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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
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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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