Fed says recession easing, inflation not a threat (loans, 2009, real estate)

[baystater]

Fed says recession easing, inflation not a threat - Yahoo! News

Fed Keeps Purchases Unchanged; Says Recession Easing (Update2) - Bloomberg.com


Yeah! Were saved! Ben says it OK, so it must be so.

..............The claw...........worship the claw.


YouTube - LGM the claw

[rubber_factory]

I believe one of those two claims.

I'm not sure which one it is, though.

[floridasandy]

unlike the fed, i believe this explanation, which concludes that a high unemployment rate increases the inflation rate:
"A High Unemployment Rate Correlates to a High Rate of Inflation" by Michael Pento, FSU Editorial 06/22/2009

in part:
The reason for this is simple. More people working and producing more goods to consume has nothing to do with inflation. Inflation is a monetary phenomenon and is caused by too much money chasing too few goods. In fact, fewer people in the work force mean fewer goods and services available to soak up money supply. Higher rates of inflation cause the dissolution of the middle class, as new money created always goes to the rich first. What money the non-rich do possess is subject to the same destruction in purchasing power of the rich, only they have much less of it. One of the consequences of this is a loss of discretionary purchases, which directly leads to a rising rate of unemployment.

[cobolt]

The Fed says clouds are made of cotton candy. Oh it must be true because the Govt says so!

[HappyTexan]

They have been saying one thing or another to the effect of hitting bottom since last summer.
At least Cramer has stopped calling bottom; they should take a cue from him.

[Stac2007]

Originally Posted by baystater

Fed says recession easing, inflation not a threat - Yahoo! News

Fed Keeps Purchases Unchanged; Says Recession Easing (Update2) - Bloomberg.com


Yeah! Were saved! Ben says it OK, so it must be so.

..............The claw...........worship the claw.


YouTube - LGM the claw

They say if you tell a lie long enough it become truth. Inflation is just being cleverly hidden. Wait until they pass the health bill. You haven't seen inflation yet. Let’s keep printing more money while a gross domestic product keeps falling.

[texdav]

Not right now as the recesioon keep grinding along and the fed keeps interest rates low. But as we recover ;which most think will be quite awhile;the feds are always to late in takign liquidy out of the marke6ts by raising interest rates. that causes inflation. There is alot of liquity now like few recessions before too.

[tallrick]

The Fed caused the problem, only a total fool would believe anything they say. If they are so credible, why do they keep so many secrets?

[gwynedd1]

Originally Posted by texdav

Not right now as the recesioon keep grinding along and the fed keeps interest rates low. But as we recover ;which most think will be quite awhile;the feds are always to late in takign liquidy out of the marke6ts by raising interest rates. that causes inflation. There is alot of liquity now like few recessions before too.

Hi texdav,

The information I have is that there is not liquidity where it matters. For example, one person I know in the construction business says work is there but the loans are not. Low interest rates but tighter credit standards for borrowers means liquidity is low. Its like a hose. The entire pathway must not have kinks or bottlenecks and the interest rate value is still at a strict contingency. So as I stated in March we began a period of stagnation leveling off from my October to March deflation position. The only pressure on prices is a shift in demand towards basic goods and low end items like spam, dry beans and used cars. When I see an up tick in consumer credit or a massive bond purchasing bing by the Fed, I may change my position. In the longer term, I would add deteriorating capital to the mix as something to monitor such as when most of those used cars have become jalopies.

[drshang]

I think both of these statements are inaccurate, although I guess it depends what standards you have for recession "easing."

Even if we have flatline growth (which isn't considered a "recession" FWIW) the economy is still weaker than it was two years ago since we had so much negative growth before. Plus the population/output of the world should continuously increase...so flatline growth is, in effective, basically negative if you discount the fact that output should increase year over year if you hold all other factors equal.

IMO a flatline GDP number or even 1% growth is basically in effect negative since just to maintain current living and output standards there needs to be growth given that the world population continues to increase and technology advances continue to happen to improve productivity.

Don't get me started on inflation. The feds monetary policy is obviously inflationary in theory. It is without question a "threat." It may not happen immediately but inflation may be good for the Fed since it will reduce the value of our massive deficit (assuming the USD doesn't lose reserve currency status).

It is necessary for the Fed to say this stuff now because if there is an inflation threat immediately, while the world economy is still really hurting, then that will dramatically depreciate the US Dollar, which will, in effect, cause all producer countries (think Japan, China, Russia or anyone else who invests in US T-bills) to lose money on their investment. If they pull money out of T-bills then the cost of debt for the US will increase, effectively making it more expensive to borrow money to finance their deficit. If the dollar loses status as the "reserve currency" then there will be massive consequences for the financial health of the United States given their debt load.