Can the Federal Reserve hold down inflation? (unemployment, gas prices, legal)

[lifelongMOgal]

Originally Posted by chickenfriedbananas

It has to do with the price of energy, not the collapse of the dollar. The rise in price this year is the steepest increase since 1974 -- the same year that we had an energy crisis.........

With all due respect, it would seem you need a lesson in basic economics:

The price of energy (and food, and commodities) is higher because your dollar is worth less. Your dollar is worth less because the FED is monitizing our debt by printing more federal reserve notes and buying US debt at the Treasury auctions.


Ron Paul: Inflation Statistics Are Rigged, Bernanke's Money Printing Is a Total Failure - YouTube


http://www.youtube.com/watch?v=EL20e...eature=related

[momonkey]

Originally Posted by emilybh

Yeah and the box is smaller and it is about 1/3 filled with cereal. (If I were you I'd switch to Kashi or some whole grain cereal from "Health Valley". You need to eat nutrients not junk. Why throw away that kind of money if you aren't buying real wholesome food with it that will help keep you alive?)

This year's garden was the largest I've had since the 1970s. I can't pay $2.50/lb for red leaf lettuce and $1.50 for a decent cucumber anymore. Besides, the local bees love me.

[Boompa]

Originally Posted by flash3780

What is the incentive for the Federal Reserve to prevent inflation? They benefit from it... so long as the currency doesn't collapse.

Not the Government, the Banks who run the Government. That's why the FED is holding inflation down.

[momonkey]

Originally Posted by chickenfriedbananas

It has to do with the price of energy, not the collapse of the dollar. The rise in price this year is the steepest increase since 1974 -- the same year that we had an energy crisis.

Sheesh, are you cheering for the collapse of the economy? You wonder why people think the tea party's insane?

Public schools?

Energy, and everything else we import, is more expensive because the dollar is weak. The dollar is weak because it has so many new friends. The Administration likes the weak dollar because they think they can boast of new jobs created in manufacturing brought about by an increase in exports in 2012. They'll also be sure to brag about a positive trend in the trade deficit. What they won't mention is the price we'll pay for these numbers at the pump and the grocery store. In the old days we called this Carternomics.

[wehotex]

Originally Posted by Swingblade

Even the banksters are getting nervous about all Uncle Ben's money printing :


When the banksters are worried about inflation you know that you should be worried about inflation. CPI is 3.8% measuring it the old way it would be 9%. I know my Lucky Charms are $3.50 a box I had to switch cereals, DAM YOU BARNANKE.

Not only that, but the box has probably also shrunk!!! I know that my toilet paper rolls have.

[chickenfriedbananas]

Originally Posted by lifelongMOgal

With all due respect, it would seem you need a lesson in basic economics:

The price of energy (and food, and commodities) is higher because your dollar is worth less. Your dollar is worth less because the FED is monitizing our debt by printing more federal reserve notes and buying US debt at the Treasury auctions.


Ron Paul: Inflation Statistics Are Rigged, Bernanke's Money Printing Is a Total Failure - YouTube



Ron Paul Asks Ben Bernanke: How Do You Define a Dollar? - YouTube

Our food and commodities are worth less because our dollar is worth less - yes. But our dollar is worth less because of the laws of supply and demand, not over-printing. The cause of the commodities surge has to do with *speculative* demand, MoGal. It's the very same sort of speculative demand that fueled the housing crisis, and it's the same speculative demand that caused oil to shoot up in 2008. Part of that speculative demand, however, is based on very real laws of supply and demand. Whenever the economy begins to heat up in the developed world, the U.S. and the industrialized world begin demanding more energy consumption. That puts a strain on the energy supply, which drives up the price. When you drive up the price of oil, everything else goes up. Period. When crude goes up, that leads to gasoline price hikes. When the price of gas goes up, that increases the costs of food transport. When the costs of food transport gets hiked, that hits businesses who can either eat the costs or pass it on to consumers. Most will pass at least some of those costs to consumers until they just stop spending...otherwise known as a loss of consumer confidence and could potentially lead to a recession.

I actually like Ron Paul, and believe it or not, I admire that he has the sack to come out and take unpopular stances on a range of issues. But he's not the economic genius that everyone thinks he is. Has he long been critical of federal economic policy, and has he made some valid points from time to time? Yes, I would admit as much. But he's not John Keynes, Paul Krugman, and he's not even Milton Friedman. Do you your own thinking, MoGal.

[chickenfriedbananas]

Originally Posted by momonkey

Public schools?

Energy, and everything else we import, is more expensive because the dollar is weak. The dollar is weak because it has so many new friends. The Administration likes the weak dollar because they think they can boast of new jobs created in manufacturing brought about by an increase in exports in 2012. They'll also be sure to brag about a positive trend in the trade deficit. What they won't mention is the price we'll pay for these numbers at the pump and the grocery store. In the old days we called this Carternomics.

No, you've got it backwards. The dollar is weak because the goods that we purchase with the dollar have become more expensive. The same thing happened in 2008 when gasoline went up to $5/gallon in some states -- then it crashed. And then it really crashed when the financial crisis hit. And when energy prices crashed, economists began worrying about deflation, when they were worried about inflation only a half year earlier. If there were true inflationary pressures on the dollar, gasoline prices and food prices would not have come down. But they did, and they rise and fell with demand. Prices remained stable until the economies of the world began growing again, and lo and behold, the price of oil spiked as did the price of gas earlier this year. That, in turn, led to a surge in food prices. The dollar is definitely weaker than it used to be decades ago, but it's still a strong currency; it's just that the resources we buy with the dollar are in much greater demand. You need to go back and hit the books.

[Mircea]

Originally Posted by roysoldboy

93 % of adults polled say that they are losing the battle. That group says that they are paying more for groceries than a year ago. It appears to me that the Fed is doing a real bang up job of holding back inflation.

No, it appears that 93% of "adults" polled are ignoramuses.

Without looking at the poll, I'm certain the idiot pollsters made absolutely no attempt to differentiate between Wage Inflation, Interest Inflation, Cost Inflation or Real Inflation.

Those are 4 different animals, each with a different cause, and each with a different solution.

Originally Posted by roysoldboy

The economy may well collapse...

No it won't. You'll have a major recession, but your economy will not collapse.

Originally Posted by roysoldboy

Why don't you read the link I provided so you will know what is going on?

Because I have a Bachelor of Arts in Economics (and Political Science) and the jack-asses who wrote the article and the morons who edited the article don't.

Originally Posted by lifelongMOgal

With all due respect, it would seem you need a lesson in basic economics:

The price of energy (and food, and commodities) is higher because your dollar is worth less. Your dollar is worth less because the FED is monitizing our debt by printing more federal reserve notes and buying US debt at the Treasury auctions.

If your claim had even an ounce of Truth in it, then the prices of all commodities would be rising.

Since the prices of all commodities are not rising, and since some have actually decreased, your claim is false.

More to the point, if there really was Real Inflation, then the price of everything, as in every single thing would be increasing, and yes, that includes your wages, but that isn't the case. Some prices of non-commodities are falling.

The only inflation the central bank can cause is Real Inflation. They can influence Interest Inflation (which inflates the price of housing and cars and other things tied to interest and interest rates).

The central bank, by definition, cannot cause Cost Inflation or Wage Inflation.

You've had Wage Inflation twice in the 20th Century, once during the Great Depression, and once during the early 1970s. The solution put in place each time by FDR and Nixon was a Wage & Price Freeze, because rapidly rising wages cause prices to rise.

Cost Inflation is caused by a shortage of commodities. It was not the fault of the Federal Reserve that there is a drought in Texas which is driving up the cost of animal feed regionally.

It is not the fault of the Federal Reserve that iron production fell for several years resulting in price increases in the cost of iron and steel products.

It is not the fault of the Federal Reserve that cotton crops world wide have been affected by weather, locusts, other insects, war and insurrection resulting in a decrease in the cotton harvests and higher prices for cotton, causing higher clothing prices.

It is not the fault of the Federal Reserve that most of your corn is being sucked up into ethanol production, or that recent flooding and bad weather has caused a shortage of corn creating an rise in the price of corn, which negatively impacts food prices, since corn and corn products are used in nearly all of your food.

It is not the fault of the Federal Reserve that farmers had to slaughter part of their swine herds causing pork prices to rise.

All of that is Cost Inflation and neither the US central bank nor any other central bank has anything to do with that, unless you intend to claim that the central banks are responsible for weather.

If you people knew anything about Economics, you'd know we use a co-efficient to measure the amount of money that can be absorbed by an economy.

That co-efficient determines how much money can be dumped into the economy, and as best as I can tell, the Federal Reserve can dump about $9 TRILLION to $12 TRILLION into the economy without causing Real Inflation.

You will have Real Inflation, but no time soon. My best guess is sometime around 2022-2025.

You'll get a warning. A "shock bump" if you will. Prices will spike maybe 8%-12% then drop again.

That means you'll walk into Kroger's, Meijers, Macy's, Target, Kohl's, Wal*Mart and everything will have increased by 8%-12%. Everything. Every thing. Every single thing. That includes your auto insurance, home-owner's insurance, ball-point pens, cosmetics, shampoo, soap, cell-phone service, electric, natural gas, every thing you see.

And then after a few months it will go away. And then it will come back and you'll have Real Inflation averaging about 35%-45% for about 15-16 years.

But that assumes your government dumps $12+ TRILLION into the economy over the next 10-11 years, and I'm certain they will.

You've had Real Inflation several times throughout your history. From 1807 to 1821, 1862-1874, 1915-1929 (um, yes you had Deflation throughout the Great Depression with Wage Inflation) and 1971-1984 (and you also had Wage Inflation during that period).

Why, why didn't you have Real Inflation after the Great Depression and WW II when your government dumped tons of money into the economy?

That goes back to the co-efficient that determines how much money can be absorbed.

In 1946 you had the Bretton Woods Agreement which made the US Dollar the de facto international reserve currency and the de facto international trade currency.

All of those US Dollars that were pumped into the economy were absorbed by all the countries of the world as they grabbed up US Dollars to keep in their federal reserve banks and to use for trade to buy oil, natural gas, all other commodities and goods manufactured in the US.

That's why you didn't have any Real Inflation.

Had that not happened, you would have had rampant Real Inflation from 1946 on for, I don't know how long. I guess as long as it would have taken to get the money out of the economy. With an income tax rate of 93%, I'm guessing not that long, but at least 6-8 years.

You're in a lose-lose situation. If you cut spending, you have a recession, if you don't cut spending, you have recession, so the question is how much Real Inflation do you want after the recession ends?

[le roi]

Originally Posted by Mircea

No, it appears that 93% of "adults" polled are ignoramuses.

Without looking at the poll, I'm certain the idiot pollsters made absolutely no attempt to differentiate between Wage Inflation, Interest Inflation, Cost Inflation or Real Inflation.

Those are 4 different animals, each with a different cause, and each with a different solution.

Right, basically they asked, "Can the fed keep inflation under control?"

...without attempting to define inflation.

IMO, some types of inflation are good. Wage inflation is a good thing, right now. Food inflation, energy inflation, commodity inflation, are all bad things. It is funny that no one makes the distinction.

[emilybh]

Originally Posted by chickenfriedbananas

Our food and commodities are worth less because our dollar is worth less - yes. But our dollar is worth less because of the laws of supply and demand, not over-printing. The cause of the commodities surge has to do with *speculative* demand, MoGal. It's the very same sort of speculative demand that fueled the housing crisis, and it's the same speculative demand that caused oil to shoot up in 2008. Part of that speculative demand, however, is based on very real laws of supply and demand. Whenever the economy begins to heat up in the developed world, the U.S. and the industrialized world begin demanding more energy consumption. That puts a strain on the energy supply, which drives up the price. When you drive up the price of oil, everything else goes up. Period. When crude goes up, that leads to gasoline price hikes. When the price of gas goes up, that increases the costs of food transport. When the costs of food transport gets hiked, that hits businesses who can either eat the costs or pass it on to consumers. Most will pass at least some of those costs to consumers until they just stop spending...otherwise known as a loss of consumer confidence and could potentially lead to a recession.

I actually like Ron Paul, and believe it or not, I admire that he has the sack to come out and take unpopular stances on a range of issues. But he's not the economic genius that everyone thinks he is. Has he long been critical of federal economic policy, and has he made some valid points from time to time? Yes, I would admit as much. But he's not John Keynes, Paul Krugman, and he's not even Milton Friedman. Do you your own thinking, MoGal.

Keynesianism DOES NOT WORK. Keynes says you can spend yourself to prosperity which is HOGWASH as we all have seen. The LAST thing we need is another leader whose economics education is limited to the names you have mentioned.

Just look how WRONG all those that follow Keynes have been about our economy.
Keynesian Economics vs. Austrian Economics - YouTube

To FURTHER demonstrate how WRONG Keynsians are and to prove that overspending by the government and expanding our money supply does NOT help us in any way shape or form, all you have to do is look at a chart of the purchasing power of the dollar. You can see that from the 1830's to 1914 when we had NO CENTRAL BANK. This was BEFORE the banksters were allowed to regain control of the money supply, the dollar had THE MOST purchasing power. In 1914 it went down and almost didn't stop declining except during the depression when it rose a little (as it should now but it isn't due to all of the crazy money printing). Note that last year the dollar only bought what 15 cents bought in 1967. 1967 was that last year that the dollar bought a dollar's worth of stuff.

http://mykindred.com/cloud/TX/Documents/dollar/

We have had ongoing inflation for a long time and ESPECIALLY since Nixon got rid of the gold standard in 1970. Just look at the chart and see the decline in purchasing power yourself.