The Obama's have changed the way inflation is computed so the low numbers
published by the government no longer indicate real inflation. Because the
numbers are rigged, the logic in the above article is not totally valid.
Inflation only helps those, like the government, who are in debt.
Kidding, right? Especially when "inflation" does not include
transportation costs, medical costs, taxes, and food costs.
A lot of conspiracy theories and economic illiteracy going on here. Did anybody
here study economics? The economists interviewed is correct, there is an OPTIMAL
level of inflation that helps labor markets clear. He didn't say the higher
inflation is the better it is. And, yes there are two types of inflation: Demand
Pull (when aggregate demand shifts right and pulls prices up. This is the kind
of inflation we get if the Fed buys too many bonds which injects too much money
into the economy, and there are Supply Shocks that drive up prices when a good
disappears through drought, disaster, or embargo. As for Keynesian
economics, I have to respond to this comment: The one thing that
Keynesian economics fails to account for is to pay back debt and build reserves
during times when the economy is not in recession.This is precisely
what John Maynard Keynes had in mind so don't blame him. It is the
politicians who have taken his ideas and distorted them almost beyond
recognition who are to blame. In fact, before he died, Keynes said he was
worried that his disciples where taking his ideas too far.
The fed is in a pickle. They want to stop printing money but they can't
because if they do the economy will tank. The IMF head warned the US that they
can't stop printing money. Why? Because their economies will tank as
well. So everyone in the world is printing money and it will end badly as David
Woolley points out. Why do you think China has purchased over a 1,000 tons of
gold year to date? I think someone is smarter out there than the Bozos at the
fed. We will have a reset given the current state of affairs, it is just a
matter of time.
@milhouseHow much is marginally more dollars?QE3 started
in September of last year and they have been printing $85 billion each and every
month since, just over $1 trillion dollars now and growing. The QE3 money is
what is now propping up the stock market. When the money printing stops, there
will be a drop in stocks as speculators cash out. The stock market rose another
150 points today when it was reported that the money printing would continue.It's not so much the printing of the money but nothing is being
done to pay down the debt, only more and more government spending on wars,
spying, and who knows what else.I do not conduct business in cash,
but I do pay off my credit card balance every month. Something that the
government does not seem to care to do.Lastly, the bulk of the money
of that $15 trillion dollar economy is in the hands of people and corporations
that can take advantage of loop-holes to avoid paying taxes on it.
Dear Milhouse Economist:The inflationary pressures we're
talking about (we meaning Jim E, MG Scott, The solution, Rothbard, and Jim in
SLC) are long term monetary pressures cooked into a debt-based monetary system.
You can hypothesize all the day long about the inflationary forces on a month
over month or year over year basis, but the long term forces, the ones that
percolate beneath the economic surface are based in sound money or the lack of
it. Currency is the ocean all of us swim in, "economically speaking",
and unsound money has terrible inflationary consequences. Since 1971 we've
been swimming in a fiat currency ocean, the dollar tied to nothing but our faith
that it has any value at all. History tells us that the life of a fiat currency
is about forty years. The final phase of any fiat currency usually ends in a
violent currency war. And, if you've been paying any attention to the money
printing in Japan, China, and even in the EU despite it being against the
Mastricht treaty, you would understand that we're doing business on
borrowed time (and borrowed money).--a PhD :)
You are being lied to by the government. They keep changing the numbers to make
it appear like inflation is only 2%. If the inflation numbers were calculated
like they were in the 70s it would be around 10-12% (see John Williams at
shadowstats for verification). This is all just propaganda to make people feel
good and make the current administration look good. Guess what? It isn't
working, the cost of living is rising, have you been to the grocery store
lately? What is being sold are smaller portions at the same prices to make it
look like prices are not going up. As mentioned earlier, once the US loses its
status as the global reserve currency for the dollar and that could happen on
any day based on the events that are transpiring we are in for hyperinflation.
That's ok, the government will just change again how they calculate
inflation until they have no more changes they can make!
Those who pointed out that the article fails to take into account cost of debt
service and deficit spending are right. The author calls it a closed system.
In a way, it is a closed system - like a spacecraft -- with a BIG LEAK. All
personal income taxes collected are now insufficient to service the national
debt. In addition to the 17 trillion dollar documented debt there are even more
trillions of unfunded obligations, mostly pensions that have no actuarial basis
for ever being paid in the absence of a rapidly expanding population base. Soe
why are things going along so well if we face this dire situation. Well,
we've eaten our children's "seed corn" and we're now
working on our grandchildren's. Advice to retirees: get a place where you
can grow zucchini and raise rabbits. And be prepared to tear up your hardwood
floors for heat. Just sayin' . . .
To those worried about the government printing money, and citing it as proof
that inflation is a big worry: How many of you conduct all of your business in
cash?If you are like most people, almost all of your money is in a
bank. Who loans it out to someone. Who buys something from someone. Who also
spends it. Every dollar of "yours" can also be claimed by eight or ten
other people. The fact is, we don't know how many "dollars" even
exist.And you really think the government printing marginally more
quasi-imaginary dollars will actually hurt something in a 15 trillion dollar
economy? You're having a laugh.- An economist.
Keynes always taught that budgets should be in balance over the course of an
economic cycle. Deficits in bad times, surpluses in good times. Politicians and
everyday citizens, however, think that the economy is never "good
enough", so they rarely support the policies that will bring about a
surplus, namely higher taxes and less spending.
@Church member:But what about those of us who are retired and on a
fixed income? Our retirement and SS dollars do not go up (maybe SS a little,
unless SS decides no increase for that year). Our homes are paid off and we have
very little debt, which is a good thing, but our income decreases as products
increase. As the years roll along, there will be an ever increasing number of
retirees, therefore, more and more people will be affected by inflation.
Don't worry about inflation. We're only $17 trillion in debt. No big
deal. Right. Inflation is a good thing say some economists who benefit from that
outcome, namely speculators and gamblers. For people trying to be responsible
and save their money for a rainy day, inflation is NEVER a good thing. I wish
so-called experts would quit telling me what I should want in life. I don't
want the money I work very hard for to be worth less and less after every day
that passes. So quit trying to convince me that that is what I want!
This author is exactly right. Most of our biggest purchases are locked in. Like
our house and car payments for example. When inflation hits those payments
(house, car, student loans) stay fixed, but our income will go up. So in fact a
smaller percentage of our income will go to paying those big purchases off. So
we will have a bigger percentage of our money to spend on what we want. It is
Jim E, MG Scott, The solution, Rothbard, and Jim in SLC:So very,
very happy to see all of you respond, and tell the D-News that they are
misleading A LOT OF UTAHNS on this subject. The headline is joke. And the facts
in the article are ridiculous. The inflation that is about to be unleashed in
our economy, though it may not reach hyperinflationary levels, may still go to
10 or 20% per year. And it has NOTHING to do with supply and demand. The
inflation will be related to the inflation of the money supply---dollar
printing. Someone should protect readers from crazies like the author of this
article. The common man reads the headline, and a few of the facts and figures
they don't need to dig any deeper. Where did this author get their
economics degree from. Oh, I forgot. Nearly every business school in America
teaches Keynsianism. What a farce.
This article talks of "supply-side" and "demand-side" inflation,
neither of which applies to our current economic situation. Prices are not
going up, the value of the dollar is going down. Printing lots of money is the
path to hyper-inflation, in which we all become multimillionaires just like the
good people in Zimbabwe. Some factors that are helping prop up the US economy
is that the US dollar is still stronger than most other countries currencies.
Also, the petro-dollar connection forces everyone to purchase oil using US
dollars. If the petro-dollar link is severed we might see a sudden collapse.
This may be one reason the US is interfering in Syria now. Syria is too stable
economy wise, they do not have central bank influence, no debt to the IMF.
Look what happened to Gaddafi when he planned to stop selling Libya's oil
The author of this article needs to read Economics in One Lesson by Henry
Hazlitt. Chapter 23 smashes all of the myths perpetuated by the author and the
Professor from Massachusetts.
JimE,You are correct, and I totally agree with you about the
traitors. The one thing that Keynesian economics fails to account for is to pay
back debt and build reserves during times when the economy is not in recession.
Our government has done nothing but accumulated debt since the great depression
and has only barrowed more, never less.We are in ruin and can't
even pay the interest on our debt any more.
The thing that worries me about our economy is what happens if there comes a
need to really fund the 17 trillion debt with printed money. That would be a lot
of paper money floating around and a huge inflation could set in really fast.
Controlling that is of course the job of the government, or the Federal Reserve.
However, if pushed by outside lenders who own hundreds of billions in bonds, it
could happen. And a time may come when the amount of our debt scares even them
into creating a run on the bank. With enough debt, even the U.S. economy can
crash. How could it not?
Uh, inflation exists because the government is diluting the money supply each
year by printing more money.Then they take the excess money and spend it
on more government projects.It's called Keynesian Economics.Problem is, they are overspending and sending our country into financial
ruin.Something we will never get out of now. Bankruptcy, or collapse, is
the only option.And we all know what that will do to the worlds
economy.In my opinion, those responsible for this are literal
traitors to the country and should be punished as a traitor should be punished.
They are no different than an outside enemy trying to bring us down.