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- but I DO acknowledge that it's STILL a tricky thing to do right (and they need to watch things very very carefully).
Ken
Quote:
Originally Posted by florida.bob
Considering the fact that they were wise enough to do the wind up, who better to trust to handle the unwind, when it is needed?
Yes, it will will be a delicate process, and Bernanke and the Board are well aware of that. A fortunate thing is that they have an obvious side to err on. They'll nevertheless be minding their step very carefully.
The decade started off at 14%, and by 1983 it was under 4%. It was between 1% and 4% for the rest of the decade.
Inflation was above 4% in eleven of the twelve months of 1984, seven of the twelve months of 1988, and every month of 1989. If you did your decades to include through 1990, it was above 4% in every month of that year also.
Gee, does that mean I will get a COLA on my Federal pensions next year? Good, I need a pay increase!
Maybe, maybe not. Because there was no change for 2010 based on 2009 over 2008 (which would have resulted in a decrease), the calculation for 2011 will be 2010 over 2008, and there may not be enough inlfation in 2010 to bring the cost of living back through the declines of 2009 to again reach 2008 levels. If it falls short, there will be no change in pensions again.
Americans saw prices rise two percent in the year to March according to the Commerce Department's personal consumption expenditures index published on Monday.
Tough always being right.
Quote:
Originally Posted by saganista
I remember Carter, and his actual administration did not at all resemble what right-wingers of today typically describe it as having been.
The reliability of your economic estimates and analyses has long been in very serious question. PCE has expanded over the past three quarters as follows: +2.8%, +1.6%, +3.6%. This is the first time since 2007 that PCE growth has been positive for three quarters in a row. The administration is apparently desperate for what it already has. My guess would be that you are much more desperate at this point than they are. The rapidly improving economy is a growing threat to significantly erode whatever chance for November electoral gains you may have thought you had...
Oh dear, dear, dear.........these are not MY estimates or analyses. Now, whose are they I wonder.
Thanks to Paul Volcker and his idea to float the rates.
Volcker moved the federal funds rate (presently 0.2%) from 9% in July 1980 to 19% in January 1981. This eventually did break the back of inflation, but only after precipitating an even worse unemployment crisis than the one we have today.
The inflation rate was 3.0% in 1966 and 3.3% in 1972. It spiked after that on accountof the 1973-74 Arab Oil Embargo. The highest level of unemployment recorded over that period was 6.1%. A level of 9% was eventually touched in May 1975, again as the result of the recession resulting from the Oil Embargo.
Have you ever heard of a Phillips Curve? Might be a good place to start...
The Phillips Curve fit one set of data in the 60s; recessions, unemployment, and inflation rates since 1970 have routinely gone completely opposite of the trends predicted by the curve. In 1974 and 1975, inflation rose into the double digits, and the unemployment rate went up with it. As inflation went down, so did the unemployment rate. Same for the 80s; the unemployment rate dropped dramatically from 1983-1989, and inflation was low and stable. Same for the 90s. The unemployment rate fell with the inflation rate.
Now, in a perfect world where the economy is always growing and full employment is maintained, the Phillips Curve absolutely makes sense and is ideal. In the real world, it is nothing more than a Keynesian pipe dream that has been contradicted numerous times..
Quote:
Originally Posted by saganista
Inflation was above 4% in eleven of the twelve months of 1984, seven of the twelve months of 1988, and every month of 1989. If you did your decades to include through 1990, it was above 4% in every month of that year also.
..So? Did I not say it was between 1% and 4% for the rest of the decade? What are you trying to contest?
Anyone here remember Jimmy Carter's last years as President? Get ready for another fun-filled ride with an even dumber cadre of officials in Washington!
Yes. They were heavily influenced by the second Arab Oil Embargo. The share of US GDP (GNP, then) going to petroleum imports doubled in about nine months. Carter dealt with that by allowing inflation to do the necessary rationing. OPEC was caught off guard by that. Suddenly, their huge piles of petro-dollars were losing their value at a rate of 50% every five years. How long did OPEC continue to function as an effective cartel after that?
He also has Warren negotiate the release of the hostages, which took place as soon as he steppend out of the WH.
That was actually the third negotiated settlement. Khomeini shot down the first two, mostly because the hostages had become quite useful to him as a wedge against moderates in his new and still shaky revolutionary government.
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