It's official: Bernanke is a lunatic

[darkwing_duck1]

http://finance.yahoo.com/news/Unusual-worry-for-economy-Is-apf-1253519994.html?x=0#mwpphu-container

The Fed is now trying to tell us that inflation is too low.

Never mind that they lie about the inflation rate with cooked books.

Never mind that millions of us are on fixed incomes (or no incomes).

The Fed wants to make our dying dollar even MORE worthless to "stimulate" the economy and ward off "deflation".

Their solution is to make stuff MORE expensive in the hope that businesses will invest increased profits in new workers.

Yeah...tell me another one...

Increased prices are just going to cut demand FURTHER on non-essentials, and produce massive suffering as the cost of "must haves" (food, medicine, etc) soars.

 

[STR]

I'm going to be quick with this, and I don't mean it as a personal attack, but you're arguing out of your depth. If you want to know what the Fed is trying to avoid, look at 90's Japan. If you want to know what they're trying to do, moderate (2-3% per annum) inflation combats unemployment, prevents pay cuts, and provides an incentive to invest in real (as in physical) assets as opposed to keeping the money locked in securities like bonds or treasuries.

If you want to know more, read a book on economics. This is first year undergrad theory here, hardly new or crazy. Sure, if you have a fixed income, or no income, you're going to slowly lose purchasing power over the decades, but most of the country benefits from it. Since this country is ostensibly run in the interest of the majority, what benefits the masses is what our economic policy will be.

 

[darkwing_duck1]

I understand the macro-economic argument and the Japan model. Japan may be in a problematic place, but it's a better place than Weimar Germany was in, or Mozambique, or 90s Russia, or several Eastern European and Central/South American nations in the 20th century.

What we have to face up to is a fundamental failure of capitalism and it's attendent politics to act in the long term best interests of the nation. As a result we have been put in a very tight box. The World Bank in July noted that for the US to remain solvent over the next 30-50 years, the total Federal tax bill needs to double, starting THIS year.

No one wants to hear that.

We cannot continue to borrow huge amounts of money we cannot repay.

We cannot just print the money.

We need to address the fundamental questions of wealth equity in the US that let some people live like Kings and leave millions paupers.

 

[Darth Picardous]

No way the US will go the way of Japan, there is simply no great amount of savings held by the American public to borrow from. Japan was only able to survive this long by borrowing from its own citizens. The US is the complete opposite.

The US has three ways out of its debt problems: hyperinflate the dollars to extinguish foreign debt, default and risk retaliation and wars by creditor nations, or simply pay the entire nations GDP in interest until 2050 whereby option 2 must occur.

And to STR, I think you may need to do a little more reading in the field of economics, try some Mises and Hayek and less Keynes. The only people who win in a inflationary environment in the US will be the Fed Reserve who will purchase all assets at fire sale prices.

 

[siskokid888]

I'm going to be quick with this, and I don't mean it as a personal attack, but you're arguing out of your depth. If you want to know what the Fed is trying to avoid, look at 90's Japan. If you want to know what they're trying to do, moderate (2-3% per annum) inflation combats unemployment, prevents pay cuts, and provides an incentive to invest in real (as in physical) assets as opposed to keeping the money locked in securities like bonds or treasuries.

If you want to know more, read a book on economics. This is first year undergrad theory here, hardly new or crazy. Sure, if you have a fixed income, or no income, you're going to slowly lose purchasing power over the decades, but most of the country benefits from it. Since this country is ostensibly run in the interest of the majority, what benefits the masses is what our economic policy will be.

This, in a nutshell. Check out the econmics column in this weeks New Yorker for more on the postive (and necessary) aspects of inflation. The problem is the public has a psychologic negative reaction to inflation, as most don't understand the intricate relationship of monetary value and financial growth.

 

[darkwing_duck1]

This, in a nutshell. Check out the econmics column in this weeks New Yorker for more on the postive (and necessary) aspects of inflation. The problem is the public has a psychologic negative reaction to inflation, as most don't understand the intricate relationship of monetary value and financial growth.

Tell that to all the people (esp those on limited/fixed incomes) that have to pull their spending tighter and tighter as the cost of essentials climbs many times faster than their incomes..

Inflation is a net REDUCER of demand because people can buy less and less amounts of goods for their dollars.

 

[Holdfast]

I don't think anyone outside of a few loons would argue in favour of a high inflation rate (or hyperinflation) but to suggest that zero inflation (or god forbid, deflation) is better than a low rate of inflation is equally absurd.

A steady, low, and predictable rate of inflation at somewhere around the 2-3% mark is definitely better for the economy than a zero or negative rate (and yes, of course, also better than 5%, or 10%, or 1000% whatever other bogeyman is being conjured up by way of counter-argument).