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The Mystery of Missing Inflation Weighs on Fed Rate Move
Wall Street Journal ^ | Dec. 13, 2015 | Josh Zumbrun

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 ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: economy; inflation; investing
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OK, so everyone's suffering big time from "Fed-fatigue".  At the same time it's not just the U.S. that's teetering on deflaion, it's the world and w/ a third the world's econ activity and half the world's wealth America (via Yellen) now seems ready to party like it's 2008 --economically.  Now, we all know that the '08 crash was Bush's fault (cough) w/ nothing to do w/ Pelosi (wheeze) and certainly subprime affirmative action and O's rise to power couldn't have done it (whreeechhh).

[wiping face]  What I'm saying is that politics aside imho we're seeing the world's lemmings race to the sea and our leaders are clueless.  Again.

Meanwhile the article may be a long read w/ too many numbers but I found it compelling -after weeding thru the sick lib bias..    At least look at the pictures graphs.


1 posted on 12/15/2015 3:41:27 AM PST by expat_panama
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To: expat_panama

Inflation isn’t missing, it’s just camouflaged.


2 posted on 12/15/2015 3:49:16 AM PST by tbpiper
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To: expat_panama

missing inflation? Not according to my grocery bill under Odumbass
Everything is smaller, and more expensive.
My average bill used to be $150. Now I am lucky to spend less than $300


3 posted on 12/15/2015 3:49:55 AM PST by Mr. K (If it is HilLIARy -vs- Jeb! then I am writing-in Palin/Cruz)
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To: expat_panama

Also see http://www.shadowstats.com/alternate_data/inflation-charts


4 posted on 12/15/2015 3:50:55 AM PST by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto!)
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To: Mr. K
We're told inflation is down because fuel prices are down. So many folks can't afford to drive very far after they pay all of their other increased expenses.

As far as those 0% rates go....definition of insanity applies. They keep doing what isn't working, unless the goal is to destroy the middle class.

5 posted on 12/15/2015 3:54:57 AM PST by grania
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To: 1010RD; A Cyrenian; abb; Abigail Adams; abigail2; AK_47_7.62x39; Aliska; aposiopetic; Aquamarine; ..

A happy Tuesday morning everyone!  Stocks bounced back up yesterday, we can say it was just a typical 'dead-cat-bounce' like we see all the time in a crash but the fact remains trading volume's up.

Futures are together today on the idea that stock indexes are pointing up, and while metals may seem off they're at least not plunging.   Any more.  For now.

Huge data flood today and (imho) they'll all be watching this stuff:

8:30 AM Core CPI
8:30 AM CPI
8:30 AM Empire Manufacturing
8:30 AM Core CPI
8:30 AM Empire Manufacturing
10:00 AM NAHB Housing Market Index
4:00 PM Net Long-Term TIC Flows

Lots of news (End of Year Tax Selling Puts a Damper on the Stock Market; Does It Create a Buying Opportunity?) too but I'll be hanging out on the econ threads:


6 posted on 12/15/2015 3:55:03 AM PST by expat_panama
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To: expat_panama

Apparently the ass hats that wrote this never do their own shopping. DO NOT tell me that there is NO INFLATION. A simple test is to have found an old grocery receipt for basic items as compared to today’s prices for the exact same items. Many of those items have nearly doubled in price.

Once again, the so-called experts use the same BS, “tell them what you want them to hear”.


7 posted on 12/15/2015 4:03:11 AM PST by DaveA37
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To: expat_panama

Thanks for posting this. Personally I think there is so much political/government and insider manipulation of the markets such that most of us are only along for the ride. Compounding this, economics is not a hard science, and often the people doing the ‘driving’ (e.g. the Fed) don’t know what the right thing to do is, and can’t accurately predict the consequences of their actions (particularly if they are blinded by their ideological leanings).


8 posted on 12/15/2015 4:07:19 AM PST by pieceofthepuzzle
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To: DaveA37

“Many of those items have nearly doubled in price.”

Yes. Plus some of the ‘big’ expenses in life, like health care, and college/university tuition have skyrocketed - while salaries have stagnated.


9 posted on 12/15/2015 4:10:32 AM PST by pieceofthepuzzle
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To: DaveA37

As a matter of fact, I did find an old register tape recently from about 30 years ago, and you’re right, it was shocking. Apart from a few meat items, there was NOTHING else on the tape over a dollar.


10 posted on 12/15/2015 4:13:59 AM PST by Fresh Wind (Falcon 105)
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To: tbpiper
Inflation isn’t missing, it’s just camouflaged.

Thank you. Or it's being ignored. Obama certainly doesn't want a rate hike.

11 posted on 12/15/2015 4:24:45 AM PST by o_1_2_3__ (Obama lied, people died - Holiday Edition)
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To: expat_panama

Saw through this BS after the, jobs are on track lie.

U6? I’d say 20%

Food is still high though gas is cheap...and gas being cheap adds more unemployment from the oil cracking industry.

USD velocity is putting on the breaks...Baltic dry index sucks.

The lies continue...some are so fooled they buy 300 presents for their 3 kids and pile them up past the Xmas treetops.

Beam me up Scotty!


12 posted on 12/15/2015 4:40:47 AM PST by CincyRichieRich (Some Animals are more equal than others.)
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To: expat_panama

The Federal Reserve and economists are as honorable as first research study scientists and statisticians. Won’t it be nice when the One who knows the hearts and minds of man rules? Joy to the world, everyone!


13 posted on 12/15/2015 4:45:08 AM PST by huldah1776
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To: expat_panama

Inflation has nothing to do with growth except growth in the money supply which is, of course, shrinkage in the wallet. If the Government wants growth then the government should abolish corporate taxes and 90% of business regulation. Then there will be GROWTH. The downside would be that the increase in available jobs would be so phenomenal that no one would notice the illegals anymore. If the government also abolished all government aid at all levels to illegals then the illegals would cease to be a problem. The lazy ones would go home and the industrious ones would learn English.


14 posted on 12/15/2015 4:51:33 AM PST by arthurus (Het is waar. Tutti i liberali sono feccia.)
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To: expat_panama

——Debts are harder to pay off without inflation shrinking their burden.———

Ha,ha, ha.......Finally an admission

The US Federal debt of $18 trillion is hard to pay off with no inflation

The inflation target must be higher on the order of say 6% to really make the debt easier to pay


15 posted on 12/15/2015 4:54:16 AM PST by bert ((K.E.; N.P.; GOPyes but now I must concentratc.;+12, 73, ....carson is the kinder gentler trumping.)
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To: expat_panama

The inflation isn’t there because the banks have not put money into the economy. It is all sitting in reserves. If a bank can hit their “net interest margin” targets with zero risk, that is the best thing.

Once rates start to go up in the market, that money is going to come rushing out. Then you will see inflation. And it won’t be camouflaged.


16 posted on 12/15/2015 4:59:21 AM PST by Vermont Lt (I had student debt. It came from a bank. Not from the Govt.)
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To: Mr. K
Real inflation has been happening right along. Of course, inflation is not measured by the government in its CPI. I can't imagine the CPI isn't now based on simple lies. It is jiggered and rejiggered periodically to include things that are not rising in price and exclude things that are but the only thing that is falling is gasoline. Everything else is rising at a smart clip.In 5 years groceries are about double around here, clothing is up maybe 40% and general WalMart prices are up a lot and continually rising. WalMart does well at reducing prices from suppliers so their retail increases are probably on a gentler curve than general inflation would indicate.

Wages in my job, security guard, have actually declined 10% over the last 5 years compounded by more diligence in avoiding overtime.

17 posted on 12/15/2015 4:59:54 AM PST by arthurus (Het is waar. Tutti i liberali sono feccia.)
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To: expat_panama

Apparently nobody at the feds eats food.


18 posted on 12/15/2015 5:01:33 AM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: expat_panama

Economics is not an exact science. In real science, F always equals ma, E always equals IR, and E always equals mc^2, at least for things you can measure on earth. In economics, results are governed by decisions made by financially struggling families over whether to buy extra baby formula, or steak. Rib-eye rarely wins. These real economic decisions are governed by the confidence that one has about what is expected to happen next week, next month, and next year. Reality wins over propaganda most of the time. Reality tells us that it’s not some bogus employment rate number that counts, It’s whether, or not, MY job will be there. When that’s not secure, the baby formula wins.


19 posted on 12/15/2015 5:07:17 AM PST by norwaypinesavage (The Stone Age did not end because we ran out of stones)
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To: pieceofthepuzzle
Most of the "big" expenses in life that you refer to are paid by third parties instead of through direct buyer-seller transactions. That is why the prices have increased at ridiculous rates.

For almost anything that isn't directly tied to commodity-based prices, prices have been pretty stagnant. Go to an electronics or furniture store and see how cheap some things have become that used to be considered very expensive.

One of the more alarming numbers I've seen in recent days is that the posted prices for transporting a loaded shipping container from Asia to the U.S. are almost less than the cost of actually transporting it. In other words, the shipping lines are practically transporting them and making no money on it at all.

20 posted on 12/15/2015 5:07:28 AM PST by Alberta's Child ("It doesn't work for me. I gotta have more cowbell!")
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