Posted on 02/26/2008 6:50:58 PM PST by Flavius
It still boggles my mind how you can have inflation during a recession, but then either asset prices must fall or costs & wages must inflate.
It sure feels like the 70s are right around the corner. Not looking forward to it...
The reason stagflation could exist was the oil price fixing by OPEC. OPEC does not have the same near monopoly powers today & the price of oil will rise or fall depending on demand. If the economy shrinks (the “stag” part) demand for energy will fall, and the price will drop — thus reducing the “flation” part of stagflation.
One significant change — Canada’s oil sands have reserves at least as large as those of Saudi Arabia.
Another change — the N. American economy produces at least twice the GDP per unit of energy used, as it did in the early 1980’s. The economy is simply not as vulnerable to the price of oil.
IMHO, the talk of “stagflation” is nothing more than MSM know-nothings talking doom and gloom to help their Democrat fellow-travellers in the upcoming elections.
Inflation is a monetary phenomenon due to an overexpansion of the money supply. It’s a general rise in prices. What you see in foodstuffs due to ethanol competition feels like inflation at the consumer level but it’s not what economists identify as inflation.
I dont call what they call it. We are seeing shortages drive prices up. And they are way up
The fact is were not in a recession yet. I know people might be confused since the LSM is lying to everyone.
This is newsmdedia driven fear mongering to get Hilabama elected.
It’s an important distinction in how you should deal with it.
If your money is being debased by monetary inflation it pays for you to borrow all that you can and to invest in hard assets. That was the wisdom of the 70s.
If food prices are going up due to increased demand from China and India and the diversion of grain to fuel production we are all going to need to plant gardens and raise chickens.
“The fact is were not in a recession yet.”
There’s no way to know that. The NBER doesn’t call recessions until they are well underway. If you’re in something housing related it could feel like a depression.
Wonder how much of total inflation is attributable to burning our food.
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If you factor in that the rest of the world sees us as morons FOR NOT DRILLING (ie. not taking real problems seriously) in addition to the ethanol boondoggle I would say a huge part of it as fuel is an expense that everyone must factor into their costs and it is a cost that very little can be done to reduce.
Planting a garden wont lower my energy costs.
I see $400 bucks a mo for AC coming this summer on a 1500 sq ft house with a new AC unit
The economy is being talked down by the MSM and every leftist organization just as it always is before an election where the incumbent is a Republican.
Energy effects the costs of everything and we tied energy markets to food markets like dopes to make it worse
One thing is actually going down.
Lumber. Thanks to the subprime debacle construction is dropping off.
Thanks Professor. Now that Macro Econ 101 class is over we can get back to reality. A massive quarterly jump in wholesale prices is not a monetary phenomenon, and it is very much inflation, in every sense of the word that matters. The same dollars chasing shrinking base of goods (because due to government imposed distortions, the goods are being squandered) is just as much inflation as more dollars chasing the same goods.
It feels that way to me as well. Question is, how long will it last?
With a socialist like Obama calling the shots? For 4 years, minimum.
Wheat doubled over the past year and it rose another 30% today
Scary as hell.
“Interesting times.”
Youngsters are in no way prepared. They think life is an eternal shopping spree, with a cell phone glued on.
You know what the best investment of the last 2 years was?
Ammo and firearms. Seriously. .308 ammo went up 500%
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