# Has America entered into a dreaded stagflation?



## iamwhatiseem (Jun 8, 2012)

By it's definition I would say yes. I think a lot of folks agree.



> Stagflation is one of the worst economic conditions a country can be in, and the United States just entered it.
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> It has actually been responsible for revolutions and uprisings in developed countries around the world. Most recently Greece, Spain and Portugal are experiencing severe doses of this dreaded economic condition. It is extraordinarily difficult to work through and often destroys wealth for generations.
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## Ariux (Jun 8, 2012)

Stagflation is caused by the government trying to "stimulate" (spend/print money) an economy out of recession.  The government devalues the money without addressing the cause of the recession.


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## iamwhatiseem (Jun 8, 2012)

Ariux said:


> Stagflation is caused by the government trying to "stimulate" (spend/print money) an economy out of recession.  The government devalues the money without addressing the cause of the recession.



So I take it you agree with the article that we are entering into the stagflationary abyss?


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## Nova78 (Jun 8, 2012)

We have entered into the Obamaflation abyss of a failed presidents bullshit policies, this Country is in deep shit....


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## EdwardBaiamonte (Jun 8, 2012)

iamwhatiseem said:


> Ariux said:
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> > Stagflation is caused by the government trying to "stimulate" (spend/print money) an economy out of recession.  The government devalues the money without addressing the cause of the recession.
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at this point there is no inflation to speak of. Houses are down 35 % for example.


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## TakeAStepBack (Jun 8, 2012)

No inflation? The money supply has increased over 9 trillion dollars in 11 years. Name a time in our history that matches up.


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## Flopper (Jun 8, 2012)

iamwhatiseem said:


> By it's definition I would say yes. I think a lot of folks agree.
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The inflation rate currently stands at 2.3%, lowest point this year and the average for the last 10 years is 2.6%.  The highest rate was in 2008 at 3.85% and the lowest in 2009 was -.34%  Please explain why you think we are entering a period of stagflation with inflation rates so low and the rates trending downward. The last stagflation in the US was in 1980 with inflation reaching 13.58% and unemployment at 7.5%.

http://inflationdata.com/inflation/inflation_rate/historicalinflation.aspx


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## Flopper (Jun 8, 2012)

iamwhatiseem said:


> By it's definition I would say yes. I think a lot of folks agree.
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The inflation rate currently stands at 2.3%, lowest point this year and the average for the last 10 years is 2.6%.  The highest rate was in 2008 at 3.85% and the lowest in 2009 was -.34%  Please explain why you think we are entering a period of stagflation with inflation rates so low and the rates trending downward. The last stagflation in the US was in 1980 with inflation reaching 13.58% and unemployment at 7.5%.

http://inflationdata.com/inflation/inflation_rate/historicalinflation.aspx


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## TakeAStepBack (Jun 8, 2012)

Price increase is a result of inflation, which is really increases in the money supply. Welcome to econ 95


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## Wiseacre (Jun 8, 2012)

So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.


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## Middleoftheroad (Jun 8, 2012)

TakeAStepBack said:


> No inflation? The money supply has increased over 9 trillion dollars in 11 years. Name a time in our history that matches up.



As a percentage?  Umm, the 60's, 70's 80's and 90's were all higher.

File:Changes in US Money supply.svg - Wikipedia, the free encyclopedia


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## Flopper (Jun 8, 2012)

TakeAStepBack said:


> Price increase is a result of inflation, which is really increases in the money supply. Welcome to econ 95


The Money Supply, M1,M2,&M3 has been falling in 2012.  M1 is only slightly higher than in Jan 2009; M2 and M3 are both lower.

Money Supply Charts


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## Flopper (Jun 8, 2012)

Middleoftheroad said:


> TakeAStepBack said:
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The total money supply has increased but the rate of increase has remained nearly the same for 20 years.
http://upload.wikimedia.org/wikipedia/commons/c/c4/Components_of_US_Money_supply.svg


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## iamwhatiseem (Jun 9, 2012)

Flopper said:


> iamwhatiseem said:
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Which is all horeshit. 
The government grossly underestimates the cost of living. As the article states, if you remove the biases inflation is near 7%. 
The method in which the government measures prices is flawed to say the least. If you are smart enough to be aware of economic conditions - you are also smart enough to know what I am saying here is true.
So why are you repeating a flawed figure?


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## Dont Taz Me Bro (Jun 9, 2012)

Wiseacre said:


> So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.



Yes, stagnation is the word I would use.


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## Dont Taz Me Bro (Jun 9, 2012)

iamwhatiseem said:


> Flopper said:
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> > The inflation rate currently stands at 2.3%, lowest point this year and the average for the last 10 years is 2.6%.  The highest rate was in 2008 at 3.85% and the lowest in 2009 was -.34%  Please explain why you think we are entering a period of stagflation with inflation rates so low and the rates trending downward. The last stagflation in the US was in 1980 with inflation reaching 13.58% and unemployment at 7.5%.
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The Obama apologists will give him cover when ever they can.


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## iamwhatiseem (Jun 9, 2012)

Dont Taz Me Bro said:


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Apparently. That or he blindly believes government reports.
An example of how the government measures prices:

Average cost of a 6 pack of beer in one year is $5.00
One year later the average price is $5.75....a 15% price increase.
But everyone is switching to cheaper brands where the average price is $5.10....the government counts this as only a 2% inflationary rate because they measure not the price of items, but just the items people are buying.
A very, very flawed method that gives favorable reporting.


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## California Girl (Jun 9, 2012)

Dont Taz Me Bro said:


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And they would, to some extent, be right. It took bi-partisan corruption and bad decision making to get us here.... it ain't Obama's fault... but... he could have done more to change our course... which would have taken a bi-partisan effort to achieve. Unfortunately, for us, our politicians care more about themselves than working in the best interests of the country.


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## pinqy (Jun 9, 2012)

iamwhatiseem said:


> Which is all horeshit.
> The government grossly underestimates the cost of living. As the article states, if you remove the biases inflation is near 7%.
> The method in which the government measures prices is flawed to say the least.


So, I know a good deal about price indexes, please explain what you think
the flaws and biases are and what you would consider the correct methodology.


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## California Girl (Jun 9, 2012)

iamwhatiseem said:


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I don't see how anyone can blame Obama for that... it's not like the previous administration was any better. 

It would be helpful if Americans could put the party crap aside and focus on how we fix it rather than ranting about what the other side did. That might be fun, but it doesn't solve the problem.


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## pinqy (Jun 9, 2012)

iamwhatiseem said:


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Wait, you're seriously saying that for cost of living prices that people aren't paying and aren't part of their cost of living should be included???

And it works both ways, if people start drinking good beer for an average of $7, that would be used in the index too.


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## iamwhatiseem (Jun 9, 2012)

California Girl said:


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We're going down the wrong road here...Obama doesn't have anything to do with this thread. My questions is...do people believe we are entering into a stagflationary period. This is critical. If we are, and the government glosses over the data and media economist don't talk about it, this could be damning.


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## slackjawed (Jun 9, 2012)

pinqy said:


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This old cowboy does not have a good understanding of how the government calculates the consumer price index or the inflation rate. I have always been told that the method they use reduces social security payments. I only know that that I have almost twice as many horses now as I did 5 years ago, but they are worth less per horse. My cattle on the other hand are worth more, but I have fewer than I did 5 years ago. 

I would be interested in what you have to say if you know about these things.


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## iamwhatiseem (Jun 9, 2012)

pinqy said:


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Correct.
The government doesn't measure the cost as is, but rather measures the costs of what people are buying on average. This is of course flawed.
If laptops (all brands) rise 8% over one year....but people are shying away from costly brands and are buying cheaper laptops - the government will report that the price of laptops has gone down.


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## bobgnote (Jun 9, 2012)

PRACTICAL PROBLEMS:

1.  VALUE is gone, with the wind, since assholes have all managed to cop shit-subsidies or jobs, doing whatever assholes do;
2.  Real estate inflated, after years of wars on drugs and everything in all directions, during poor enforcement of border security.  Now that the FBI and CIA wouldn't share intel about the known 9/11 perps, we have a DHS.  Border Patrol and ICE are actually performing, with some efficiency;
3.  CO2 is at 400 ppm.  What usually happens is it tops out at 280 ppm, and a cooling cycle takes us slowly, over 80-110K years, into a glacial maximum, until CO2 hits 180 ppm, and then the warming rocket back up, in only a few thousand years.  But humans since the 18th Century pushed the planet to 300 ppm by the start of the 20th Century, to 400 ppm, today, with severe NO2 and CH4 (methane) expected to push temperatures _way up there,_ while water acidifies, and the ocean food chain is collapsing, already;
4.  Politicians have CRS, HUB (head up butt), DKS (don't know shit), or they are faking, so they can continue their circle-jerk, for profiteering, with their 1% PAC-men and women, all pretending their fart-around has value.

But there is no value.  All gone!

The runaway global warming will accelerate, to likely force seismic and volcanic events.  Can we eat shit and die?  YESSSS!  Screw around, at your peril.


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## California Girl (Jun 9, 2012)

iamwhatiseem said:


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Are we entering a stagflationary period? Oh, hell, yea. I don't really think anyone (with a decent understanding of economics) would disagree.... of course, those who think they know more than they actually do know about economics might argue the toss about it. But, those people would be wrong. 

Many of the economists I work with are voicing a lot of concern about it - and it's not just the US... I think most EU countries are joining us as we merrily tumble into the abyss. On the bright side, at least we'll have company when we hit the bottom and wander aimlessly in the dark.


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## iamwhatiseem (Jun 9, 2012)

California Girl said:


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That is my worry.
I run a business, it isn't a small business either. 
I just received the trial balance from our controller last night. 
We are on track to crush last years results. Is this because we have grown our business? Are we making more money because we are beating competitors? No.
Like many businesses our revenue did stop falling by 2010...but it has been flat ever since. Our gross revenue is only up 2.8% over last year...but the bottom line is up 18%. So what gives? We lowered our costs. We have less people, we aren't buying anything that we don't have to have. We are repairing rather than replacing. Businesses all over the country are doing this exact same thing. And for the overall economy - this SUCKS. 
Thus slow growth and a nagging unemployment level that is going nowhere.
I cannot and will not spend the companies money when I have absolutely no idea what is down the road. I don't trust the fake numbers that we are getting, I can see with my own eyes they are way off. The industry is stagnant to say the least and I am building the war chest for an upcoming storm. And again - I am far from alone. We have no confidence.


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## pinqy (Jun 9, 2012)

iamwhatiseem said:


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 why on earth do you think that's flawed? The whole point is to measure the average change in cost of what people are buying in order to measure how much more expensive it is to maintain a constant standard of living.


> If laptops (all brands) rise 8% over one year....but people are shying away from costly brands and are buying cheaper laptops - the government will report that the price of laptops has gone down.


actually, no. If all laptops are rising 8%, then the cheaper laptops are included in that "all," and it would show as an 8% increase.

I don't think you understand the details, and I sure as hell don't understand how you think things should be . How would yo measure things a nd aggregate them? I'm especially interested in how you would weight and average.


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## iamwhatiseem (Jun 9, 2012)

pinqy said:


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It is a valuable figure (the current way CPI measures inflation) but it is not accurate in measuring prices, and is also not altogether useful to measure an economy.
Why?
Easy. 
If you have 1000 people. In year one, the average grocery bill was 15% of their household income. 
Year two. For various reasons the 1000 people as a whole have less money. Item per item comparison with no regard for what is selling...pure item for item let's say the average total grocery costs is 6% higher than year one. However, in year two the 1000 people are buying less of everything. They are buying cheaper items, they stopped splurging...so the average grocery bill for year two is 13% of their income because they need the money for other expenses. 
You tell me - what with the CPI show?


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## Douger (Jun 9, 2012)

iamwhatiseem said:


> By it's definition I would say yes. I think a lot of folks agree.


You use the word America very loosely.
Do you refer to murka or the real world in this hemisphere ?


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## iamwhatiseem (Jun 9, 2012)

Example 2
Applewood bacon and standard platter bacon.

*Year one*
Aplwd Bacon - $3 per lb.
Platter - $2.20 per lb.
Americans spent $1 million for bacon.
Of that 40% was Aplwd or 133,333 lbs. ($399,999)
60% was platter or 272,727 lbs. ($599,999)
406,060 lbs for $1 million spent.
CPI measurment = $2.46 per lb. This is the "consumer experience".

*Year two...*
Aplwd Bacon increased 4% - now $3.12 lb.
Platter bacon increased 5% - now $2.31 lb.
Because of the increase and higher unemployment etc. people buy more of the Platter bacon.
Year two
Aplwd - 30% of the market
Platter - 70% of the market
Americans still spent $1 million on bacon.
Aplwd = 96,154 lbs ($300,000)
Platter = 303,030 lbs ($700,000)
399,184 lbs sold for $1 million spent.
CPI measurement = $2.50 per lb.
Inflation rate = 1%

*True price increase average = 4.5%*
CPI - 1%

*Government tells people bacon prices have barely rose...basically steady.*


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## iamwhatiseem (Jun 9, 2012)

News Headlines

RealClearMarkets - The US Is Headed For Stagflation

Stagflation with a twist - Forbes


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## Flopper (Jun 9, 2012)

iamwhatiseem said:


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We use the cost living index to measure inflation. Whether the index is a good measure of your cost of living depends on what you buy.  It's not the absolute value of the index that is important but rather the value relative to other time periods or geographical locations.  The last major change in the index was in the early 1980's so the inflation rates we see today are comparable to the past figures.

As the BLS points out,  "CPI is not a gauge of current living costs; what is it? It is a measure of the prices of a "market basket" of goods and services purchased at some point in time by a typical urban worker's family relative to the prices of that same "market basket" at some other point in time."

The CPI as any measure of inflation is of course flawed.  We use it because it is the only reliable index that covers all major urban areas and spans a time period of over 90 years.


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## iamwhatiseem (Jun 9, 2012)

Flopper said:


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Blah Blah Blah Blah
I gave concrete examples showing how the CPI is a useless fictitious number generated to make something look better than it is in bad times.
It is inarguable that the index will show a lower inflationary number when spending contracts and/or people become more frugal in their purchasing...obvious. Not even you would argue with that.
The problem is when people use this fictional number to make decisions - they are therefore making decisions based upon bad data. 
A ridiculous 2.3% for 2012 is absurd. It doesn't pass the smell test for anyone who is a consumer. You can't tell a mother with 3 children that prices are about the same when she is the one that goes to the store every week. 
It is a bad number that misuses consumer data.

Having said that....are we or are we not in a stagflation...and if we are...a stimulus as an example, would be the worst thing to do as it would further devalue currency...further increase INFLATION that is more like 7%.


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## pinqy (Jun 9, 2012)

iamwhatiseem said:


> If you have 1000 people. In year one, the average grocery bill was 15% of their household income.


 Which is not useful information. % of consumption spending, is , % of income is not.


> Year two. For various reasons the 1000 people as a whole have less money.


 which will be reflected in 2 years when the weights are re-done. 





> Item per item comparison with no regard for what is selling...pure item for item let's say the average total grocery costs is 6% higher than year one.


 how are you measuring that? How are you weighting items and how are you averageing them?
[/quote]However, in year two the 1000 people are buying less of everything. They are buying cheaper items, they stopped splurging...so the average grocery bill for year two is 13% of their income because they need the money for other expenses. 
You tell me - what with the CPI show?[/QUOTE]Don't know. CPI measures the price on shelves. The basket is updated every 2 years and the relative importance of items is updated every December. 
Rember, the CPI measures changes based on a costa t standard of living. So reduced income won't affect the index.

Ok try again so I can tell what you do and don't understand:
Explain in your own words how the CPI is calculated. As much steal as possible.
And then say how you would do it. And I mean details: I don't want any "they take the average" crap. Weighted or unweighted, which average? Formulas would be nice.


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## iamwhatiseem (Jun 9, 2012)

pinqy said:


> Blah blah



Are we in a stagflation or not?
Tell me why you believe so.


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## BakshisMouse (Jun 9, 2012)

iamwhatiseem said:


> By it's definition I would say yes. I think a lot of folks agree.
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By that definition, the USA is not in stagflation. The inflation rate is just not that high.

Massachusetts Institute of Technology Inflation Project


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## BakshisMouse (Jun 9, 2012)

TakeAStepBack said:


> No inflation? The money supply has increased over 9 trillion dollars in 11 years. Name a time in our history that matches up.



If you're talking about the relationship of money supply to price level, have a look at this:











What makes you think our situation is not comparable?


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## BakshisMouse (Jun 9, 2012)

The prices of food and fuel are volatile. If we just look at them, the inflation rate is probably higher than headline inflation. However, because of the volatility, they can easily deflate. They are not a useful indicator of underlying inflation.

Headline inflation is often based on "sticky" price inflation.



> Some prices in the economy fluctuate all the time in the face of supply and demand; food and fuel are the obvious examples. Many prices, however, dont fluctuate this way  theyre set by oligopolistic firms, or negotiated in long-term contracts, so theyre only revised at intervals ranging from months to years. Many wages are set the same way.
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> The key thing about these less flexible prices  the insight that got Ned Phelps his Nobel  is that because they arent revised very often, theyre set with future inflation in mind.



Source

These "sticky" prices are not accelerating in value. That should mean something to anyone who cares to read.


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## Annie (Jun 9, 2012)

Flopper said:


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Take out housing deflation, count energy and food, that would be inflation. The wrong items are included and missing from the index.


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## BakshisMouse (Jun 9, 2012)

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I request that you respond to the post just above of yours. (#39)


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## iamwhatiseem (Jun 9, 2012)

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Thank you - I was beginning to think only hard headed 1st year economics juniors were posting today. Jesus.
I ask about stagflation and they give me the CPI index and say no.
God...articles by some of the best and most prominent sources (some of which I included here) all circle around a real inflation rate of about 7% when you remove the biases and skewed factors.
7% is high. And that is a number that I believe any average consumer can agree with. 2.3% is a joke.
I am not alone in thinking that a stagflation condition is a real possibility, and I am joined by greater economic minds than anyone here including me by far of course.
If we are entering into a stagflation - this could be a very bad thing. The best weapon to fight it is to:
1)  Lower interest rates (oops - can't do that)
2) Lower business taxes (not happening now, and if Obama wins - he wants to raise it)
3) DO NOT print money. (oops...too late for that, and the casino Gods in the market are crying for more)

 Point is - our corrupt government could really and truly create an abyss if the right things aren't done.


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## BakshisMouse (Jun 9, 2012)

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What the fuck? Lowering interest rates usually causes more inflation. Paul Volcker got rid of the stagflation of the late 1970s-1980s by using the Federal Reserve to create a deep recession with high unemployment by raising interest rates. Once inflation was down, the economy grew healthily.

The way the Federal Reserve influences the interest rate to go down is by bying US treasury bonds via open market operations. This raises the money supply. (aka: printing money)

Unexpected high inflation is a backdoor way to lower real interest rates, by the way.


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## iamwhatiseem (Jun 9, 2012)

BakshisMouse said:


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Sorry...I meant to say raise interest rates...I believe I typed the same thing in a different thread today. 
Bernanke cannot raise rates like in the 70's because that would make the government debt wholly unmanageable and most likely put a lot of high-debt/income businesses - out of business. The past 30 years our economy has been drunk on treating debt as income - therefore a huge percentage of the economy is based on debt and debt servicing (thanks to Greenspan) to raise the rates at any level worthwhile could cause catastrophe to the governments budget as well as Wall Street. It should have been done slowly over the past 20 years - but thanks to plutocratic policies - that didn't happen.


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## Paulie (Jun 9, 2012)

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I think that more expensive products that are substituted for should be taken into consideration when the higher priced product was what the consumer would ultimately have bought had it not risen in price.

If I'm being priced out of a certain product I usually buy, I'm feeling that inflationary effect and it should be considered.


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## BakshisMouse (Jun 9, 2012)

BakshisMouse said:


> The prices of food and fuel are volatile. If we just look at them, the inflation rate is probably higher than headline inflation. However, because of the volatility, they can easily deflate. They are not a useful indicator of underlying inflation.
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^^^^
I still think this is pertinent.


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## Middleoftheroad (Jun 9, 2012)

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Why on earth would you take out housing?  Almost everyone I know spends 15-20% of their income on housing.  It accounts for 14% of GDP.  There is absolutely no reason whatsoever to take this out, unless you are trying to manipulate the numbers to show high inflation.

Everyone knows why energy isn't included, it is incredibly volatile.  You want energy included?  Then you must be prepared to admit for the last month we have been in a deflationary period as energy prices have been tumbling.  Which is exactly the opposite of what you are trying to prove.


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## EdwardBaiamonte (Jun 9, 2012)

TakeAStepBack said:


> No inflation? The money supply has increased over 9 trillion dollars in 11 years. Name a time in our history that matches up.



the Fed balance sheet is up but velocity is down. This time may be different since economics is a new science and we have learned a little, perhaps, about macroeconomics. If you compare the Fed today with the Fed in 1929 you see a monster difference.

Or if you look at China you see 10% growth for 30 years straight along with massive government and massive central banking.


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## EdwardBaiamonte (Jun 9, 2012)

Middleoftheroad said:


> Almost everyone I know spends 15-20% of their income on housing.



renters spend far more than that. Taking housing out allowed Greenspan to keep pumping up the bubble and say there was no inflation




Middleoftheroad said:


> Then you must be prepared to admit for the last month we have been in a deflationary period as energy prices have been tumbling.



deflation is a decline in the general price level not just the price of energy. In theory if you spend more on energy you spend less on other things driving their price down and keeping inflation at 0%. To have inflation you must have more money  printed.


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## Middleoftheroad (Jun 9, 2012)

EdwardBaiamonte said:


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All physical goods are made and transported with use of energy.  If the price of gas falls, transportation costs fall and goods become cheaper.  Further if oil prices fall, many products are made with use of oil including rubber, plastic, fertilzer and pesticides.  If you look at food, the price gets hit several times by oil in use of fertilizer, pesticides, transportation costs, and costs of running the farming equipment.  Further if your food is wrapped in plastic, add a little bit more.


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## EdwardBaiamonte (Jun 9, 2012)

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nevertheless the general price level cant rise until the liberals print more money.

If we only have 100 dollars we cant pay 105 dollars!!


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## Flopper (Jun 9, 2012)

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The wrong items?  Consider how the BLS determines the weight of over 200 item categories that make up the index.

"The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought. For the current CPI, this information was collected from the Consumer Expenditure Surveys for 2007 and 2008. In each of those years, about 7,000 families from around the country provided information each quarter on their spending habits in the interview survey. To collect information on frequently purchased items, such as food and personal care products, another 7,000 families in each of these years kept diaries listing everything they bought during a 2-week period.

Over the 2 year period, then, expenditure information came from approximately 28,000 weekly diaries and 60,000 quarterly interviews used to determine the importance, or weight, of the more than 200 item categories in the CPI index structure."
Consumer Price Index Frequently Asked Questions

The point is that the BLS weights the item categories in the index based on how families actually spend their money.  In 2011 groceries increased nearly 5% and gasoline prices and healthcare rose everywhere as did fuel oil.  However property taxes, electricity, new home prices, and natural gas was down.  How closely your cost of living matches the index depends on how closely your spending pattern matches the 7,000 families in the survey and where you live.


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## Flopper (Jun 9, 2012)

Middleoftheroad said:


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*CPI includes food and energy.  Inflation rate comes from the CPI.
Core CPI is the same number but excludes food and energy due to volatility.  The Federal Reserves uses Core CPI as a tool in determining monetary policy.*


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## pinqy (Jun 9, 2012)

Flopper said:


> Middleoftheroad said:
> 
> 
> > Annie said:
> ...


Actually, the Fed stopped using the CPI about 10 years ago. They use the core PCE now.


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## EdwardBaiamonte (Jun 9, 2012)

pinqy said:


> Flopper said:
> 
> 
> > Middleoftheroad said:
> ...



in any case deflation is more of a worry then inflation so op is silly


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## iamwhatiseem (Jun 9, 2012)

EdwardBaiamonte said:


> pinqy said:
> 
> 
> > Flopper said:
> ...



Your the silly one if you think I am comparing inflation with deflation.
Stagflation is nether...it is a combinational condition where there is slow growth over an extended period, high and persistent unemployment and then inflation to boot.
Stagflation makes deflation look like a great economy.


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## EdwardBaiamonte (Jun 9, 2012)

iamwhatiseem said:


> Stagflation makes deflation look like a great economy.



deflation is the worst of all possible worlds since tomorrow everything will be cheaper; therefore  there is no reason to buy anything at all today.


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## iamwhatiseem (Jun 9, 2012)

EdwardBaiamonte said:


> iamwhatiseem said:
> 
> 
> > Stagflation makes deflation look like a great economy.
> ...



Ok...so you just showed your lack of knowledge about economic principles and conditions.
Good to know.
I suggest you read some more before you come back.


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## saveliberty (Jun 9, 2012)

I suggested we had stagflation about two years ago.  Obama's suggestion this is the new employment rate confirms it in my mind.


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## iamwhatiseem (Jun 9, 2012)

saveliberty said:


> I suggested we had stagflation about two years ago.  Obama's suggestion this is the new employment rate confirms it in my mind.



When you consider 50% of the unemployed have been unemployed for over 2 years....that certainly fits the bill of sustained high unemployment.
We have 1.9% growth....can you say anaemic?
Inflation is truly around 7%...that meets all three requirements for stagflation.

   Therefore a QE3 would inarguably cause more harm than good and prolong the recession. In a stagflation, it is paramount to not further dilute currency to increase the inflationary condition. In a stagflation, each facet has a direct reaction with the others....thus the great difficulty in dealing with it. Trying to help one facet only exacerbates the other two.
We DO NOT have the right people on power to deal with the problem effectively. And I am not sure it is possible to change that.


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## saveliberty (Jun 9, 2012)

Its precisely due to the policies in place that I felt stagflation was the only likely outcome.


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## EdwardBaiamonte (Jun 9, 2012)

iamwhatiseem said:


> EdwardBaiamonte said:
> 
> 
> > iamwhatiseem said:
> ...



if true why are you so afraid to identify the lack of knowledge to which you refer? What does your fear tell you, liberal.


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## itfitzme (Jun 9, 2012)

TakeAStepBack said:


> No inflation? The money supply has increased over 9 trillion dollars in 11 years. Name a time in our history that matches up.



Inflation means price inflation.  It has for a hundred years.  It is what everyone means by inflation.  Monetary inflation, and increase in the money supply, is called what?  Oh yeah, monetary inflation.  The word inflation in the definition of stagflation means price inflation. It always has.

Try using the same definitions of terms that everyone else does, instead of making up your own language. It will help you understand what other people are talking about and help you communicate.

This may explain why you are so confused about economics.


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## EdwardBaiamonte (Jun 9, 2012)

itfitzme said:


> TakeAStepBack said:
> 
> 
> > No inflation? The money supply has increased over 9 trillion dollars in 11 years. Name a time in our history that matches up.
> ...



what a minute, you're the liberal so you are the one confused. Its easy to prove too. Please say somethng  intelligent in support of liberalism. Thanks


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## itfitzme (Jun 9, 2012)

TakeAStepBack said:


> Price increase is a result of inflation, which is really increases in the money supply. Welcome to econ 95



An increase in the money supply is required in order to keep up with a) increasing population b) increasing standard of living and c) modest increase in price inflation (aka inflation).

Increasing money supply, by the fundamental nature of MV = PQ, can go into two effects, a) increasing output and b) increasing prices.

Which increases depends on the state of the economy, whether it is at full output and full labor utilization.

The natural unemployment rate is considered to be about 5%.  The Phillips curve notes that there is an inverse relationship between unemployment and inflation.  Attempting to push unemployment down below the natural rate drives inflation up. When the terms stagflation was coined, the gov't had attempted to push unemployment down to 5%.  The result was little movement in unemployment with considerable increase in inflation.  It was decided the natural rate was about 7% at that time, thus explaining the problem.

You should start by reading Hume, "On Money".  I have provided the link below.

Welcome to basic economics.


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## EdwardBaiamonte (Jun 9, 2012)

itfitzme said:


> Are you really this ignorant of the basics?  Really?



I fail to see what he said that showed ignorance. Can you point it out please.


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## Trajan (Jun 9, 2012)

Flopper said:


> Middleoftheroad said:
> 
> 
> > TakeAStepBack said:
> ...



that won't last, wait until the borrowing costs which they surely will,  rise to the historic norm of 5%....then we are fucked and guess what?


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## itfitzme (Jun 9, 2012)

Flopper said:


> TakeAStepBack said:
> 
> 
> > Price increase is a result of inflation, which is really increases in the money supply. Welcome to econ 95
> ...



It is even more meaningful adjusted for inflation and per capita. It would be nice to be able to adjust for standard of living, increased consumption per capita, but I have no clue how to determine that.  

The fact that M1, in real dollar, per capita terms has remained relatively flat is a bit disconcerting.  It suggests that standard of living, in terms of increasing consumption, has not increased much, if at all.


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## saveliberty (Jun 9, 2012)

Most of the new money supply has been issued to pay government debt.


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## Polk (Jun 9, 2012)

Wiseacre said:


> So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.



That's not necessarily true. It would be nice if it was true (assuming the Fed just let that take its course instead of trying to suck the money out of the system rapidly), but it's not.


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## itfitzme (Jun 9, 2012)

Polk said:


> Wiseacre said:
> 
> 
> > So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.
> ...



That is the the while point, isn't it, will they manage to pull all that back, how fast can they do it, and will they accomplish it with the right timing.


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## itfitzme (Jun 9, 2012)

So this whole thread really comes down to whether one believes John Williams unpublished, unverifiable measure of inflation where he takes the BLS CPI, estimates an "error" and adds it into the CPI, or you believe all of the other verifiable, published, and independently consistent measures of inflation, including the BLS CPI, MIT's whatever that it, , and Federal Reserves PCE.


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## Polk (Jun 9, 2012)

itfitzme said:


> Polk said:
> 
> 
> > Wiseacre said:
> ...



It would be desirable if they didn't pull it back too quickly, but I have my doubts about that. Bernanke has already said high unemployment doesn't bother him.


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## Polk (Jun 9, 2012)

itfitzme said:


> So this whole thread really comes down to whether one believes John Williams unpublished, unverifiable measure of inflation where he takes the BLS CPI, estimates an "error" and adds it into the CPI, or you believe all of the other verifiable, published, and independently consistent measures of inflation, including the BLS CPI, MIT's whatever that it, , and Federal Reserves PCE.



Don't know know MIT is cooking the books too?


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## KissMy (Jun 9, 2012)

The Fed could decide to raise interest rates & write down or wipe out all the 13week, 2, 5 & 10 year T-Bonds it has been buying with QE1, QE2 & Operation Twist. That way the Government would not miss a debt payment due to high interest on it's debt like Greece. This would prevent inflation.


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## itfitzme (Jun 9, 2012)

Polk said:


> itfitzme said:
> 
> 
> > Polk said:
> ...



What we have to realize is that the unemployment rate can only drop so fast.  Right now, the economy is stable at  8.5% (or whatever) unemployment.  In the 70's, ~7% was the natural rate.  The money is there, for companies to borrow, if they see expansion as a real possibility, and they don't.  There is no measure of what the current natural rate is.  There is not real distinction between structural and frictional unemployment, they are overlapping and relative concepts.   The only thing we might say indicates that it is structural is that we don't have inflation, in spite of easy money.  Sure, there is demand out there, but is it enough, localized enough, to support a business?  There are a lot of independent contractors still struggling to find enough local business to keep paying the bills.

There is labor demand, in trucking and medical, but people are not trained.  That takes time, it takes individuals willing to take the risk on loans, if their credit isn't trashed, and pell grants if they can get them.  Even before that can happen, they have to discover the idea.

Short of investment in start-ups and new technology, betting on future demand, growth is incremental, a job here, a bit of demand, another job there.  Beyond jobs work programs, investment in infrastructure, increasing defense spending, and the Fed increasing the monetary base, there isn't much that the gov't can do.

I am not sure what Bernanke meant by "high unemployment doesn't bother him".  It would be interesting to know the context.

But the thing is, the Fed can only give the economy more rope, it can't make the economy ramp up.  That is up to the markets.  

I'd really like to know what all these whiner's expect the gov't to do.  Tax cuts were extended.  The banks and auto industry were bailed out. The money supply was increased.  Inflation is stable.  Programs have been created to help stabilize the housing market.  Food stamps are, at least, keeping people from going hungry.  

I hear a lot of whining about the unemployment rate and the sluggish economy, but not much in the say of actual details of what they expect should happen.  What else do they propose, increase the size of the military?


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## Polk (Jun 9, 2012)

The idea that high unemployment is the "new normal" becomes fashionable during every recession, and it turns out to never be true. People were making the same arguments you are during the late 1930s, then the war came an unemployment dropped to almost zero. It wasn't purely a war effect either, as unemployment didn't skyrocket at war's end.


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## KissMy (Jun 9, 2012)

Polk said:


> The idea that high unemployment is the "new normal" becomes fashionable during every recession, and it turns out to never be true. People were making the same arguments you are during the late 1930s, then the war came an unemployment dropped to almost zero. It wasn't purely a war effect either, as unemployment didn't skyrocket at war's end.



When the Boomers retire allowing the unemployed to take their place it may help the jobs situation. There should also be more jobs taking care of these retired people.


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## itfitzme (Jun 10, 2012)

Polk said:


> The idea that high unemployment is the "new normal" becomes fashionable during every recession, and it turns out to never be true. People were making the same arguments you are during the late 1930s, then the war came an unemployment dropped to almost zero. It wasn't purely a war effect either, as unemployment didn't skyrocket at war's end.



I'm not saying it's a "new normal".  I'm just saying that, right now, it is what it is because of the current state of the economy.  To say that it should be 5%, right now, is an artificial concept.  It is really a question of how quickly it will get from what it is, right now, to what it can be later.  In the long run, output goes to "maximum".  

But I am not sure that we have even seen a "long run" since the 50's, or ever.  Maybe in the '70s?  What we have seen are a series of expansions based on product "bubbles" (more like sprints) punctuated by recessions as the economy attempts to find some equilibrium but under shoots.

New consumer products are invented.  A dozen companies get in on the program. Unemployment falls.  Consumption rises.  The market gets build out.  Companies fall by the wayside.  Unemployment rises. Consumption for the very product that was created falls below it's steady state level.  Slowly unemployment returns to a more natural rate.  Consumption increases.  The new product sales rise to the level that it just replaces purchase that have worn out and keeps up with increasing demand on population growth.  The system settles into a steady state.

Except, all the while, another new service or product is coming into existence, one "bubble" overlapping another.  If all goes well, the decline from one previous bubble is overlapped by the increase in another.  This time around, everything was built out with no new service or product picking up the slack.  The final end game, individual property ownership, became the final bubble.  The economy fell back hard and undershot it's long term natural rate. And right now, the short term rate is a bit higher than we would like to see it.  Ouch, that hurts, but then we aren't all dead yet so it can't be all that bad.

It helps to understand how feedback systems function, seeking an equilibrium. They always overshoot the steady state condition.  And when the underlying structure keeps changing, it's kind of hard for the feedback system to reach a constantly changing set point.  It's just laughable, in a morbid sort of way, at the idea of the economy desperately seeking an ever changing set point.  It's like moving the goal post after the kicker has kicked the football.

It must be pretty apparent for companies that supply basic products, like grocery stores. People don't change how hungry they get.  The population doesn't suddenly decrease.  And yet they are well aware of demand cycling.  It's gotta look a bit odd from their perspective when suddenly people just aren't eating as much. And then they have to lay off a couple of employees, employees that are also customers (that's how grocery stores work), and think, damn, there goes another customer. But then, she was returning only 15% of what we were paying her anyways, so it isn't worth it.

Se trade off a certain level of stability for the sake of growth. Implementing new efficiency tools increases output and standard of living. For that, some people have to find something new to do.  If efficiency increases faster then people can find new products to supply, then it is a bit of an issue.  If we had absolute stability, we'd have far less of an issue, if any at all.  But then we'd have that standard of living of the former USSR.  That was a feedback system that was over damped, always chasing it's steady state condition, never reaching it because it kept moving upward.  As long as you never taste caviar, you don't know better.  But you better have enough bread.

The problem with accepting better growth is accepting the variability.  It's a bitch to have to start eating hamburger again, once we've gotten use to fillet minion. 

But, you know, that's just a general impression, based on decades of observation and anecdotes.


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## Polk (Jun 10, 2012)

But saying it's the current state of the economy (which I agree with, by the way) doesn't really line up with your argument that lack of skills is a major factor.

And before someone asks, Bernanke has never directly stated he doesn't care about high unemployment. However, that's the clear implication when he says he could take further steps to help the economy, but doesn't because of inflationary fears. I would recommend Bernanke take a look at what Switzerland has done during the current crisis to prevent the value of the franc from rising.


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## Annie (Jun 10, 2012)

Middleoftheroad said:


> Annie said:
> 
> 
> > Flopper said:
> ...


The bubble burst, the net worth is so far down, if things ever turn around, it will be at least 15 years to get back. That segment though, while it hit most folks hard, is not going to be a worry at all regarding inflation. Indeed, the negative and stability of that negative, makes it an unfair weight on all the other pressures rising to take what little is left of folks income-you know, the 'left over money' to pay that mortgage on the house that isn't worth what one is paying. Or to buy food, which is way up. Or clothing, same as food. Etc.


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## pinqy (Jun 10, 2012)

iamwhatiseem said:


> When you consider 50% of the unemployed have been unemployed for over 2 years....that certainly fits the bill of sustained high unemployment.


You just like making numbers up, don't you? 42.8% of unemployed have been unemployed 27+ weeks. table A-12
So if less than half have been unemployed more than 6 months, how can more than half be unemployed more than 2 years? First inflation, now umployment, you just make numbers up?


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## BakshisMouse (Jun 10, 2012)

Trajan said:


> Flopper said:
> 
> 
> > Middleoftheroad said:
> ...



Au contraire! I think that these low borrowing costs will last for a long time!

I think we are following Japan's trajectory.

Indicators for JAPAN

Despite steadily accelerating Japanese federal debt, and multiple S&P downgrades, Japan's borrowing costs have remainded extremely low for over 10 years. Their current yield on a ten-year bond is 0.86%. Plus, they have a long-term *deflationary* outlook.

In a way, they're having a better time with their current economy than we are having with ours. They never have had such a large unemployment problem as we have now.


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## Flopper (Jun 10, 2012)

pinqy said:


> Flopper said:
> 
> 
> > Middleoftheroad said:
> ...


Correct, which excludes the most volatile items such as food and energy.


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## Flopper (Jun 10, 2012)

iamwhatiseem said:


> Inflation is truly around 7%...that meets all three requirements for stagflation.


Where did you get 7% as the current inflation rate?


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## bobgnote (Jun 10, 2012)

Flopper said:


> pinqy said:
> 
> 
> > Flopper said:
> ...


. . . which are related; as energy costs increase, food prices rise.

No politician has admitted the desperate need to re-green, despite the crazy media for restricting CO2 and other emissions, such as Kyoto Accords or Clean Air Act.

You cannot petition the lord, with that sort of chickenshit prayer!  You need positive action, to re-green the planet.  This means hemp and switchgrass and smart plants, for biomass and re-greening deserts, polluted lands and seas, and to farm semi-arable land.

You don't correct shit, by being an asshole.  You have to get out, and grow something.

Hidden cost processes in the wars on drugs and Islam need to be reduced and averted.

We will never correct, where real estate inflated, on war, corruption, and immigration.  The borders are closed, now.  So don't expect a recovery, of a shit-pile, in the wake, of a parade of assholes.  Won't happen.

Omitting food and energy from review is a device of propagandists.  Meanwhile, CO2 is up to 400 ppm, the top equilibrium without humans is 280 ppm, and CO2 may be headed, for 900 ppm!  Earth to assholes!  A correction to population will occur, before the lousy, inflation-on-corruption economy 'recovers!'


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## BakshisMouse (Jun 10, 2012)

bobgnote said:


> . . . which are related; as energy costs increase, food prices rise.
> 
> No politician has admitted the desperate need to re-green, despite the crazy media for restricting CO2 and other emissions, such as Kyoto Accords or Clean Air Act.
> 
> ...



I don't think that headline inflation excludes food and fuel. It just doesn't focus on them exclusively.



BakshisMouse said:


> The prices of food and fuel are volatile. If we just look at them, the inflation rate is probably higher than headline inflation. However, because of the volatility, they can easily deflate. They are not a useful indicator of underlying inflation.
> 
> Headline inflation is often based on "sticky" price inflation.
> 
> ...



^^^^
Still pertinent.


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## BakshisMouse (Jun 10, 2012)

Oh, and lookey here:

Economic News Release: Bureau of Labor Statistics.

Seasonally adjusted changes from preceding month:

(Numbers in order, October 2011, November 2011, December 2011, January 2012, February 2012, March 2012, April 2012, Unadjusted 12 month ended April 2012.)

Food......................    .2    .1    .2    .2    .0    .2    .2      3.1
Food at home.............    .2    .0    .2    .0    .0    .1    .2      3.3
Food away from home (1)..    .2    .3    .2    .4    .1    .2    .3      2.9
Energy....................  -1.8   -.5  -1.3    .2   3.2    .9  -1.7       .9
Energy commodities.......  -2.6   -.6  -2.0    .9   5.7   1.7  -2.6      3.1
Gasoline (all types)....  -2.8   -.9  -2.1    .9   6.0   1.7  -2.6      3.2
Fuel oil (1)............   -.5   2.7  -1.0   1.4   2.8   2.7  -1.1       .9
Energy services..........   -.4   -.4   -.2   -.8   -.8   -.4   -.2     -2.4
Electricity.............    .2    .2   -.1    .0    .0   -.8    .2       .6
Utility (piped) gas service: -2.6  -2.6   -.6  -2.9  -3.4    .9  -1.8    -11.6


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## BakshisMouse (Jun 10, 2012)

For the above post, it might be helpful to click the link.

For those of you who say that that data must be falsified by Obama minions: What would you be saying if the Bureau of Labor Statistics got similar numbers under a Republican administration?


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## itfitzme (Jun 10, 2012)

Flopper said:


> iamwhatiseem said:
> 
> 
> > Inflation is truly around 7%...that meets all three requirements for stagflation.
> ...



It comes from Shadow Stats, run by John Williams.  He "estimates" the error in the CPI, then adds this estimated error into the existing CPI.  So he basically is saying that the CPI is in error so I'm gonna use it but adds an new error by estimating the error."  He plans on publishing the methodology when he can find someone that actually has a degree in economics and mathematics to represent him.

Of course, he doesn't just present the data, if you want to know what the "real" inflation rate is, you have to subscribe.  He's got a an excellent thing going there.  I wish I had thought of it.  He does provide a graph, so you can estimate his estimate the he gets from estimating the error in the CPI estimate.

Of course, his method is surely better than over a half decade worth of research by hundreds of thousands of economists and mathematicians around the globe.

The problem is, over the long run, the two would diverge so much that it would be clearly obvious which doesn't make sense.

For all it is worth, you can just add 5% to the CPI and get the same number.  He adds no new information.

Oh, wait, they do.


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## itfitzme (Jun 10, 2012)

Polk said:


> But saying it's the current state of the economy (which I agree with, by the way) doesn't really line up with your argument that lack of skills is a major factor.



I try to hold to ideas that are, at least, testable.  

When we speak of stagflation , we are discussing two things, unemployment and inflation.  I'm just making note of that as a check that I don't inadvertently add to taking things off topic.  Unemployment leads to the question of whether we are looking at structural or frictional issues.  And, changes may show up in the labor force participation rate which has declined since about 2001. Something has been going on for a good decade.  

There are a number of articles that address this. 

www.bls.gov/opub/mlr/2006/10/art3full.pdf 
Trends in labor force participation

www.prb.org/pdf08/63.2uslabor.pdf 
U.S. Labor Force Trends 2008

www.kc.frb.org/publicat/econrev/pdf/12q1VanZandweghe.pdf 
Interpreting the Recent Decline in Labor Force Participation

http://research.stlouisfed.org/publications/review/08/01/DiCecio.pdf 
Changing Trends in the Labor Force: A Survey 2008

http://ftp.iza.org/dp2991.pdf 
What Explains Trends in Labor Force Participation of Older Men in the United States?

These might shed some light on things.  

It becomes a question of degrees, magnitudes, as well.  There are always some structural changes going on, but if it is a major factor is questionable.

The economy changes incrementally, at the margin. And the trend is the difference between two factors, 100 of one vs 110 of another.  100 jobs added in food service and 110 added in phlebotomy is a trend of 10 in medical services.

A large portion of the unemployment, even the lack of entry into the labor force, is among the 19-25 age group.  Are they no finding jobs because there is a lack of demand for unskilled labor products?  Is it because there is demand that is being taken up by older or even non-citizen labor?   Is it because there is potential demand for skilled labor in medical services?  How do we even measure potential demand?  The proof is in the pudding, as they say, so we really don't know that there was potential demand until it gets filled. And it can be a combination, sluggish demand due to lack of flow of money that, should it exist, would purchase the services provided if there were workers to provide it.

What I do know for sure is that there is a demand for phlebotomists that will find work after doing a year of volunteer work.  There is a demand for trained medical technologist and administration assistant.  There is a demand for truckers, free training for an 8 month contract will get a job.  And there are opening in established products like grocery stores.  Which is adding more faster becomes the question.  Which is adding jobs at a rate above normal population grower is more to the point.

The not in the labor force percentage is extremely low in the 30 to 35 year old category. It is excessive in the 19-25 and high in the 60-65 year old categories.  A major net flow is from employment to retirement.  It is suggestive just looking at the flow and if you ask the BLS, they say that this is correct.

That 19-25 year old category is an indicator of a lack of skills.  Though, the displacement by immigrant workers begs the question as to whether to interpret it as a lack of jobs or excess labor.

This is the direction that things are lining up for me.  Some of it becomes an issue of where to draw the line between to categories which are a bit fuzzy.  Some of it is a matter of it becomes an issue of not being able to really tell what the rate of change is.

I don't have a definitive description of the difference between structural, frictional, and simply depressed economy unemployment.  I read a statement that the first two are not simply exclusive.  Frictional unemployment is defined as the market trying to match the skills to the job.  But, where do we draw the line when it comes to skilled vs unskilled?  Is a retail cashier a skilled position?  Do bank tellers really need a bachelor's degree?  Employers want a drop in fit.  What about transferable skills?  If employers are not hiring people with transferable skills, is that a lack of training or frictional unemployment.

Oh, and 7.5% was considered to be the natural rate back in the stagflation of the '70s.  So is 8.5% that much different?

Oh, and back in the '60s, women were a much smaller part of the workforce, with the labor force and the employment rate being far lower than it is today.

Oh, and here is the perception that really gets me with the economy. Typical control systems seek a steady state at some fixed level.  The economy is a constantly growing system, increasing population, efficiency, standard of living, and CPI.  The employment rate has been relatively flat, employment just growing with population. If the economy were at "full employment". This is exactly what it would do.  So, it is at some steady state condition.

Lacking a definitive description, I accept fuzzy rather than inadvertently force a distinction that I later have to undo.  So, yes, I am intentionally allowing the two to not line up.  

Have you ever seen a clothing material that is made up of blue and red threads. When you look at it from a distance, it appears purple.  It isn't blue, it isn't red, and it really isn't even purple.  What color do I call it?    Do I describe it as blue and red?  If it is 60% red and 40% blue, is it correct to call it red?

I'm comfortably uncomfortable with Shrodinger's Cat being both dead and alive simultaneously.  

So, for now, the economy seems to be sitting at the steady state.  It has been there for about two years.  Clearly, it is not going to jump from 8.5% to 5% overnight.  So I accept being comfortably uncomfortable with a slowly changing natural rate with underlying structural changes that cannot be distinguished, at the margin, from underemployment, decreased labor utilization and frictional unemployment.

So, yeah, you are so right, it isn't lining up well.


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## Polk (Jun 10, 2012)

KissMy said:


> The Fed could decide to raise interest rates & write down or wipe out all the 13week, 2, 5 & 10 year T-Bonds it has been buying with QE1, QE2 & Operation Twist. That way the Government would not miss a debt payment due to high interest on it's debt like Greece. This would prevent inflation.



It would also be really stupid.


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## EdwardBaiamonte (Jun 10, 2012)

itfitzme said:


> I try to hold to ideas that are, at least, testable.



so do you hold the idea that Republican philosophy is superior to Democrat? Why?

for a while you were saying middle of the road? Do you hold a different idea now? Is it all too complex for you?


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## pinqy (Jun 13, 2012)

iamwhatiseem said:


> Example 2
> Applewood bacon and standard platter bacon.
> 
> *Year one*
> ...



Ok, finally back at work so I can make sure my formulas were correct.  
First, the CPI-U uses a LaSpeyres index, meaning it uses the weights from the base period.
A Laspeyres is (&#931;PtQ0)/ (&#931;P0Q0) * 100. Setting Year 1 as the base year of 100 (since that's P0Q0/P0Q0), we look at Year 2 as (3.12*133,333+2.31*272,727)/(3*133,333+2.20*272,727) *100 = 104.6 or an increase of 4.6%

Although in truth, at the level of bacon, consideration is taken of substitution, so a geometric means index is used instead.  That would be &#928;(Pt/P0)^w or (3.12/3)^.4 * (2.31/2.2)^.6 = 104.599 or a change of 4.6%

Alternately, a Paasche index which uses current quantity and past price (&#931;PtQt)/ (&#931;P0Qt) * 100 could be used, giving (3.12*96,154+2.31*303,030)/(3*96,154+220*303030)*100= 104.7 or a change of 4.7%

A Fisher ideal index combines the two for (L*P)^.5 = 4.65% increase.

It's not possible to use current weights, because there's no time to collect them.

Your bizarre method of just averaging percentage changes without regard to quantity is odd.  Your'e saying that a 100% increase for a 50 cent pack of gum carries more weight than the 2% increase in a $20,000 car.  You'd have the inflation at 51% using just those two items when in reality the change in cost would be 2%

The whole point is to emulate change in the cost of living, but you for some reason seem to think that's wrong.  I don't know what advantage you think your method would provide...it's not measuring anything like reality.  Your'e actually underestimating inflation in your example.


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## Polk (Jun 13, 2012)

iamwhatiseem said:


> Example 2
> Applewood bacon and standard platter bacon.
> 
> *Year one*
> ...



While zeroing in on the market for one good (and a food item at that) is a pretty poor way to talk about the inflation, let's take your example at face value. There is absolutely nothing wrong with conducting the calculation in that way. It's called the substitution effect, and it's something that everyone with even an elementary background in economics understands as valid.


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## ekrem (Jun 13, 2012)

Dont Taz Me Bro said:


> Wiseacre said:
> 
> 
> > So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.
> ...



Sputnik moment they called it.


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## EdwardBaiamonte (Jun 13, 2012)

Wiseacre said:


> So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.



of course thats idiotic since the Fed can take money out as easily as it puts it in. Producer price index came out today showing deflation, not inflation; so no inflation yet in sight


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## BakshisMouse (Jun 13, 2012)

EdwardBaiamonte said:


> Wiseacre said:
> 
> 
> > So, maybe it's not stagflation but just stagnation.   Still not good, and eventually all that extra money will result in inflation.
> ...



Why is it that this is the only issue that you are actually correct about?


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## EdwardBaiamonte (Jun 13, 2012)

BakshisMouse said:


> EdwardBaiamonte said:
> 
> 
> > Wiseacre said:
> ...



if the absurd  liberal thinks intellectual conservatism is incorrect please state your most substantive example rather than waste our time being stupid


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## BakshisMouse (Jun 13, 2012)

EdwardBaiamonte said:


> BakshisMouse said:
> 
> 
> > EdwardBaiamonte said:
> ...


^^^^
Back to your usual form so soon?


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## EdwardBaiamonte (Jun 13, 2012)

BakshisMouse said:


> EdwardBaiamonte said:
> 
> 
> > BakshisMouse said:
> ...



did it ever occur to you that you're a  stupid liberal because you lack the IQ and character to learn, so all you do is deflect fooling only yourself??


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## BakshisMouse (Jun 13, 2012)

Why is it so difficult to address the issue at hand?


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## EdwardBaiamonte (Jun 13, 2012)

Polk said:


> While zeroing in on the market for one good (and a food item at that) is a pretty poor way to talk about the inflation,



pretty poor? inflation reflects  the general price of all goods and services not one good


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## Polk (Jun 13, 2012)

EdwardBaiamonte said:


> Polk said:
> 
> 
> > While zeroing in on the market for one good (and a food item at that) is a pretty poor way to talk about the inflation,
> ...



Right, which is why I took issue with his claim.


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## pinqy (Jun 14, 2012)

What's the fear of inflation again?




> The Consumer Price Index for All Urban Consumers (CPI-U) decreased  0.3 percent in May on a seasonally adjusted basis, the U.S. Bureau of  Labor Statistics reported today. Over the last 12 months, the all  items index increased 1.7 percent before seasonal adjustment.
> 
> The gasoline index declined 6.8 percent in May, leading to a sharp  decrease in the energy index and the decline in the all items index.  The indexes for natural gas and fuel oil declined as well, though the  electricity index increased. The food index was unchanged, with a slight decline in the index for food at home offsetting an increase
> in the food away from home index.
> ...


Consumer Price Index Summary


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## Rshermr (Jul 20, 2016)

EdwardBaiamonte said:


> BakshisMouse said:
> 
> 
> > EdwardBaiamonte said:
> ...



Poor ed B.  He is such a weak minded con troll that his learning consists of allowing his con bosses to fill his little tiny mind with con talking points.  And he is certain that rational thought is the devils toolbox.  Poor guy is a congenital idiot.  It is really not his fault.


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## Rshermr (Jul 20, 2016)

pinqy said:


> What's the fear of inflation again?


    [/QUOTE]




> The Consumer Price Index for All Urban Consumers (CPI-U) decreased  0.3 percent in May on a seasonally adjusted basis, the U.S. Bureau of  Labor Statistics reported today. Over the last 12 months, the all  items index increased 1.7 percent before seasonal adjustment.
> 
> The gasoline index declined 6.8 percent in May, leading to a sharp  decrease in the energy index and the decline in the all items index.  The indexes for natural gas and fuel oil declined as well, though the  electricity index increased. The food index was unchanged, with a slight decline in the index for food at home offsetting an increase
> in the food away from home index.
> ...


Consumer Price Index Summary

Problem is, this is not about facts.  It is about clowns who want to make the economy look bad.  And the term stagflation is a good term to use to scare people.  That the economy is exactly the opposite of stagflation is beyond them.  They are incapable of rational thought.  But thanks at the attempt at a lesson.  It is just that they are not capable.


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## jillian (Jul 20, 2016)

iamwhatiseem said:


> By it's definition I would say yes. I think a lot of folks agree.
> 
> 
> 
> ...



fox business?

lol...


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## EdwardBaiamonte (Jul 23, 2016)

Rshermr said:


> .  It is about clowns who want to make the economy look bad. .



you mean liberal clowns like Sanders and Clinton????? 

"Despite major increases in productivity, the median male worker in America today is making $726 dollars less than he did in 1973, while the median female worker is making $1,154 less than she did in 2007, after adjusting for inflation."- Bernie Sanders

“The problem is, 80% of the American people are still living on what they were living on the day before the [2008 finnan*cial] crash. And about half the American people, after you adjust for inflation, are living on what they were living on the last day I was president 15 years ago. So that’s what’s the matter.” -Bill Clinton


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## Rshermr (Jul 25, 2016)

jillian said:


> iamwhatiseem said:
> 
> 
> > By it's definition I would say yes. I think a lot of folks agree.
> ...



But it is true.  He is what he seems.  Which is:
1.Stupid
2. A con troll
3.  Incapable of rational talk


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## Rshermr (Jul 25, 2016)

iamwhatiseem said:


> By it's definition I would say yes. I think a lot of folks agree.
> 
> 
> 
> ...


Why are you a complete idiot.  Lets see the reasons:
1.  There is no inflation, dipshit.
2.  The unemployment rate is very low, dipshit.
3.  GDP growth is good, dipshit.
4.  You are a con troll.
5.  You are lying, as normal.  dipshit.
6. You are butt stupid.  dipshit.
7.  You can provide no proof of anything you say.  dipshit.

Have a nice day.  Dipshit.


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## Rshermr (Jul 25, 2016)

EdwardBaiamonte said:


> Rshermr said:
> 
> 
> > .  It is about clowns who want to make the economy look bad. .
> ...


Simple, dipshit.  Because the great percentage of income since the great republican recession of 2008 went to the upper1%.  The rest of the people, 99% of the total, got to share the remaining 7%.  
*Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened*
*http://www.bloomberg.com/news/artic...-93-of-income-growth-as-rich-poor-gap-widened*
Then, all you have to figure out is who pays the working people of this country.  Not that you care, dipshit.


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