Lone voice warns of debt threat to Fed

#2
#2
Big money supply and no rate movement options seem a bigger deal to me.
Posted via VolNation Mobile
 
#5
#5
Link did not work, so here is a pre-emptive comment.

We have been warned since the beginning....

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
-Thomas Jefferson

EDIT: Link just worked and ill stick to the quote...
 
#6
#6
Nash270 said:
We have been warned since the beginning....

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
-Thomas Jefferson
Click to expand...

How right you are!!!

Extreme example of a wrecked economy gone to teetotal hell using Obozolike economic strategy.

Fighting back in present day America.

BTW a pre 1964 US quarter contained enough silver to buy about a gallon of gas, the same amount of silver would buy about a gallon of gas today.

Don't forget the "Federal Reserve Transparency Act of 2009."

Contact your representative today and ask about this bill.

It certainly is no cure all but it is a step in the right direction.

I, as a citizen am accountable to the US government in minute detail about most everything, why shouldn't the Federal Reserve, a private organization that controls money flow that affects me and every other citizen of America, not be somewhat more accountable about it's transactions which I might add are tax free?????

It is a crime that this bill has been buried in some subcommittee for almost six months.
 
#8
#8
this guy is obviously right. we should worried about fannie and freddie buying trillions of 30 year mortgages at all time low interest rates.
 
#13
#13
BigPapaVol said:
How?
Posted via VolNation Mobile
Click to expand...

Inflation targets have been set too low. Higher average inflation, and thus higher nominal interest rates, would have made it possible to cut interest rates even more, thereby reducing the drop in output and deterioration of fiscal positions.
 
#14
#14
bam15 said:
Inflation targets have been set too low. Higher average inflation, and thus higher nominal interest rates, would have made it possible to cut interest rates even more, thereby reducing the drop in output and deterioration of fiscal positions.
Click to expand...

What? I'll assure you I've studied a lot of Econ ad political Econ and I have no idea how this linkage you're describing works.

Which interest rates can be cut further? How?
Posted via VolNation Mobile
 
#15
#15
BigPapaVol said:
Big money supply and no rate movement options seem a bigger deal to me.
Posted via VolNation Mobile
Click to expand...

National debts bring down governments and wreck economies.

Inflation can and probably will eat up around 97% of your lifetime earnings but deflation can take 100% and then some.

That's what central banking is all about.

They say only one in a million can understand it, I think how can one in a million not understand it?
 
#16
#16
BigPapaVol said:
What? I'll assure you I've studied a lot of Econ ad political Econ and I have no idea how this linkage you're describing works.

Which interest rates can be cut further? How?
Posted via VolNation Mobile
Click to expand...

The idea I explained is being tossed around by Olivier Blanchard and some other economists Krugman/Mankiw. The consensus of the central banks is to set inflation targets near 2% however the fault with this is the implications of a liquidity trap. Corresponding with lower average inflation is a lower average nominal rate. Given the zero bound on the nominal rate, a smaller decrease in the interest rate—thus less room for expansionary monetary policy in case of a shock.

targets.jpg


Raising inflation targets would be a boon to the economy, something Bernanke unfortunately doesn't plan on doing. In the long run, it’s really hard to cut nominal wages, yet when you have very low inflation, getting relative wages right requires a large number of workers take wage cuts. Having a higher inflation rate would lead to lower unemployment on a sustained basis, hence why deflation is a larger threat than inflation in our current crisis.

The theory suggests that central banks could raise their inflation targets higher, to allow for greater interest rate cuts in times of crisis. The Fed messed up to start with, and as I mentioned before, fiscally speaking, we did not have a large enough stimulus.

http://elsa.berkeley.edu/~akerlof/docs/inflatn-employm.pdf"]http://elsa.berkeley.edu/~akerlof/docs/inflatn-employm.pdf"]http://elsa.berkeley.edu/~akerlof/docs/inflatn-employm.pdf

http://www.imf.org/external/pubs/ft/spn/2010/spn1003.pdf"]http://www.imf.org/external/pubs/ft/spn/2010/spn1003.pdf"]http://www.imf.org/external/pubs/ft/spn/2010/spn1003.pdf

Krugman: Deflation in Europe

GDP DEFLATORS, 2000=100

deflator_divergence.png



With a low overall inflation rate for the eurozone, that means large-scale deflation in the overvalued economies if convergence is to happen any time in, say, the next 5-10 years.

The task would be a lot easier if the eurozone had 4 percent inflation instead of 2.
 
Last edited:
#17
#17
"The consensus of the central banks is to set inflation targets near 2%"

according to whom exactly? the only time we've had inflation under 2% in the last 100 years is during recessions and it's been very temporary. in the 90s and 2000s inflation maxes out in the high 3%. in the 80s it maxed out at 10% which was most definetely not good for the economy. and let's not forget that today's CPI most likely underestimates inflation so the true rate inflation target is probably right where you want it to be if not higher.
 
Last edited:
#18
#18
The only positive spin I could give this is, it might force China's currency higher and make chinese imports more expensive, which is something Washington wanted.

But the U.S. is in a precarious spot. They have to have China buying U.S. treasuries, which means they can't negotiate more favorable terms to the trade imbalance with China. This isn't going to have a happy ending.
 
#19
#19
oklavol said:
The only positive spin I could give this is, it might force China's currency higher and make chinese imports more expensive, which is something Washington wanted.

But the U.S. is in a precarious spot. They have to have China buying U.S. treasuries, which means they can't negotiate more favorable terms to the trade imbalance with China. This isn't going to have a happy ending.
Click to expand...

china's currency is already pegged to the dollar so i'd imagine china wouldn't be unhappy with a dollar rally since they already spend billions trying to keep the dollar up. china is more beholden to the US than the other way around. we can torpedo their economy by tarrifs, all they could do is stop buying treasuries which wouldn't be in their best interest since they own hundreds of billions of them.

i do agree the US need a stronger dollar (or at least a flat one) and obama is way off base saying otherwise though.
 
#20
#20
coredeflate.png


Going in the wrong direction, real interest rates rising even as the nominal rate remains at zero.
 
#21
#21
it's only going to get worse too. as long as obama wants to spend like crazy interest rates are going up. only so many people out there willing to buy billions of 4% treasuries.
 
#22
#22
droski said:
it's only going to get worse too. as long as obama wants to spend like crazy interest rates are going up. only so many people out there willing to buy billions of 4% treasuries.
Click to expand...

The numbers suggest that deflation may not be too far in the future. It also suggets that we need higher, not lower inflation.
 
#23
#23
Using Paul Krugman for economic guidance is like using Wade Houston to coach a championship basketball team.
 
#24
#24
bam15 said:
The numbers suggest that deflation may not be too far in the future. It also suggets that we need higher, not lower inflation.
Click to expand...

if we aren't in a deflationary cycle with 10% unemployment (17% real unemployment) and the housing collapse, i don't think we will be in one in the future.

as for higher inflation we've talked about htis before. i don't for a second believe this 2% inflation target stuff since inflation has been below 2% twice in the past 30 years. edit: so therefore we should be in a constant tightening which hasn't happened. central bankers say one thing and in reality do something different.
 
Last edited:
#25
#25
droski said:
if we aren't in a deflationary cycle with 10% unemployment (17% real unemployment) and the housing collapse, i don't think we will be in one in the future.

as for higher inflation we've talked about htis before. i don't for a second believe this 2% inflation target stuff since inflation has been below 2% twice in the past 30 years. edit: so therefore we should be in a constant tightening which hasn't happened. central bankers say one thing and in reality do something different.
Click to expand...

I think the numbers prove other wise, deflation is a very real possibility.

There is a consensus that inflation targets should be 2%-3%, at least that is what the Fed tells you, but you believe nothing the government says, so it is pointless to tell you.


Why should we be tightening? That would make the situation much more difficult. Having a higher inflation rate would lead to lower unemployment. Under the current policy of low inflation/borderline deflation getting relative wages right would require that a significant number of workers take wage cuts. You can play off the deflation numbers, but it is a possibility.

fredgraph.png


There is an actual possibility of tightening, and rumors are swirling about that the Fed is considering it, but the Fed did wait three years after 2001 before tightening as the graph above shows.

With declining inflation and high unemployment, there is no justification for tightening.

The personal consumption expenditure deflator also provides some statistics:

fredgraph.png


http://www.kc.frb.org/Publicat/ECONREV/PDF/2q08billi_kahn.pdf
 
Last edited:
New posts
You must log in or register to reply here.

VN Store



Back
Top