US inflation rise ties Fed’s hands on further easing

FT ^ | June 15 2011 | Robin Harding

[Graneros]

Link only. http://www.ft.com/intl/cms/s/0/a2e3d988-9748-11e0-9c9d-00144feab49a.html#axzz1PO8nsDZ9

[Graneros]

What a quandary for the fed. It will be interesting to watch Bernake's high wire act on this one.

[Mariner]

You sent everyone to a story that requires registration.

[Graneros]

My apologies to all. I didn’t realize. I found the story on Drudge. His link to the FT story works.

[org.whodat]

In the end they have no other choice, they let horse out of the barn, who is out there willing to buy US debt.

[Graneros]

For anyone interested in reading the story go to Drudge and click on this headline: Inflation on the rise...

Again my apologies to all who tried to read the story and couldn’t. I sure hope the Financial Times website isn’t indicative of what we can expect from all websites in the future.

[RicocheT]

Drudge’s link works. We can only hope the series of quantitative easing (borrow and spend insanely) is ending as it’s the road to ruin. Inflation is inevitable with the way the Fed has been printing dollars and using paper dollars to buy paper IOUs (T Bills.)

[Graneros]

First I’m glad you were able to get to the article.

I’ve been saying all along that there will definitely be a QE3, 4, 5... I think it’s wrong but the fed has left itself with no way out. What I find interesting is they DO know all that printing causes inflation but have gone ahead and done it anyway. So now they’re between the proverbial rock and a hard place. As I said should be interesting to see how they handle this.

You know what I just went back to Drudge to check some info on this article and now Drudge’s link isn’t working. So I won’t be fooling with anything from the FT again.

[RayChuang88]

There is one way out, though I'm not sure if Obama is willing to do this: fix the economy-sapping income tax system.

When the current income tax system has all these disadvantages:

1. 70,000 pages of tax code plus additional rulings so complex that even the IRS can't figure out half of it.
2. The complexity costs American residents over US$300 BILLION per year in compliance costs.
3. It drives millions of jobs, thousands of factories and hundreds of corporate headquarters out of the USA for income tax avoidance reasons.
4. It may have driven using legal tax loopholes as much as US$14 TRILLION in American-owned liquid assets to foreign financial institutions to keep them out of the hands of the IRS.

No wonder the US economy is failing. It's time to chuck the current income tax system and replace it with the flat income tax proposed by Steve Forbes some 15 years ago or go even further and completely phase out the income tax in favor of a national consumption tax like FairTax (H.R. 25/S. 13). With either overhaul, American residents and businesses will be encouraged to keep their net worth and capital investments in the USA, which means bringing back industry and most of that US$14 trillion in liquid back to the USA under better tax circumstances, immediately lowering the unemployment rate and bringing a gigantic liquidity stimulus that would send the American economy to unprecedented heights of prosperity.

So what are we waiting for?

[Graneros]

“There is one way out, though I’m not sure if Obama is willing to do this: fix the economy-sapping income tax system.”

I agree with you. Fixing the tax system would work like magic in fixing our economy. But not only does Obama not want to do it very very few politicians want to change the system. They like having a system that no one understands and can be manipulated. Even those Republican candidates who say they’ll change it when they are elected could never get something like the Fair tax passed.

Also it’s not just the 14 Trillion debt. Don’t forget to tack on the 61 Trillion in unfunded liabilities of SS, Medicare, etc. Then add on the 90% of the money our banks and insurance companies will owe of the cost of the so called European PIG countries if (when) they default.

[RayChuang88]

With the two income tax overhaul proposals I mentioned, it has another advantage: American residents can now create their own financial “nest egg” for retirement and/or medical bills completely tax-free. This means we can start to scale back Social Security and Medicare, which means eventual huge savings off the Federal budget.