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In Fed and Out, Many Now Think Inflation Helps
New York Times ^ | October 26, 2013 | BINYAMIN APPELBAUM

Posted on 10/27/2013 1:10:29 PM PDT by reaganaut1

WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.

Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment.

The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.

The school board in Anchorage, Alaska, for example, is counting on inflation to keep a lid on teachers’ wages. Retailers including Costco and Walmart are hoping for higher inflation to increase profits. The federal government expects inflation to ease the burden of its debts. Yet by one measure, inflation rose at an annual pace of 1.2 percent in August, just above the lowest pace on record.

“Weighed against the political, social and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained burst of moderate inflation is not something to worry about,” Kenneth S. Rogoff, a Harvard economist, wrote recently. “It should be embraced.”

The Fed, in a break from its historic focus on suppressing inflation, has tried since the financial crisis to keep prices rising about 2 percent a year. Some Fed officials cite the slower pace of inflation as a reason, alongside reducing unemployment, to continue the central bank’s stimulus campaign.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Front Page News
KEYWORDS: federalreserve; inflation
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To: reaganaut1

Umberto Calvini:
"The government bankers want to control the debt,
And whoever controls the debt, controls everything.
This is the essence of the banking industry,
to make us all slaves to debt."

21 posted on 10/27/2013 1:34:04 PM PDT by Diogenesis
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To: reaganaut1

We’re so screwed.


22 posted on 10/27/2013 1:36:04 PM PDT by riri (Plannedopolis-look it up. It's how the elites plan for US to live.)
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To: reaganaut1

... Is there any truth to the rumor that the plan is after all of the Quantitative Easing is completed that the US Dollar will need to be necessarily devalued upwards to 40% (depending on how many QE’s perpetrated)over the next 20 years to cover the volume of currency that has been printed?


23 posted on 10/27/2013 1:41:36 PM PDT by R_Kangel ( "A Nation of Sheep ..... Will Beget ..... a Nation Ruled by Wolves.")
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To: Dilbert San Diego

“if the economy picks up....”

Under obamanomics?!? Bwahahahahahaaaaaa!!!!


24 posted on 10/27/2013 1:42:25 PM PDT by Caipirabob (Communists... Socialists... Democrats...Traitors... Who can tell the difference?)
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To: reaganaut1
The school board in Anchorage, Alaska, for example, is counting on inflation to keep a lid on teachers’ wages.

This reporter is an idiot. They froze wages, higher inflation will not benefit the school board.

Higher inflation will cause the teachers (successfully or not) to seek higher wages in the next contract.

25 posted on 10/27/2013 1:42:49 PM PDT by Toddsterpatriot (Science is hard. Harder if you're stupid.)
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To: grania
Near-zero interest rates on savings is theft.

Why?

26 posted on 10/27/2013 1:43:22 PM PDT by Toddsterpatriot (Science is hard. Harder if you're stupid.)
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To: reaganaut1

Since the Fed wrongly decrees that pay raises cause inflation, does this mean they’ll now allow people to make more money?


27 posted on 10/27/2013 1:44:58 PM PDT by Moonman62 (The US has become a government with a country, rather than a country with a government.)
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To: reaganaut1
No wonder the Post is going belly up when they have insane commentary like this.

Sheesh, have any of these people ever balanced a checkbook or had a real wages job or bought something on time or have their assets depreciate or even shopped for groceries? Someone lead them to the nearest insane asylum because that's where they should be. Oh, sorry, the PC term would be "The Federal Institution for the Mentally Impaired".

This makes as much since as when Pelosi said "...it's good that more people are on unemployment insurance since they can buy more goods and stimulate the economy". Do your own extrapolation for such economic nonsense.

Someone wake me up from this nightmare...or just shoot me.

28 posted on 10/27/2013 1:45:14 PM PDT by A Navy Vet (An Oath is Forever!)
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To: reaganaut1
When you have a fiat currency, watch out when policymakers say they want more inflation. They will get it.

Perhaps at some point. But the fact that politicians want inflation is a very good indicator they are up to their eyeballs in debt, and want inflation to make it all disappear. Does that mean they won't get it?

I have no idea where we are headed. Inflation? Yes, we have massive money printing. Deflation? Yes, I see a hugely indebted government and population struggling to pay its bills now.

Otherwise, I absolutely agree that our nationalized money system and interest rates are grossly distorting this economy. As a side note - the Federal Reserve is the underpinning of progressive government. Kill it, and you kill every progressive government social engineering scheme with it. THAT should be the goal for Conservatives

29 posted on 10/27/2013 1:46:41 PM PDT by PGR88
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To: R_Kangel

I wonder if in 10 years they will debate whether to lop off a few 0’s from the currency we will be using then.


30 posted on 10/27/2013 1:46:55 PM PDT by GeronL
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To: Toddsterpatriot
re: why is near-zero interest rates on savings theft

The banks keep your money. They charge fees. They loan out money at a profit. Many people who are retired or nearly so have saved an amount such that 4% interest (or so) would supplement their retirement, and that interest would be money pretty much completely spent in local economies.

Now you have a model where banks can profit from your money but not have to give you part of the return. But still their executives and largest stock holders get very nice returns and bailouts if they mess up. If you don't have a large enough balance, they'll charge the saver a fee for safe-keeping of the money.

It's not a sustainable model. Older baby boomers and retirees have mostly prepared for the future. How are most younger people going to be anything but indigent when they retire?

31 posted on 10/27/2013 1:52:18 PM PDT by grania
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To: reaganaut1

With 10% inflation, 4% bonds look like they are easy to pay off.
Never mind the havoc it causes for everyone else.


32 posted on 10/27/2013 1:52:21 PM PDT by tbw2
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To: bmwcyle

It is if the “our” to which you are referring is the government. Debtors LOVE inflation.


33 posted on 10/27/2013 1:54:55 PM PDT by GeorgeTex (Obama-The Ultimate Terrorist Weapon.)
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To: USFRIENDINVICTORIA

The value of the dollar has been on a steady down. Its sitting at support and looking for direction.

http://stockcharts.com/c-sc/sc?chart=$USD,uu[800,a]daclyyay[pb50!b200!f][vc60][iue12,26,9!lc20


34 posted on 10/27/2013 1:55:16 PM PDT by Orange1998
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To: tbw2

That would EASILY push the DOW to 20,000. The mad rush out of Bonds and into stocks (corporations have hard assets) would be FRIGHTENING.


35 posted on 10/27/2013 1:57:10 PM PDT by Orange1998
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To: grania
"Near-zero interest rates on savings is theft."

Disagree. As yet, no one is forcing you to put your dollars into a private institution like a bank. You can always keep your fiat currency under your mattress or send it off-shore (Cayman Islands) or buy gold. Yeah, bank/money market interest rates suck, but it's still your option. At least you have that for now...

36 posted on 10/27/2013 1:57:14 PM PDT by A Navy Vet (An Oath is Forever!)
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To: 1rudeboy

It’s another way to redistribute wealth from the middle class. They’re not likely to have the kind of shelters for their wealth like the rich have. They might have savings accounts in dollars. So inflation makes their wealth go down while the poor don’t lose anything. It leads us to greater income equality on the backs of the middle class, perfectly consistent with all of Obama’s policies.


37 posted on 10/27/2013 2:00:14 PM PDT by JediJones (The #1 Must-see Filibuster of the Year: TEXAS TED AND THE CONSERVATIVE CRUZ-ADE)
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To: grania; Toddsterpatriot

Be careful grania, Toddsterpatriot is the resident Financial No It All. You can easily fall into his Lair. :)


38 posted on 10/27/2013 2:00:52 PM PDT by Orange1998
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To: grania
Near-zero interest rates on savings is theft.

How much are your savings going to be worth after inflation?

39 posted on 10/27/2013 2:04:17 PM PDT by JediJones (The #1 Must-see Filibuster of the Year: TEXAS TED AND THE CONSERVATIVE CRUZ-ADE)
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To: reaganaut1
WAR IS PEACE

FREEDOM IS SLAVERY

IGNORANCE IS STRENGTH

40 posted on 10/27/2013 2:07:31 PM PDT by matt1234 (Hitler blamed the Jews. Obama blames the Tea Party.)
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