Posted on 10/27/2013 1:10:29 PM PDT by reaganaut1
WASHINGTON — Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.
Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment.
The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.
The school board in Anchorage, Alaska, for example, is counting on inflation to keep a lid on teachers’ wages. Retailers including Costco and Walmart are hoping for higher inflation to increase profits. The federal government expects inflation to ease the burden of its debts. Yet by one measure, inflation rose at an annual pace of 1.2 percent in August, just above the lowest pace on record.
“Weighed against the political, social and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained burst of moderate inflation is not something to worry about,” Kenneth S. Rogoff, a Harvard economist, wrote recently. “It should be embraced.”
The Fed, in a break from its historic focus on suppressing inflation, has tried since the financial crisis to keep prices rising about 2 percent a year. Some Fed officials cite the slower pace of inflation as a reason, alongside reducing unemployment, to continue the central bank’s stimulus campaign.
(Excerpt) Read more at nytimes.com ...
Inflation is nothing more than debasing our currency. It kills the country embracing it after destroying the wealth of its citizens.
For this to be done purposely is worthy of the death penalty to its perpetrators.
> “Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.”
There so many things wrong with that statement that I must now be living on a different planet.
Communists are sick minded puppies. They’re like pissed off homos that seek revenge by spreading their HIV so that they’re not alone...
> “Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.”
There so many things wrong with that statement that I must now be living on a different planet.
Communists are sick minded puppies. They’re like pissed off homos that seek revenge by spreading their HIV so that they’re not alone...
It’s amazing, Obama keeps the economy and unemployment in ruins, but so many point the finger everywhere else but towards him where it belongs.
America doesn’t need inflation, it needs a regime change.
bump
It simply means you should be doing something else with the money.
Confiscation of wealth will follow inflation (remember FDR stole every American’s gold). Finally war will be induced.
This is always the cycle. It is always caused by a government seized by totalitarians under whatever name they choose to call themselves.
Here and now they call themselves Democrats.
Love that fake Jefferson quote.
Deflation, in this context, didn't come into common usage until long after Jefferson died.
Devaluation? That's when a currency is pegged, either to another currency or to a commodity. FDR devalued the currency by making it worth less gold. We don't peg the dollar, so the government can't suddenly decide it's worth less.
The market can, of course, decide very suddenly that the dollar is worth less.
The real theft is the difference between the miniscule interest your savings earn and their loss of purchasing power (value.) Every dollar the Fed prints and circulates devalues existing dollars. It's like watering whiskey -- the bottle's full again but Uncle Sam stole the good stuff.
There are plenty of very secure bonds that pay 4%.
But still their executives and largest stock holders get very nice returns and bailouts if they mess up.
Stock holders lost tons of money when the banks messed up. Even jerks like Dick Fuld and Jimmy Cayne lost hundreds of millions.
How are most younger people going to be anything but indigent when they retire?
The ones who can afford a house have hopefully locked in a 30 year under 4%.......
Don’t worry Orange, I can’t make you learn anything if you don’t want to. ;^)
DNG DING DING !!! WINNER !!!
I noticed at the store when I bought orange juice that the half gallon (64 fl oz) is now only 59 fl oz
Inflation is how politicians steal from the savings of the wise and prudent and hardworking, and give it to the spendthrifts and loafers and moochers who always outnumber them. It’s just another form of tax.
More than they are now. I'll be able to spend the interest on savings associated with inflation. Now, I have to hold as much money as I can for a rainy day. As far as stuff I have to buy, I'm pretty well stocked up and things are in repair and the big ticket items bought and paid for.
Here's the problem. Retired baby boomers and older getting interest on their savings is a very fine way to stimulate the economy. Just about every penny of that interest gets spent, mostly in local economies. Thus, it has a good local multiplier effect.
The recession deepened and the job situation got worse when interest rates on savings nosedived. Coincidence?....I don't much believe in coincidence, especially with economic issues.
“Inflating the currency is what you do when you have racked up a mountain of debt and you don’t have a clue of how to meaningfully grow the economy.”
Yep...we could pay the Chinese back pronto, with a wheelbarrow of $10,000,000 dollar bills...I think that they would be rather unhappy about it, though.
40% over the next twenty years? I wish. Try 40% over the next year or two.
I think that creditor nations are getting very close to punting on the Yellen dollar.
Peter Schiff is a bit self-aggrandizing but his grasp of economics is spot on. Hold Yellens at your peril.
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