Posted on 12/15/2015 3:41:27 AM PST by expat_panama
The Federal Reserve has kept interest rates at near zero since the 2008 financial crisis. To raise them, it has come up with a new set of tools. Produced by Katy Burne, Christopher Kaeser, Arielle Ray and Mark Scheffler.
But Fed officials face a troubling question: Jobs are on track, but inflation isn't...
...well below the Fed's 2% target.
[snip]
Low inflation-and low prices-sound beneficial but can stall growth in wages and profits. Debts are harder to pay off without inflation shrinking their burden.
[snip]
Former Fed Chairman Ben Bernanke, in an interview, pointed to Congress as one culprit for inflation's weak performance. As Fed chairman, he urged Congress in the aftermath of the recession to temporarily boost government spending and focus on longer-run measures to control debt. By raising demand, that spending would also boost inflation. After an $830 billion stimulus plan in 2009, however, Congress turned to shorter-run budget cutting.
...the central bank can only do so much to stabilize the U.S. economy if lawmakers are working against Fed efforts.
[snip]
Debate over inflation and its causes has come to a boil in recent months, with other theories joining Mr. Shirakawa's ideas about aging countries and Mr. Bernanke's blame of stingy fiscal policy.
[snip]
A Wall Street Journal survey of economists in August found two-thirds of them still believe there is link between lower unemployment and higher inflation.
But the relationship is affected by outside factors.
[snip]
When businesses and workers expect high inflation, they try to command higher prices and wages... ..."No one is planning for higher inflation. My contacts just don't expect it."
(Excerpt) Read more at wsj.com ...
There is no inflation. There is full employment. That’s two lies by the Fed.
A wage is the price of labor, and wages going down mean that those prices are going down. There are other prices and some are up and some down. Here are the grand totals as of ten min. ago (direct from the CPI people at the BLS):
Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city
average
Seasonally adjusted changes from
preceding month
Un-
adjusted
12-mos.
May June July Aug. Sep. Oct. Nov. ended
2015 2015 2015 2015 2015 2015 2015 Nov.
2015
All items.................. .4 .3 .1 -.1 -.2 .2 .0 .5
Food...................... .0 .3 .2 .2 .4 .1 -.1 1.3
Food at home............. -.2 .4 .3 .3 .3 .1 -.3 .3
Food away from home (1).. .2 .2 .0 .2 .5 .2 .2 2.7
Energy.................... 4.3 1.7 .1 -2.0 -4.7 .3 -1.3 -14.7
Energy commodities....... 9.6 3.1 .7 -4.1 -8.6 .4 -2.4 -24.2
Gasoline (all types).... 10.4 3.4 .9 -4.1 -9.0 .4 -2.4 -24.1
Fuel oil (1)............ .7 -1.9 -3.4 -8.1 -2.4 -1.1 -1.3 -31.4
Energy services.......... -1.0 .2 -.6 .5 -.4 .2 -.1 -2.8
Electricity............. -1.2 .2 -.4 .3 -.5 .4 .3 -.2
Utility (piped) gas
service.............. .0 .3 -1.4 1.2 -.3 -.7 -1.9 -11.7
All items less food and
energy................. .1 .2 .1 .1 .2 .2 .2 2.0Nov. numbers show deflation; I'm wondering if the Fed believes it any more than the folks on this thread...
Yeah, but your 75" TV has dropped 60% since last year...so to an economist it all balances out. :)
We shouldn’t be shipping anything from Asia, we should make our own products here in the USA. Hopefully President Trump can turn this situation around.
Yeah, folks have been talking about that. I got no clue as to what exactly it means but that won’t stop me from worrying about it...
economics is not a hard science,
A reference to the Invisible Hand they can’t see.............
Debts are harder to pay off without inflation shrinking their burden.
They don’t care about the inflation you and I experience.
Then again it may be the fact that every single time someone receives a wage, someone else is paying it. That's why I thing wage trends are important. otoh, the Fed says it doesn't care about wages becuase it only looks at Personal Consumption Expenditures and not personal incomes. In the month of Nov. energy costs fell, and that brought average prices for consumers back down to zero.
We could always leave out food and energy if we want and say Nov. had a 2.4% annual rate, but I don't know if Yellen wants to do that.
There is no such thing as “missing inflation” or “inflation is not on track.” If their predictions are wrong, then they should say so.
Also, this shows that their goal is to raise prices generally, thus hurting people who were foolish enough to work honestly and save money so they would not become a burden in their old age.
That’s getting even harder to do, because what was a “pound” may now be 14.6 ounces for the “same” product.
“Jobs are on track, but inflation isn’t...”
Workforce participation rate numbers provided by BLS along with a trip to the supermarket would suggest otherwise. Blind leading the blind with these BS assumptions will lead to epic failure.
The inflation figures broadcast by the 0bama Caliphate are much like the unemployment figures - "massaged" to make a non-existent recovery look grand so the kenyan commie looks good.
Take a look at the figures for the debt: The debt stayed unchanged until the congress, under the "leadership(?)" of Paul Ryno (Closet Muzzie, Wisconsin), raised it and then it jumped over $339 Billion overnight. My guess is that when we finally rid ourselves of the bastard in the white hut, inflation will soar, again overnight. If we restore a REAL President, they will immediately be faced with multiple crises on Day 1.
“Inflation isn’t missing, it’s just camouflaged.”
Excellent point. It is there.
Zero’s administration has used the “no inflation” B.S. at least 3 times to deny s.s. recipients a cost of living increase.
My favorite is Walmart Great Value coffee. The price has stayed around $6.50. The size has gone from 39oz to 33.9oz to 27.8oz. This has been my goto for SHTF medicinal reasons. Purely a caffeine withdrawal measure. I'm not sure of the exact time peroiod but that's over 25% in 4 or 5 years.
How could you. Somewhere at Goldman Sachs (or lesser demonic entities) they've created derivatives of derivatives derived from their second cousin's once removed that have been conceived by idiot savants who have warned them that if they sell them to a Norwegian pension fund they're going to blow up and expand the need for the Norwegian dole. Caveat emptor say the financialist "conservatives". How much can we make says Heidi's boss, Lloyd.
Happened in 2008 and nobody went to jail in this Barky reign of the people. It will happen again.
...got no clue as to what exactly it means...
...they've created derivatives...
The article doesn't mention derivatives.
Well said.
How perceptive of you. Tell me that there are no bets on the survival of junk bonds. ETFs? They're not derivatives. Do you know what they're holding? Ever hear of total return swaps? Somebody have to draw you a picture? They make things more volatile and are bound to leave bagholders when it all goes sideways.
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