Posted on 09/01/2009 5:18:23 PM PDT by fishingking
If they are printing the cash like they are, why aren't we seeing inflation now?
Been shopping lately?
I noticed canned food prices jumped from around 55-cents to 87-cents. That is about a 60% increase in the last month.
I noticed at another local grocery yesterday that similar canned food prices were in the 75-cent range, where previously they were in the 50-cent range about a month ago.
I believe the money has not been distributed yet. IIRC there was an article on FR about the low percentage of stimulous funds that had been spent.
If history is any indicator... you won’t have to wait too much longer.
Partly because there is such a huge amount of deflation going on in some areas due to so much bad debt and the consumer being tapped out.
Also I have read that some of the printed money gets recycled among the bankers and does not make it out to the consumer. And probably much of it has not been detected yet.
In the end it is game that ends badly.
Welcome to Free Republic.
There is a lag effect. As the money markets value the intrinsic value of each currency, they bid on it.
Next year — KAPOW! Carter to the 100th power.
Buy goods and gold.
Dude, if you want a longer career at FR than your last one, try slowly educating yourself about the protocol here instead of posting vanities in the News section.
Takes time for effects of faux money to filter down to the general economy?
LOl!!
That’s the better halve’s job
Or back...
The money has to get into wide circulation first, right now, much is sitting in bonds and corporate securities from the bail outs. Of course, inflation is a ratio of price to value (ie, value of the dollar goes down, objects require more of said dollars to buy it), however, if prices are being held down because demand is low because of the slow economy (ie, drop prices to get people to buy) it can offset the decreased value of the dollar. The tipping point will come when the prices have to increase in spite of demand just to make enough profit to continue the production cycle.
Too much slack in the economy... Unemployment high (unions can’t strike for higher wages in times like these); excess capacity everywhere (can’t raise prices when you’re trying to just cover your overhead); slack demand (nothing driving up prices).
Inflation will come when the dollar starts to crater (as it has been drifting lower) and China begins to balk at buying our debt (because of the weak dollar and the prospects of deficits in the trillions as far as the eye can see) and our economy starts to stagnate when Obama tries to pay for this madness with tax increases on EVERYBODY.
This is probably simplistic but it captures much of the dynamic that I expect to see in the next year or two.
Partly because unemployment is still high and that holds wages down.
A lot of of the money that was given to prop up banks and financial institutions beginning last year actually went overseas.
Then, of the 2009 stimulus, only a small percentage has gotten into the wild, so to speak.
Inflation is still coming, like a freight train.
If inflation is too much money chasing too few goods then people will have to start chasing goods again for the monetary inflation to become manifest. Or not, as per the next paragraph.
If I have it right then inflation is not rising prices but an inflating of the money supply. It’s been my opinion that we’ve had inflation for some years. This time around the money much chased foreign goods made too cheaply to rise in price. The chased ‘goods’ that did rise in price were stocks and real estate.
A: Velocity of money is currently low.
When banks start lending at normal rates of speed, then watch for inflation.
We are seeing deflation because demand for goods and services has declined. Demand for goods and services has declined because a lot of people are out of work or afraid of losing their jobs, and, therefore, they are not eager to spend as much money as in the past. People delaying purchases leads to companies offering more discounts and lower prices.
I think the reason we have not yet seen inflation is that we are in a deep recession, with unemployment around 10%. Recessions tend to put downward pressure on prices, with people having less money to spend.
I would expect that when and if the economy picks up again (and it’s hard to know when that will be, cause businesses are afraid to hire people and take risks when there is an anti-capitalist marxist in the White House), the inflation will come with it.
It could even be hyper-inflation-like the price of a loaf of bread going up tenfold within a day. Nobody’s really sure, cause we are carrying an unprecendented amount of debt.
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