the economy stupid.”
For some reason the Republican Party does not want to rub the state of the economy in Obama’s face. Romney was pathetic on this issue during the campaign. Why aren’t Boehner, McConnell, McCain, Graham, Ryan, Rubio, Christie, Rove, and the rest of the Republican leadership pounding the economy drum, including the deceptive statistics, everyday? It must be they either support the ruinous economic policies or they are fat dumb and happy satisfied with being the minority party.
“Okay, the mythical 1.7% figure doesn’t include food or fuel, you know, the stuff that keeps us warm, fed and well lit.”
In addition, government inflation accounting assumes you will change your buying habits in response to rising prices. If you drive a full size car and when it comes time to trade you find the full size vehicles have increased in price you’ll buy a mid size. By government inflation accounting rules that may actually result in a decrease in price. Same thing with housing, you’ll move from a 2000 square foot home to a 1500 square foot home. When you buy detergent at the grocery store you’ll switch from Tide to the store brand. As a result of these decisions to “trade down” on your purchases your household rate of inflation is diminished.
The sad truth in America today is average household incomes are declining for the first time in our history and inflation is rising rapidly. If there was a true opposition party it would be screaming this fact everyday. As James Carville said when orchestrating the 1992 Clinton victory over Bush I, “It’s the economy stupid.”
For some reason the Republican Party does not want to rub the state of the economy in Obama’s face. Romney was pathetic on this issue during the campaign. Why aren’t Boehner, McConnell, McCain, Graham, Ryan, Rubio, Christie, Rove, and the rest of the Republican leadership pounding the economy drum, including the deceptive statistics, everyday? It must be they either support the ruinous economic policies or they are fat dumb and happy satisfied with being the minority party.
England prospered under protection too. And had their industries devastated when they adopted free trade policies
I'm all for lowering the domestic taxes to offset an import tariff. Make it tax neutral. You'll still get a huge bump in government revenues when Americans go back to work and GDP soars.
England prospered under protection too. And had their industries devastated when they adopted free trade policies
I'm all for lowering the domestic taxes to offset an import tariff. Make it tax neutral. You'll still get a huge bump in government revenues when Americans go back to work and GDP soars.
Actually if you look at the law, unemployment is listed first, inflation second.
But certainly the FED would act to avoid deflation because it leads to massive unemployment.
I call BS. Allowng FED intervention, and TARP was a serious mistake that amounted to kicking the can down the street.
The government, including the FED should have allowed the country to take its medicine like we should have back in '08. Then force an austerity program to right the ship.
The government ran up $8 trillion in debt prior to 2008 with no help from the FED.
That amounts to a debt of $8T for the first 235 years of this country. Well guess what in a short 5 years the FED has over doubled that and added another $9T. You might support Bungling Ben and his QE sideshow, but I for one think him, his boss Obummer, and our complicit congress are about to steer the train off the cliff.
The FED only got involved because unemployment soared, which is what they are supposed to do. That’s their legal mandate.
If that was the case why did Bungling Ben keep pumping the QE spigot after unemployement stablized (though high) in the '09-'10 timeframe?
The President appoints the Fed Chairman from among the sitting Governors, who themselves are appointed by the President in staggered 14 year terms. Once appointed he cannot be removed by the President. It would take an act of Congress to fire him.
I call BS. Allowng FED intervention, and TARP was a serious mistake that amounted to kicking the can down the street.
But who really allowed that? Congress approved TARP and the President signed it. I do think the FED made a mistake. They lowered the Bank Reserve ratio over the last 20 years to an effective 1% from it's historical 15%. That left them no room to maneuver when the liquidity crisis hit. That's why Congress had to get involved.
But Congress had made prior mistakes too. They repealed the Glass-Steagall act that prevented banks from engaging in risky behaviors. The FDIC failed to adequately investigate the credit default swaps that banks were claiming were offsetting their risk.
The lowering of reserves, the repeal of Glass-Steagall was all done to allow U.S. banks to compete against European banks on European banks terms. Instead of forcing European banks to come up to our standards to do business here, we lowered our standards to remain competitive with them.
"That amounts to a debt of $8T for the first 235 years of this country. Well guess what in a short 5 years the FED has over doubled that and added another $9T.
The FED only bought $1.9 Trillion of that extra $9 Trillion. The Rest Congress borrowed from others.
You might support Bungling Ben and his QE sideshow, but I for one think him, his boss Obummer, and our complicit congress are about to steer the train off the cliff."
I agree that Obama and our complicit congress are steering us wrong. The overspending is ridiculous. But that's not the FED's fault. Congress approves the spending and the borrowing. The FED jumped into to lower interest rates to try to get the unemployment down and offset deflation caused by the credit crisis.
"The government, including the FED should have allowed the country to take its medicine like we should have back in '08. Then force an austerity program to right the ship."
Congress should certainly reign in spending. But if you're talking about letting banks fail. That has severe ripple effects. Bank customers often fail when their banking relationships fail. The FDIC did close 465 banks from 2008-2012. Too much medicine at one time can kill a patient.
"If that was the case why did Bungling Ben keep pumping the QE spigot after unemployement stablized (though high) in the '09-'10 timeframe?"
If unemployment's high, Ben should keep the throttle on. Unemployment is at 23% now according to shadowstats.com. (they include a group of long-term unemployed that Clinton defined out of existence.)
Unfortunately, we've done nothing to reign in our incentives to offshore our industries. So the FED is bailing water, but the boat is sinking faster than the FED can bail.
With the one exception of lowering the Reserve ratios prior to the crisis, the FED is the only one up there that is doing what they are supposed to be doing.
if you look at the law, unemployment is listed first, inflation second.
We hear that a lot but here's the actual law and it doesn't say that; all it's got is stuff about what a 'good' economy is supposed have. So what the Federal Reserve says is that--
"...maximum employment could best be achieved by achieving price stability..."
"...the Committee could achieve its dual mandate by achieving the price stability objective..."
--and no matter what the 1978 law should have said and was meant to have said, the Fed's tools stay the same. They affect prices, and that's why the Fed admitted that the 1978 law did not affect:
"...the Committee’s view about how and the extent to which monetary policy is capable of increasing the level of output beyond achieving price stability."
I'm not sure what you are looking at, but here's the actual Federal Reserve Act as embodied in U.S. Code. USC_Title 12_Chapter 3_Subchapter I_§ 225a
USC ›12 USC § 225a - Maintenance of long run growth of monetary and credit aggregates
The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.
Title 12 is "banks and banking" with Chapter 3 specifically the "Federal Reserve System". You're link was off in Title 15 Commerce and apparently deals with things the President is authorized to do, not the Federal Reserve.
...1% tariffs for the last 40-50 years and now we have lost a lot of industries and have the highest rate of unemployment...
We can't be back to saying correlation does prove causality. Better is the idea that we show care with numbers and include references. This is what we got when we look at historic unemployment/tariff numbers (linked in your post #117) and it's probably not the direction you intended to go:
|
|
for the past half century |
1/2 century before |
|
average tariff rate |
3.6% |
12.0% |
|
average unemployment |
3.4% |
7.4% |
We weren’t but for some reason you brought us back to that.
Why you would use numbers from two different periods where monetary policy is dramatically different, to try to show a correlation between unemployment and higher tariffs is beyond me.
I also posted a graph from a study that showed that countries that had high trade deficits leading up to 2000 had significantly higher unemployment in 2000 than those countries that didn’t.
When I talk about industries lost, you don’t need a graph to correlate those. We know what industries we lost. We know where we get those goods now. They’ve been off-shored. No correlations needed.
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