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Old 07-14-2008, 06:50 AM
 
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From a staunch Ron Paul, Peter Schiff, Marc Faber, David Tice fan this will go right against the grain. but could bernanke be a genius? could he be inflating the currency to combat our dependence on oil and imported goods? i'm definitely not a fan of regulation but i do think the recent gas price hikes were the best thing to ever happen to us.
just a thought.
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Old 07-14-2008, 09:45 AM
 
Location: western East Roman Empire
9,309 posts, read 14,207,592 times
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I understand what you are driving at, but we could have achieved globalization in a more orderly fashion without wasting resources, war, and speculation.

But the US and European populations are to a large extent to blame for the mess because their expectations going forward are unrealistic.

One purpose of inflation is to assuage expectations going forward while reality bites the people in ass from behind. It is an age-old tactic by the ruling class, and the people, ignorant of history, usually fall for it every time.

Perhaps another way of saying the same thing is that bouts of speculation are the way of capitalism, it's one of the ways that the rich keep getting richer, through huge capital gains, while a few lucky peons hanging onto their coattails.

Last edited by bale002; 07-14-2008 at 09:56 AM..
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Old 07-14-2008, 01:13 PM
 
Location: Ohio
24,624 posts, read 19,058,949 times
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Quote:
Originally Posted by 58robbo View Post
From a staunch Ron Paul, Peter Schiff, Marc Faber, David Tice fan this will go right against the grain. but could bernanke be a genius? could he be inflating the currency to combat our dependence on oil and imported goods?
I think you're terribly confused.

There are different types of inflation, each with its own cause, and each with its own resolution.

1) Currency Inflation: The cause is the printing too much money (that would be the US Treasury Department in the US), devaluing the price of goods and services, as well as wages. As a result prices and wages rise.

Solution: Reduce the money supply. If the government refuses, then the central bank (the Federal Reserve for the US) must raise interest rates.

The rate of Currency Inflation in the US is one of the lowest in the world. Certainly not as low as Switzerland's 0.50% but half of Britain's 6.3%.

2) Monetary/Fiscal Inflation: The cause is too much available credit, devaluing the the price of goods, services and wages, causing them to rise, but at a lesser rate than Currency Inflation.

Solution: The central bank (the Federal Reserve for the US) must raise interest rates. If the central bank fails or refuses, then the government must raise taxes, and/or cut government spending and/or reduce the money supply.

3) Wage Inflation: The cause is rapidly rising wages which results in rapid price increases:

Solution: One solution that appears to be effective is Wage & Price Freezes, such as the one implemented by Nixon in the early 1970s and the one implemented by FDR in the late 1930s.

4) Cost Inflation (Part I): The cost of raw materials, ie commodities such as oil, natural gas, coal, timber, gold, silver and other precious metals, metal ores, minerals, wheat, rice, corn, sorghum, barley, sugar beets, chocolate, coffee, sugar cane, cotton, linen, flaxen, and wool rises due to shortages on the world market.

Solution: Reduce consumption. Unfortunately, reduced consumption typically results in massive job losses and recessions.

5) Cost Inflation (Part II): The cost of raw materials, ie commodities such as oil, natural gas, coal, timber, gold, silver and other precious metals, metal ores, minerals, wheat, rice, corn, sorghum, barley, sugar beets, chocolate, coffee, sugar cane, cotton, linen, flaxen, and wool rises due to a country's currency losing value on the world market, resulting in higher prices of all commodities as well as higher prices for all semi-finished and finished imported items (such as parts for manufacture or goods for retail outlets in the US like WalMart).

Solution: None really. You could nuke Russia and take over the country and force them to replace the Euros and gold in their central bank with US$ and force them to sell all of their commodities and goods in US$, but the US might lose the war and be in a worse situation.

The US could nuke Europe and that would destroy the Euro and the US$ would reign supreme gain, maybe. Or you could pray for an asteroid to smack Europe and lay it waste.

There are more than 60 countries that have abandoned the US$ as an International Reserve Currency and International Trade Currency in favor of Euros or Russian Rubles, so the US could start the draft and invade those countries one by one, but that would be very costly and take a long time.

The US could take a simpler course of action and abandon its abusive foreign policies and trade policies, but it would take decades for other countries to gain the trust of the US again.

In the mean time, Americans just need to get used to paying more and doing with less, or doing without.

If the US doesn't do something soon, Angola, Singapore, Malaysia, Algeria, Venezuela, Nigeria and Indonesia will start selling their oil in Euros, Rubles or basket currencies, and the US$ will decline to about $1 = 0.42 Euros and prices in the US will go even higher.

Then there's the matter of Central Asia. If the US does not invade Iran, it will not be able to gain control of Central Asia, and the Russians and/or Chinese and/or Western European countries will, and the oil will be sold in Euros, Rubles or basket currencies, ultimately driving the US$ down to $1 = 0.26 Euros and wreaking havoc with the US economy. If the US isn't already experiencing a depression, it will be.
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Old 07-14-2008, 01:16 PM
 
2,197 posts, read 7,373,128 times
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To answer the thread's title question-- no.
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Old 07-14-2008, 01:53 PM
 
3,283 posts, read 5,192,685 times
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Quote:
Originally Posted by Mircea View Post
I think you're terribly confused.

There are different types of inflation, each with its own cause, and each with its own resolution.

1) Currency Inflation: The cause is the printing too much money (that would be the US Treasury Department in the US), devaluing the price of goods and services, as well as wages. As a result prices and wages rise.

Solution: Reduce the money supply. If the government refuses, then the central bank (the Federal Reserve for the US) must raise interest rates.

The rate of Currency Inflation in the US is one of the lowest in the world. Certainly not as low as Switzerland's 0.50% but half of Britain's 6.3%.

2) Monetary/Fiscal Inflation: The cause is too much available credit, devaluing the the price of goods, services and wages, causing them to rise, but at a lesser rate than Currency Inflation.

Solution: The central bank (the Federal Reserve for the US) must raise interest rates. If the central bank fails or refuses, then the government must raise taxes, and/or cut government spending and/or reduce the money supply.

3) Wage Inflation: The cause is rapidly rising wages which results in rapid price increases:

Solution: One solution that appears to be effective is Wage & Price Freezes, such as the one implemented by Nixon in the early 1970s and the one implemented by FDR in the late 1930s.

4) Cost Inflation (Part I): The cost of raw materials, ie commodities such as oil, natural gas, coal, timber, gold, silver and other precious metals, metal ores, minerals, wheat, rice, corn, sorghum, barley, sugar beets, chocolate, coffee, sugar cane, cotton, linen, flaxen, and wool rises due to shortages on the world market.

Solution: Reduce consumption. Unfortunately, reduced consumption typically results in massive job losses and recessions.

5) Cost Inflation (Part II): The cost of raw materials, ie commodities such as oil, natural gas, coal, timber, gold, silver and other precious metals, metal ores, minerals, wheat, rice, corn, sorghum, barley, sugar beets, chocolate, coffee, sugar cane, cotton, linen, flaxen, and wool rises due to a country's currency losing value on the world market, resulting in higher prices of all commodities as well as higher prices for all semi-finished and finished imported items (such as parts for manufacture or goods for retail outlets in the US like WalMart).

Solution: None really. You could nuke Russia and take over the country and force them to replace the Euros and gold in their central bank with US$ and force them to sell all of their commodities and goods in US$, but the US might lose the war and be in a worse situation.

The US could nuke Europe and that would destroy the Euro and the US$ would reign supreme gain, maybe. Or you could pray for an asteroid to smack Europe and lay it waste.

There are more than 60 countries that have abandoned the US$ as an International Reserve Currency and International Trade Currency in favor of Euros or Russian Rubles, so the US could start the draft and invade those countries one by one, but that would be very costly and take a long time.

The US could take a simpler course of action and abandon its abusive foreign policies and trade policies, but it would take decades for other countries to gain the trust of the US again.

In the mean time, Americans just need to get used to paying more and doing with less, or doing without.

If the US doesn't do something soon, Angola, Singapore, Malaysia, Algeria, Venezuela, Nigeria and Indonesia will start selling their oil in Euros, Rubles or basket currencies, and the US$ will decline to about $1 = 0.42 Euros and prices in the US will go even higher.

Then there's the matter of Central Asia. If the US does not invade Iran, it will not be able to gain control of Central Asia, and the Russians and/or Chinese and/or Western European countries will, and the oil will be sold in Euros, Rubles or basket currencies, ultimately driving the US$ down to $1 = 0.26 Euros and wreaking havoc with the US economy. If the US isn't already experiencing a depression, it will be.
confused? in the interest of debate i simply put a question across. i happen to see the reduction in consumption as a good thing from an economic, environmental, moral, social point of view. i am not a fan of the fed but if i am going to be forced to search for positives to the feds monetary policy, then their contribution to gas price hikes have to go to the top of that list. anyway like i said i just asked a question and wondered if there might be some method to the madness of helicopter ben? i'd prefer it if you could answer the question without personal comments. thanks mrs albright
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Old 07-14-2008, 02:55 PM
 
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Now I'm confused!

Nuke, invade?

Is this economics or brigandage?
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Old 07-15-2008, 02:52 AM
 
Location: Chicago
38,707 posts, read 102,800,235 times
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Quote:
Originally Posted by 58robbo View Post
confused? in the interest of debate i simply put a question across. i happen to see the reduction in consumption as a good thing from an economic, environmental, moral, social point of view. i am not a fan of the fed but if i am going to be forced to search for positives to the feds monetary policy, then their contribution to gas price hikes have to go to the top of that list. anyway like i said i just asked a question and wondered if there might be some method to the madness of helicopter ben? i'd prefer it if you could answer the question without personal comments. thanks mrs albright
If you want to see a reduction in consumption, there's a way of doing it without nearly ruining the economy and turning credit markets upside-down all over the world: transition from an income tax to a sales/consumption tax. Not only would that discourage consumption but it would also encourage savings, which would go a long way toward correcting the imbalance of trade. That of course is a fiscal policy decision that is completely out of Bernacke's hands.
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Old 07-15-2008, 03:35 AM
 
3,283 posts, read 5,192,685 times
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Quote:
Originally Posted by Drover View Post
If you want to see a reduction in consumption, there's a way of doing it without nearly ruining the economy and turning credit markets upside-down all over the world: transition from an income tax to a sales/consumption tax. Not only would that discourage consumption but it would also encourage savings, which would go a long way toward correcting the imbalance of trade. That of course is a fiscal policy decision that is completely out of Bernacke's hands.

on the money there. if i had the power to do so that is exactly what i would do. i would exempt services from the tax though to encourage service based non-consuming economy.
having said that, the opposition that such a tax would encounter would be overwhelming and would never be passed. bernanke is not subject to that kind of opposition and it could just be that him and greenspan took it on themselves to address some pressing issues.
just for debate sake!
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Old 07-15-2008, 04:23 AM
 
Location: Tolland County- Northeastern CT
4,462 posts, read 7,973,037 times
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Dr. Bernanke is a nice of enough guy- very soft spoken, smart- but he seems too mild mannered- and hoped to follow in the footsteps of Greenspan using the same kind of economic ideas-namely easy money aka low interest rates, too much liquidity and reflating -this time the housing and financial markets. This time around its not going to work- the dollar is worth a plug nickle with all the 'easy money being printed' which is causing commodities to soar. Bernanke is now bedeviled with stagnant or declining growth, rising inflation and soaring food/ energy costs. Both Greenspan and Bernanke have in the end miscalculated everything- from saying there was no 'housing bubble' to 'there is no sub prime market issue' to saying the housing bust had bottomed- in 2006!

The problems we have today stem from the egregious errors both Greenspan and now Bernanke have created. Despite Dr. Bernanke's impressive credentials - he still basically a political appointee and has had to listen to his master-Bush.
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Old 07-15-2008, 04:30 AM
 
Location: Central CT, sometimes FL and NH.
4,496 posts, read 6,740,422 times
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Quote:
Originally Posted by skytrekker View Post
Dr. Bernanke is a nice of enough guy- very soft spoken, smart- but he seems too mild mannered- and hoped to follow in the footsteps of Greenspan using the same kind of economic ideas-namely easy money low interest rates, too much liquidity and reflating -this time the hosing and financial markets. This time around its not going to work- the dollar is worth a plug nickle with all the 'easy money being printed' causing commodities to soar. Both Greenspan and Bernanke have in the end miscalculated everything- from saying there was no 'housing bubble' to 'there is no sub prime market issue' to saying the housing bust had bottomed- in 2006!

The problems we have today stem from the egregious errors both Greenspan and now Bernanke have created. Despite Dr. Bernanke's impressive credentials - he still basically a political appointee and had to listen to his master-Bush.
Agreed. Bernanke should return to Princeton where he can play with his economic theories without really harming anyone other than his students.

Cheap money has got to stop. Take the fed funds up to 5% in an orderly well telegraphed fashion. This will get people off the fence who think they are going to see 0% mortgage rates. This will shake out the sketchy businesses, investments, etc. that have profited off of cheap money. Most importantly it will raise the value of our currency and promote investment in our banks, bonds, and other financial instruments that would be more attractive to investors at higher rates.
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