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Fed Officials Mull Inflation as a Fix (Grab your ankles folks!
http://online.wsj.com/article/SB10001424052748704689804575536391713801732.html?mod=WSJ_hpp_LEFTWhatsNewsCollection ^

Posted on 10/07/2010 9:23:22 AM PDT by Red in Blue PA

The Federal Reserve spent the past three decades getting inflation low and keeping it there. But as the U.S. economy struggles and flirts with the prospect of deflation, some central bank officials are publicly broaching a controversial idea: lifting inflation above the Fed's informal target.

The rationale is that getting inflation up even temporarily would push "real" interest rates—nominal rates minus inflation—down, encouraging consumers and businesses to save less and to spend or invest more.

(Excerpt) Read more at online.wsj.com ...


TOPICS: Front Page News; News/Current Events
KEYWORDS: bhoeconomy; federalreserve; inflation; unemployment

1 posted on 10/07/2010 9:23:24 AM PDT by Red in Blue PA
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To: Red in Blue PA
The Federal Reserve spent the past three decades getting inflation low and keeping it there.

Complete and total lie. Anyone who shops for groceries can tell you inflation is very real indeed.

2 posted on 10/07/2010 9:25:36 AM PDT by pnh102 (Regarding liberalism, always attribute to malice what you think can be explained by stupidity. - Me)
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To: Red in Blue PA
Sounds like the American currency will be added to my collection sooner than I expected..........


3 posted on 10/07/2010 9:27:40 AM PDT by OB1kNOb (Obama: I hate Presidenting. Everyone treats me like a dog. Doctor: Sorry to hear it now roll over.")
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To: Red in Blue PA

From what I’ve read here at FR we have trillions of dollars being held by nervous corporations that will be unleashed if the corporations gain confidence, leading possibly to serious inflation. Now the Fed is deciding to loosen money supply further (allow more inflation) to either create more of this overhang of unspent dollars or maybe worse, they will create more dollars just when the corporations are finally spending, increasing that inflationary effect.


4 posted on 10/07/2010 9:28:13 AM PDT by November 2010
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To: Red in Blue PA

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”
- Ronald Reagan


5 posted on 10/07/2010 9:30:01 AM PDT by donna (This is the age of Republican-Feminism. We "feel right”!)
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To: Red in Blue PA

Back in 2008 I thought they’d try this. It’s dumb, but some idiot is likely to think it’s a great idea.


6 posted on 10/07/2010 9:30:15 AM PDT by ClearCase_guy
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To: November 2010

High inflation - zero interest rates - oH! Whoopie!


7 posted on 10/07/2010 9:30:32 AM PDT by I am Richard Brandon
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To: November 2010

From what I’ve read here at FR we have trillions of dollars being held by nervous corporations that will be unleashed if the corporations gain confidence, leading possibly to serious inflation. Now the Fed is deciding to loosen money supply further (allow more inflation) to either create more of this overhang of unspent dollars or maybe worse, they will create more dollars just when the corporations are finally spending, increasing that inflationary effect.

There’s a Cloward-Piven maneuver if ever I’ve seen one


8 posted on 10/07/2010 9:31:30 AM PDT by Buckeye McFrog
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To: Red in Blue PA

Well, presuming my salary would keep up, it would help me pay my mortgage off a lot faster.

Not that I support the idea though.


9 posted on 10/07/2010 9:31:59 AM PDT by RockinRight (if the choice is between Crazy and Commie, I choose Crazy.)
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To: pnh102

Groceries are up 15% since 2007. Saw the stat yesterday. Gold has gone from $300 to $1350. Gas is headed up again towards that $3 range. Health insurance is definitely up. My electric bills are higher than they used to be by a big amount.


10 posted on 10/07/2010 9:33:07 AM PDT by November 2010
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To: November 2010
Hate to say this as I am currently unemployed, but the only way to exact dramatic change is to starve the beast. Refrain from all spending (thus taxes) and buy only what is needed, and when on sale.
11 posted on 10/07/2010 9:36:15 AM PDT by Red in Blue PA (Planning on using 911? Google "Brittany Zimmerman")
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To: RockinRight

Well, presuming my salary would keep up, it would help me pay my mortgage off a lot faster.
__________________________________________________________

I saw an article yesterday where Bass was predicting high inflation in the USA. He previously took his Dallas TX area mortgage out . . . in Japan . . . because he expected inflation and currency devaluation in Japan. His mortgage went down by 20% . . . since May.


12 posted on 10/07/2010 9:37:35 AM PDT by November 2010
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To: RockinRight
I think that's exactly the expectation, though, as I think you indicate, it wouldn't work.

But people's biggest expesnive is their mortgage, and a lot of folks are having trouble paying that bill. If it's a fixed rate mortgage, and if inflation return, and if people starting getting cost of living raises, then perhaps that mortgage payment will start to seem smaller.

I don't support this, and I don't think it would work as expected, but I can see how a politician would think this was a brilliant way to slow down the foreclosure rate.

13 posted on 10/07/2010 9:37:41 AM PDT by ClearCase_guy
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To: I am Richard Brandon
If interest rates get any lower the banks will be charging us for the privilege of having them store our savings for us.
14 posted on 10/07/2010 9:44:40 AM PDT by F.J. Mitchell (Zerobama not a Muslim? Obviously then, their most favorite useful idiot..)
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To: ClearCase_guy

Problem is that raises are annual typically. With 10% inflation, you start the year with a $200 grocery bill for the family and end up with a $220 grocery bill. So $80 more a month. Electricity, insurance, service fees, etc. will randomly rise whehter or not your salary has yet.

Meanwhile your mortgage and salary are likely unchanged until the next year . . . and how is your business doing? Can they afford to raise salaries by the rate of inflation or will they undershoot it a little to help them survive or increase profits? Will your clients in business accept a 10% increase in price or are they somehow getting squeezed by the inflation also?

It’s a really unfair system to have faster inflation intentionally built in.


15 posted on 10/07/2010 9:44:51 AM PDT by November 2010
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To: I am Richard Brandon

High inflation - zero interest rates - oH! Whoopie!
___________________________________________________________

Nice for all the folks that bought long term bonds isn’t it?


16 posted on 10/07/2010 9:47:06 AM PDT by November 2010
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To: Red in Blue PA

The government did not “keep inflation low” in that they did not fight against inflation. The government deliberately kept inflation in existence as a stealth tax on the economy. The Keynesians and other socialists are all for that because they generally believe in static wealth- that there is no wealth creation, only its concentration and distribution. Therefore for an economy to appear to be expanding there must be inflation. They also believe that inflation is only redistributing money from producers to the government(good) while actual economic expansion is theft of resources from other societies(bad).


17 posted on 10/07/2010 9:48:15 AM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: November 2010
trillions of dollars being held by nervous corporations that will be unleashed if the corporations gain confidence, leading possibly to serious inflation.

That would not "lead to inflation." It is inflation already extant. The price effects of that inflation are in abeyance because the money is stuffed into corporate mattresses, but the inflation is already in the system. Rising prices are NOT inflation. They are an effect of inflation. Dumping of that money into the system is not to be feared as a a possibility. It is a certainty. Fearing it is no longer appropriate. Fearing the knife is silly after you have already been cut. The blood has not yet started to flow but it must.

18 posted on 10/07/2010 9:54:16 AM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: RockinRight

Salaries and wages are always the last prices to rise in an inflation. Theoretically increased inflation rates are beneficial to debtors but that does not normally include debtors who rely on salaries and wages for their income.


19 posted on 10/07/2010 9:56:10 AM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: November 2010

” Groceries are up 15% since 2007. “

That must be a Government statistic - in 2007, on my weekly shopping trips, I could get out of WalMart (so shoot me...) for about $30.. (Single man, living alone..)

Last Saturday, my checkout bill was $42, which is substantially more than a 15% increase over essentially the same ‘shopping basket’ - way more, since I didn’t buy meat (except 2/$1 hot dogs and cheap bologna) or ‘junk food’ (chips/sodas)....

My eating habits haven’t changed (except being priced-out of buying meat on a regular basis), so price increases account for jut about all of it....

YMMV, of course.... ;)


20 posted on 10/07/2010 9:59:21 AM PDT by Uncle Ike (Rope is cheap, and there are lots of trees...)
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To: Red in Blue PA

"Be back later tonight honey! Gotta stand in line to buy some milk and bread!"


21 posted on 10/07/2010 10:01:59 AM PDT by COBOL2Java (Obama is the least qualified guy in whatever room he walks into.)
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To: Red in Blue PA

Maybe we should read the Constitution to see if any of this could have been avoided, maybe even a part of the Constitution directly addresses the issue of Money.

Article 1 section 10

NO STATE SHALL MAKE ANYTHING BUT GOLD AND SILVER COIN, A TENDER IN PAYMENT OF DEBT.

Article 1 section 8

Congress shall have the power to COIN MONEY.

to coin money has a very specific legal definition, look it up.
To stamp pieces of precious metal, not print on paper

Only government can take a valuable commodity such as paper, slap some ink on it, and make it worthless.


22 posted on 10/07/2010 10:04:36 AM PDT by eyeamok
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To: November 2010

You mean he used a Japanese bank to do a mortgage on a house in Texas?

I didn’t realize they would, or could, do that.


23 posted on 10/07/2010 10:13:27 AM PDT by RockinRight (if the choice is between Crazy and Commie, I choose Crazy.)
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To: eyeamok
“Maybe we should read the Constitution... “

Bite your tongue!! Why, if we did that, gov’t would be compelled to follow it. If they did THAT, how would they control the people or sell us down the river?

24 posted on 10/07/2010 10:19:46 AM PDT by MichaelCorleone
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To: Red in Blue PA

Unless I read the mood of the country wrongly a spate of hyperinflation would be personally deadly for the mucky-mucks.


25 posted on 10/07/2010 10:20:16 AM PDT by Seruzawa (If you agree with the French raise your hand - If you are French raise both hands.)
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To: Red in Blue PA

BOHICA


26 posted on 10/07/2010 10:25:13 AM PDT by GailA (obamacare paid for by cuts & taxes on most vulnerable Veterans, retired Military, disabled & Seniors)
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To: RockinRight

Well, Bass made about a billion dollars by shorting the housing market derivatives right before the bubble burst, so he’s got access to things we don’t.


27 posted on 10/07/2010 10:46:06 AM PDT by November 2010
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To: Uncle Ike

I don’t trust the inflation stats either. Just saw the stat and quoted it. It’s hard to tell because my wife is a much better shopper than she used to be.


28 posted on 10/07/2010 10:47:27 AM PDT by November 2010
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To: Red in Blue PA

The guys over at zerohedge would respond to this by saying “gold bitchez”.

And they’d be right.


29 posted on 10/07/2010 10:48:19 AM PDT by NeoCaveman (I can see November from my house. Christine turned me into a Newt. I got better. Go Joe DioGuardi)
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To: arthurus

Sounds right to me. But inflation is not measured by money supply in stats and in how we actually feel inflation, it’s measured by prices.


30 posted on 10/07/2010 10:50:03 AM PDT by November 2010
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To: arthurus

Another way of putting it is that just money supply alone doesn’t account for velocity.


31 posted on 10/07/2010 10:50:50 AM PDT by November 2010
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To: Red in Blue PA
One good threat deserves another:

Do that and we'll switch our transactions and savings to another currency.

32 posted on 10/07/2010 11:02:28 AM PDT by Justa
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To: Red in Blue PA
encouraging consumers and businesses to save less and to spend or invest more.

LOL. You can't save less *and* invest more.

33 posted on 10/07/2010 11:07:51 AM PDT by kevao
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To: Justa
And in turn: do that and face an IRS audit and possible arrest.

Don't get uppity, serf. Your money - and your life - are the property of the Federal Government.

34 posted on 10/07/2010 11:16:28 AM PDT by Mr. Jeeves ( "The right to offend is far more important than any right not to be offended." - Rowan Atkinson)
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To: Justa
And in turn: do that and face an IRS audit and possible arrest.

Don't get uppity, serf. Your money - and your life - are the property of the Federal Government.

35 posted on 10/07/2010 11:16:28 AM PDT by Mr. Jeeves ( "The right to offend is far more important than any right not to be offended." - Rowan Atkinson)
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To: Red in Blue PA

36 posted on 10/07/2010 11:24:09 AM PDT by SandRat (Duty, Honor, Country! What else needs said?)
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To: November 2010

Not money supply alone. It is increase in money supply beyond what is required to maintain a stable price level. It is unavoidable so long as politicians do not have so much money to spend as they would like to have and there is no immutable limiting factor such as gold.


37 posted on 10/07/2010 12:15:34 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: November 2010

The effects on our situations are measured by prices. Inflation is not prices. At all. Inflation causesthe price level to rise. When you insist on defining inflation as any damned thing you want it to be then there is no economic discussion of the phenomenon possible because your meaning is not my meaning and your meaning will change with whim and the nature of your discomfort. There is the classical definition or there is no definition for the word beyond a vague expression of discomfort. It becomes a Liberal PC word that means what the speaker wants it to mean for only the moment the speaker is using it.


38 posted on 10/07/2010 12:21:25 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: RockinRight

And I’m going by a line in an article, don’t know whether a US bank denominated the loan in yen or whether he dealt with a Japanese bank (or US subsidiary of Japanese bank).


39 posted on 10/07/2010 12:27:47 PM PDT by November 2010
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To: F.J. Mitchell

Since I believe that the real interest rate is negative at the moment, we are certainly paying out; and since the bank’s are still charging for making loans, they are certainly being paid.


40 posted on 10/07/2010 1:07:44 PM PDT by I am Richard Brandon
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