The rest of the world has too much to lose, and thus has no choice but to play along with the Fed’s scam.
Huh? Then why is everything I’m buying especially food going through the roof?
Western economies right now “need” to deflate. Obama’s policies are forcing the Fed to inject money into the system in a misguided attempt to re-inflate a deflating economy. The longer this goes on the worse the actual deflating correction will be...
The reason we’re not seeing inflation like we should is because people are panicked and not spending. Inflation is defined as too much money chasing too few goods. (Hyper inflation is people bailing out of currency as a store of value and into assets.) Our collective bunker psychology (caused by Obamacare and the job market) is keeping prices lower than they should be. But we do have inflation. I’m sure you’ve noticed in the grocery store. Cars, despite their high cost, are a relative bargain. They haven’t gone up nearly as much as food.
The contraction in credit reduced the money supply almost as much as the Fed quantitative easing increased it.
If the economy recovers and credit returns then there is potential for inflation. But the FED can sale the bonds it bought on the open market reducing the money supply and keeping inflation largely in check.
Combine that with the fact that the government is probably understating inflation by a couple of percent to avoid having to pay seniors increased social security benefits.
The debt is mushrooming totally out of control and a huge portion of it out of sight and off the balance sheet. The fed is swamping us with phony money, propping up the markets. Obama and the democrats couldn’t care less. Their bubble will burst after they’re gone.
I thought the fact that 80% of the QE money being held by banks as excess reserves had something to do with keeping inflation in check, and when that ends, all bets are off.
Needless to say, excluding food costs from the calculation of inflation is Laff-able. “Food and energy costs are too volatile. Therefore they should not be used to show inflation.”. He he.
Where is the money? That’s what puzzles me.
But inflation can only result from an increase in the money supply.
gawd, is he stuck on stupid?
Guess Art hasn’t been out to buy bacon eggs & milk lately. The inflation is there on the shelves, not in the stats.
I would think inflaction is a factor of both money supply and velocity. I think the supply is way up, but the velocity is way down. That is why inflation is not up as much as Carter (but is up much more than the fed admits to).
In a way he is right. Based purely on the vast number of dollars created during the Obama terms of office, we should resemble the Weimar Republic. People should be walking around with baskets of money to buy an apple.
Why isn’t that happening?
I would like to hear more of what Dr. Laffer has to offer on this. I don’t think I agree with the idea that inflation is not monetary base driven. What is apparently happening is massive interference with the markets through manipulation.
What I find most telling is that a real economist, not a government funded university hack, is willing to admit he may be wrong when the real world data does not prove out. Try and get that from Paul Krugman.
His credibility will henceforth be a laff
That's right the Feds is buying it's own bonds
The money flow that normally would happen in Art's model isn't happening. This is why inflation is in check!
...... YET.
“Inflation does not appear to be monetary base driven,”
Too bad he doesn’t get it. So many people are without jobs, so many jobs have gone overseas, than there is much less money to spend. This drives prices down. Couple that with the inflationary effect of ‘quantitative easing’ and you have inflation and PHD’s working at WalMart.
Obviously, nothing like that happened.
The Fed did the same thing in the 1950's and 1960's, and nothing happened. But then Nixon was forced to close the gold window, and then all the built up inflation broke loose.
Laffer should know better, or his words are being twisted around.
bkmk