Very funny, except apparently wrong on its main points. I say apparently because I am not an economics expert. But maybe some one can tell me how I am wrong.
On inflation, the core inflation rate is under 0.6 %, the lowest ever recorded.
Unemployment is almost 10%
Isn't this the classic case, low inflation/high unemployment, where none other than Milton Friedman said the Fed in the Great Depression and the Bank of Japan in 1998 should have bought bonds on the open market?
(11-20-2010 12:58 AM)Owl75 Wrote: Isn't this the classic case, low inflation/high unemployment, where none other than Milton Friedman said the Fed in the Great Depression and the Bank of Japan in 1998 should have bought bonds on the open market?
What am I missing here?
This is of course quite true, but those of us not brainwashed by the liberal media know Friedman was a Kenyan Muslim socialist.
(11-20-2010 12:58 AM)Owl75 Wrote: Isn't this the classic case, low inflation/high unemployment, where none other than Milton Friedman said the Fed in the Great Depression and the Bank of Japan in 1998 should have bought bonds on the open market?
What am I missing here?
This is of course quite true, but those of us not brainwashed by the liberal media know Friedman was a Kenyan Muslim socialist.
(11-20-2010 12:58 AM)Owl75 Wrote: What am I missing here?
You're missing real inflation. Not that bullsh*t CPI the government is feeding you. CPI doesn't include gas. It doesn't include food. It doesn't include energy. It doesn't include alot of the big dollar gotta have items that are most sensitive to price changes.
What do you think quantitative easing IS? It's inflation!!!11 You're printing more money without adding more value to the currency. Ergo, everybody's dollars are worth less. Right now we're building all that money up like a giant dam, as nervous companies horde money (since it's CRAZY CHEAP to get huge loans right now at near zero interest). It will have to enter the system eventually. And might I add, a side effect of "quantitative easing" is the lowering of interest rates. I haven't looked at the numbers, but I imagine at this point we've long crossed the line where just putting your money in a bank you're LOSING MONEY as your interest return is lower than inflation. Bottom line: the big companies benefit from near zero cost of borrowing. You, the presumably non-profligate-drowning-in-debt saver is getting screwed. In a free market, savings would always be strongly encouraged as it is capital that drives capitalism. And the only way to accrue capital is through work and investment of existing capital.... not through a printing press. This entire system of fiat currency and fractional reserve banking is bizarre, perverse, anti-liberty, anti-capital, and serves mainly to transfer wealth at staggering rates from the poor, marginal, and middle class to the wealthy banking elite.
(11-20-2010 12:58 AM)Owl75 Wrote: What am I missing here?
You're missing real inflation. Not that bullsh*t CPI the government is feeding you. CPI doesn't include gas. It doesn't include food. It doesn't include energy. It doesn't include alot of the big dollar gotta have items that are most sensitive to price changes.
What do you think quantitative easing IS? It's inflation!!!11 You're printing more money without adding more value to the currency. Ergo, everybody's dollars are worth less. Right now we're building all that money up like a giant dam, as nervous companies horde money (since it's CRAZY CHEAP to get huge loans right now at near zero interest). It will have to enter the system eventually. And might I add, a side effect of "quantitative easing" is the lowering of interest rates. I haven't looked at the numbers, but I imagine at this point we've long crossed the line where just putting your money in a bank you're LOSING MONEY as your interest return is lower than inflation. Bottom line: the big companies benefit from near zero cost of borrowing. You, the presumably non-profligate-drowning-in-debt saver is getting screwed. In a free market, savings would always be strongly encouraged as it is capital that drives capitalism. And the only way to accrue capital is through work and investment of existing capital.... not through a printing press. This entire system of fiat currency and fractional reserve banking is bizarre, perverse, anti-liberty, anti-capital, and serves mainly to transfer wealth at staggering rates from the poor, marginal, and middle class to the wealthy banking elite.
Just to be clear -- while the "core inflation" that Owl75 is referring to is an inflation measure that strips out food and energy, the government does calculate a wide variety of CPI's.
The most-commonly quoted measure (the Consumer Price Index for All Urban Consumers -- "CPI-U") includes gasoline, food, energy, and major purchases.
The CPI measure that's probably the most important to the most Americans is the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), which is used by the Social Security Administration to adjust benefits.
The CPI-W is very similar to the CPI-U. Like the CPI-U, it includes all the items that GTS mentioned above.
The SSA uses third-quarter-average CPI-W for its adjustments. Over the last two years, the change in the SSA metric has been -2% (Q308 to Q309) and +1.5% (Q309 to Q310). So over the last two years, we've seen net deflation (and a lot of unhappy Soc Sec recipients who didn't get an increase in 2010 and again won't get one in 2011).
(11-23-2010 04:37 PM)JOwl Wrote: The CPI measure that's probably the most important to the most Americans is the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), which is used by the Social Security Administration to adjust benefits.
The CPI-W is very similar to the CPI-U. Like the CPI-U, it includes all the items that GTS mentioned above.
The SSA uses third-quarter-average CPI-W for its adjustments. Over the last two years, the change in the SSA metric has been -2% (Q308 to Q309) and +1.5% (Q309 to Q310). So over the last two years, we've seen net deflation (and a lot of unhappy Soc Sec recipients who didn't get an increase in 2010 and again won't get one in 2011).
That may be what SSA uses, but it's not what the Fed uses when they report their "good" work. They conveniently leave out energy, food, etc.
I still say inflation is rampant, and merely disguised by the hording of liquidity due to the ridiculously low cost of borrowing. The Fed has "monetized" or printed TRILLIONS of new dollars. Those chickens will come home to roost eventually. The price of gold is a fine indicator of what the market thinks inflation and dollar stability really is. I'll add a caveat to that in that rampant speculation is fueling a gold bubble right now, but even a popped gold bubble will have gold at three times the price it was in 2000.
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Quantitative Easing Explained
