January 5th, 2012, 12:18 PM #1
Inflation: What, Why, and What About Me?
Inflation, What, Why, and What about me? - Modern Survival Blog – surviving uncertain times
Feel free to disregard the "survivalist" mentality attached to the comments and ads... It is a well written, honest piece.
Coming to a nation near you...
Last edited by Chuckiechan; January 5th, 2012 at 12:21 PM."The world burns while Obama Tweets."
January 5th, 2012, 04:13 PM #2
We've been hearing this kind of nonsense for three years and he haven't had inflation and we won't as long as we're in a liquidity trap.Conservatives: "If the facts disagree with our opinion, ignore the facts -- or at least misrepresent them."
January 5th, 2012, 04:56 PM #3
you are perfectly happy to react to AGW which may or may not cause serious problems. But hyper inflation is much closer to a science than AGW when predicting the results.
there is a general concensus in the scientific community when it comes to AGW but not in how much impact it will have.
But if Deficit spending continues at a similar rate to today then we can almost certainly predict that within a relatively short time we will feel serious inflation.
Is an additional 5 -10 years of trillion dollar deficits long enough? I don't know when but with continued pressures like those of today put pressure on the deficit a faith based currency will ultimately collapse wont it?
If even a hint of inflation happens would you invest in american bonds at low rates or would you demand higher interest to cover your risk? Personally I would want my investment to outpace inflation or at least keep up with a bear investment mentality.
Taxing our way out of this also seems to be a risky plan being that it does impact the bottom line of companies forcing them to raise prices decreasing demand resulting in potentially further increases.
I feel the only reasonable way out of this is to reduce spending. Because I do not see another manufacturing boom in America like we saw in the mid part of the last century.
Right now you have a nation with a somewhat permanently slowed manufacturing sector and the highest spending. Where is the money coming from... borrowing and printing.
our interest payments on our loans will eventually become a force to recon with.
our interest payment for 2011 was 454 billion dollars @ 3% interest 39% of that 454 billion is interest on new debt over the last 4 years.
at current rates we will be spending near a trillion dollars a year to service our debt even if no one gets smart enough to decide to demand new interest rate.
today if they bumped the average interest rate to service the debt to a modest 5% we will pay 760 billion annually in interest alone. If we see 2% additional inflation I would think that the national debts interest rate will rise to keep up with it.
I can't see how we can play this game for long.
Last edited by Epidemic; January 5th, 2012 at 05:28 PM.
January 6th, 2012, 03:50 AM #4
So many of you think history started when you were born and it can't happen to you because it never happened before. Well it has, and it is likely to happen again.
And it isn't pretty unless you own assets that will appreciate with inflation."The world burns while Obama Tweets."
January 6th, 2012, 09:39 AM #5
What you are not appreciating is that the economy is not at full capacity -- and that's important because the biggest single influence on revenue is the state of the business cycle (which is why austerity in the face of a liquidity trap is so ineffective even at reducing deficits).
The slump in the economy is the result of a failure of demand -- period, end of story.
But there is a real concern that if the slump goes on long enough, it can turn into a supply-side problem, because investment will be depressed, reducing future capacity, and because workers who have been unemployed for a long time become unemployable. That's why it's imperitive to get the economy to full capacity earlier instead of later and that's why deficits now, during a liquity trap, aren't that important. I understand the knee-jerk response to cut spending in the face of deficits but that only deepens the long-term problem and makes deficits worse as revenue falls further.
The crisis we’re in is not something unprecedented. It’s a close cousin to the Great Depression — milder, but recognizably the same sort of thing. And we understand — or used to understand — how the Depression happened, and what to do in such a situation. Most of what’s required are fairly straightforward translations of existing concepts. For example, we have a pretty good understanding of bank runs; extending that framework to shadow banking requires little more than the understanding that repo and other kinds of short-maturity obligations are, from an economic point of view, more or less equivalent to deposits.
So how is it that policy is so confused and lost?
I’ve been arguing for a while that much of the economics profession has lost its way, recapitulating old errors because it made a point of unlearning what Keynes taught. But it’s not just economists who willfully threw away hard-won insights.
On Monday night we had a panel discussion of the euro crisis at Princeton — me, Chris Sims, Hyun Shin, Markus Brunnermeier. I was struck by some of what Sims had to say. He pointed out that central banks have always had a wider mandate than simply guaranteeing price stability; they’ve always served as lenders of last resort, including having a standby capacity to finance the government in times of need. And there are good, well-understood reasons for this wider mandate. Yet the creators of the euro essentially threw away hard-won wisdom — stuff that Bagehot knew in the 19th century! — to create a stripped-down central bank without the powers or flexibility that history has shown are necessary. What were they thinking?
The result of all this is that the supposedly sober, serious people are actually radicals insisting that we can make the economy work in ways that it has never worked in the past — hence the embrace of magical thinking on expansionary austerity and the power of structural reform. Meanwhile, the irresponsible bearded professors are actually the custodians of traditional wisdom.
And those who are determined to forget the past run a high risk of reliving it — which is why we’re in the state we’re in.Conservatives: "If the facts disagree with our opinion, ignore the facts -- or at least misrepresent them."
January 6th, 2012, 09:48 AM #6
That is all well and good but trillions we have dificit has not resulted in the turning around of the economy. You are like a gambler hoping that red 17 will hit while you have your chips there. We tried 10 black but that did not hit so lets try again give the wheel another spin? I mean after all there are only 50 possible numbers it has to hit sometime. But what is worse is each time we put those chips on the table we are doing so with a creditcard and now that we are at our credit limit they are about to raise our rates.
January 6th, 2012, 12:03 PM #7
The trillions spent is turning the economy around. The Dec 2011 jobs number is very positive, indicating that in-spite of GOP obstructionism Obama policies are working. They would have worked faster had the stimulus been bigger, however.Conservatives: "If the facts disagree with our opinion, ignore the facts -- or at least misrepresent them."
January 6th, 2012, 12:07 PM #8
January 6th, 2012, 12:30 PM #9
Two things about the numbers.. First, they don't mean much due to seasonal hiring so let's wait until January's numbers come out. I'm interested to see if the private sector hiring numbers hold up. It's good news if they do.
Second, the employment base has fallen due to people falling off the rolls. As 100,000 gain jobs in month "A", 90,000 fall off the rolls in the same month, showing a 10K gain in jobs. We have more than that retiring every month.
These people have not vanished. They are uncounted.
From CNN Money:
People working as fallen from ~ 63% to ~ 58%. That's 5% of the workforce our shrunken economy has no use for under Obamanomics, and just deleted them from the "counted persons". It's as if the census decided not to count red heads lowering the USA population by ~ 2.5%"The world burns while Obama Tweets."
January 6th, 2012, 12:53 PM #10
Obviously, when the housing bubble cracked lots of construction workers became unemployed.
I understand your desire to marginalize good news, even if that means Americans are better off. You want Obama to be in the worst light because you want Republicans to win elections.
January 6th, 2012, 12:57 PM #11
January 6th, 2012, 02:15 PM #12Whatever government spends money on means that people are paid to perform that work.
Where does the government get it's money? From people who work and businesses who profit. Or the government prints money to fill pay envelopes, taxing every holder of dollars - I.E. your paycheck buys less.
So you take $ 100.00 from a business and pay $ 80.00 to a worker and lose the rest "somewhere".
Governments have zero productivity, and productivity is what generates money in the first place."The world burns while Obama Tweets."
January 6th, 2012, 02:28 PM #13
I don't blame Obama, but I marginalize everthing they say when books are cooked.
I don't know if he cooked them the same way as Bush, but in the end they stop counting people who are have given up looking for work and fallen off the unemployment rolls as if it is a good thing. So probably the best metric for job health would be gross number of jobs and average pay. for some reason that is not what is reported.
Users Browsing this Thread
There are currently 1 users browsing this thread. (0 members and 1 guests)
By The Real Bingo in forum DebateIMO: Politics, Religion, ControversyReplies: 0Last Post: November 3rd, 2008, 11:19 PM
By RobRich in forum DebateIMO: Politics, Religion, ControversyReplies: 0Last Post: April 18th, 2008, 04:45 PM
By Chuckiechan in forum DebateIMO: Politics, Religion, ControversyReplies: 2Last Post: April 14th, 2007, 10:44 AM
By RayH in forum IMO CommunityReplies: 2Last Post: October 19th, 2004, 11:27 PM