Posted on 10/22/2015 8:43:19 AM PDT by Kaslin
“Volcker also brought the economy to a halt, which devalues the currency “
Actually it has the opposite effect on the dollar. Halting inflation made the dollar very strong, far more than the Reagan economic team expected.
“I have read that Reagan gave Volcker the green light to do what he did. Nobody’s perfect.”
Well if they hadn’t done that inflation wouldn’t have ceased. Part of the problem was breaking the inflationary expectations and behavior of the public at large. We were spending money as fast as we got it because we expected it to continue to devalue, so monetary velocity was through the roof. Slamming the breaks on credit growth stopped that.
Actually it has the opposite effect on the dollar.
...
Go ahead and explain how reducing the production of goods and services strengthens a currency.
All Volcker had to do was reduce money creation to match Reagan’s policies of smaller government and more private sector productivity. Volcker went way too far. And inflation wasn’t halted, it was reduced.
Funny how you and other Conservatives choose to toe the line of Democrat Volcker and others who believe that only Big Government can solve problems.
yes
So....is the price of crude even going to go up?
“Go ahead and explain how reducing the production of goods and services strengthens a currency.”
I wasn’t speaking of a reduction of goods and services, I said reducing monetary growth. Evidently you don’t bother to read.
And your complaint about lost production is identical to what Yale’s Keynesian economist James Tobin was saying against the Reagan-Volcker program so spare me your pretense of knowing what you’re talking about.
One of the biggest factors holding down crude apparently is the glut of natural gas brought about by fracking. Firms that can substitute cheaper NG for petroleum will continue to do it. Iran coming back online is also a factor. Business cycle. It’s supply and demand affecting oil right now, not inflation.
I hadn’t thought of the natural gas point. Good point.
You are a professional economist, I think?
Thank you for your patience here. Most of us are trying to learn stuff and participate in a good faith discussion.
So back to the point of beef, and the price of feed, the price of corn, etc.
I just saw this from an NYT article;
“Corn, the most valuable crop in the country, has fallen to $3.78 a bushel from $7.50 three years ago.”
So I’m not sure I understand. If corn costs half what it was three years ago, then unless beef cow feed is something other than corn (I don’t really know), then the cost of feed should be going down, also.
Something tells me that our whole system is a bit chaotic, and there’s not easy answers to a lot of these questions.
But we do know this:
beef is up.
gasoline is down (and crude is down).
coffee is up.
eggs were up earlier this year (bird flu).
That accounts for most of my purchases right there.....
I’m not surprised that you don’t understand. You want to feel safe and secure with the Big Government propaganda.
From the time US energy policy shifted under EPA mandates, corn increased in price continuously in every year until 2013 except for 2008-2009. Corn [and most other commodities] was flat during that period because of the onset of the recession. There was also a crash in the price of ethanol at that time, because there was substantial drawdown in consumer mileage. For a period of about 5 months, people really weren't going anywhere.
Before the expansion of ethanol, corn had historically traded in the $2.00-$3.50 range. During the years from 2005 - 2013 its price rose dramatically. One consequence of that was the livestock growers switched to other feedstocks; beef steers and dairy beef will east just about any indigestible biomass you put in front of them. That reduced the price of corn, as did the EPA moratorium on increasing the mandate during that time, and other factors like lower international demand [the overall world economy is slowing, regardless of what lies you've been told.]
Considering the consumer price of an agricultural output against agricultural inputs on a spot basis is usually tricky. Commodities markets have to some degree been stabilized by the advent of futures and other smoothing forces, but spikes and crashes still happen all the time and they aren't reflected back into the consumer end of market in realtime. The actual transfer-function depends in very complicated ways on weather, imports, exports, trade agreements, existing stocks, demands in non-consumer markets ... you name it.
The bottom line is that the long term trendline for corn prices have been increasing, and the reason for that is clear. This despite the fact that, as always, US farmers continue to farm more productively than ever.
With all of the money that Obama dumped into the economy at the beginning of his reign, it is impossible for their NOT to be inflation.
I see the inflation whenever I go to the grocery store. Food is expensive, these days—and my salary is not growing as fast as food prices.
really helpful. thank you. i need to study your post in detail, but thanks.
Interesting that you signed up to post an answer. I read the link and I see nothing that states they look at decreased portion size at the same price.
Ground beef is about $5.00 a pound, I used to pay that for steak.
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But the shrink-ray on non-fresh food is disconcerting.
I buy Lesueur peas. About 5 years ago, they were about $1.05 a can, frequently going on sale for $.80 (or so). Now they are $1.85 or so, about an 80% increase. The size has remained the same so at least no hidden shrinkage/price increase.
No one would have imagined a couple of decades ago that we would learn how to stop high inflation and keep it stopped. Like communism, it can still be found in a few places. But like communism, it’s no longer much of a threat.
Regarding the article. There is NEVER pure deflation or inflation. There will be deflation of some things and inflation of other things.
PLACE YOUR BETS.......................
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