When should the Fed start deleveraging?

[AmazonTania]

I understand the concept of floating the economy in a downturn until it get's moving again.... This year the US might for the first time in 5 years of Obama being in office be under 1 trillion dollars added to the deficit, but that's yet to be seen.

I don't see much of a chance of the deficit being larger than projected. First, the fiscal year ends September 30, so we are almost nine months through it already. So far, each time the Bureau of the Debt issues its monthly report, the results have been a little under projections and the projected deficit at September 30 has been lowered. It might be fun to set up a pool and see who can come closest!

On top of that the FED is injecting hundreds of billions. Add the 2 together and you have a number so large just saying it will get Obama bots ripping their face off trying to defend that kind of economic policy.

You lost me here. The Fed has been making about $80--90 billion a month on its balance sheet investments. This money goes back to the U S Treasury. Before 2008 this figure was about $25 billion a month. So what's the problem here as you see it?

For the record, inflation is massive ....

Whoa! "Inflation is massive" by what measure? Anticipated inflation were the TIPS spread is right at 2% on the 10-year bond and the 30-year bond. CPI is less than 2%. Tell me what you are looking at.

McDonald's seems to think there is inflation. And by McDonald's, I mean the Big Mac Index computed by The Economist.

Either there is something wrong with McDonald's, or there is something vaguely strange with the way the CPI is measuring it's inflation.

 

[Rshermr]

So, which crabs are best, iyo? king, dungeness, or snow??
My boat is at the dock, 15 minutes from good crabbing. Dungeness only here.
Maybe it is not an economic issue for most, but imo, crabs are a requirement for a good life.

Joe's Crab Shack is a chain on the coast famous for its T-shirts proclaiming "Peace--Love--Crabs".

The best bet for crabs is probably Landry's in Pensacola. Get the steamer for two and allow at least a couple hours to eat it.

Best crabs I get are at a fish camp in Louisiana where we drop the pots right off the porch. The shrimp we have to trawl a net for at about four o'clock if we plan to eat by six. Corn at the local vegetable stand is fresh every morning, the new potatoes are from the garden, and the crab boil is Zaterain's. Only thing missing is the Jax Voodoo Beer; the SOB's sold out to a company in New Jersey and have ruined it.

Yup. I know about Joe's crab shop. Evan have on in our state, but down close to Portland. Never been to one. Just got a kick out of your tag line.
LA sounds like good eating. We have prawns here, but not as large. And, yeah, that whole M & A thing has pretty much wiped out the local beer options. But there are a lot of craft beers, if you are so inclined, around the area.
Best.

 

[The Rabbi]

The Fed's actions have skewed markets with people pouring money into investments simply from lack of better alternatives. There is little to no business formation and expansion going on, mainly due to bad economic policy (e.g. Obamacare). The growth we have seen is artificial. The Fed will be forced to cut back and then the economy will tank again.
This experiment in Keynesianism should be a lesson that it doesnt work. Unfortunately the Left will learn the opposite.

 

[editec]

The DEBT is a FAKE as the money, kiddies.

If we have a depression, recession, inflation, deflation. boom or a bust economy it is entirely MAN MADE.

Humankind in aggregate is actually getting weathier, not poorer.

You or I might be getting poorer., Our nation might be bankrupted, but those events are NOT inevitable, they are CONTRIVED events.

 

[oldfart]

McDonald's seems to think there is inflation. And by McDonald's, I mean the Big Mac Index computed by The Economist.

Either there is something wrong with McDonald's, or there is something vaguely strange with the way the CPI is measuring it's inflation.

Starbucks just announced price increases. My surmise is that many retailers think that they can put through price increases now despite the weakening economy. This is more evidence of returns to market power and branding. Check out the "monopoly profits" thread.

 

[The Rabbi]

McDonald's seems to think there is inflation. And by McDonald's, I mean the Big Mac Index computed by The Economist.

Either there is something wrong with McDonald's, or there is something vaguely strange with the way the CPI is measuring it's inflation.

Starbucks just announced price increases. My surmise is that many retailers think that they can put through price increases now despite the weakening economy. This is more evidence of returns to market power and branding. Check out the "monopoly profits" thread.

Or evidence for more inflation. Since official figures do not count either energy or food they will lag significantly.

 

[AmazonTania]

McDonald's seems to think there is inflation. And by McDonald's, I mean the Big Mac Index computed by The Economist.

Either there is something wrong with McDonald's, or there is something vaguely strange with the way the CPI is measuring it's inflation.

Starbucks just announced price increases. My surmise is that many retailers think that they can put through price increases now despite the weakening economy. This is more evidence of returns to market power and branding. Check out the "monopoly profits" thread.

Starbucks EPS for the last financial quarter is $0.52 EPS, which is up from $0.41 EPS a year ago. This is good considering that shareholders equity is around the same levels as a year ago. It means that Starbucks is more profitable than it was a year ago.

The issue is clearly not an issue regarding it's profits, or market power... According to the CPI coffee prices should have declined -0.4% in may.. Not to mention that Coffee Futures are at all time lows.

Starbucks is not influencing any demand for coffee beans, because there is no demand for coffee beans. Their profits are not suffering in the slightest. Ruling out these factors, the only explanation one can come to is inflation. Or rather, according to Starbucks, is increasing cost of rent and labour cost. Housing prices were replaced with rents in the CPI for more stability, but rent prices are clearly being inflated by an entity desperately trying to blow air into a deflating housing market. Mitigating factors helped keep the appearance of inflation low, such as low labour cost. But over the years, Starbucks labour cost have been increasing and as interest rates start to rise (as they already have) it will become more difficult for the corporation to control this.

 

[Toro]

McDonald's seems to think there is inflation. And by McDonald's, I mean the Big Mac Index computed by The Economist.

Either there is something wrong with McDonald's, or there is something vaguely strange with the way the CPI is measuring it's inflation.

Starbucks just announced price increases. My surmise is that many retailers think that they can put through price increases now despite the weakening economy. This is more evidence of returns to market power and branding. Check out the "monopoly profits" thread.

Or evidence for more inflation. Since official figures do not count either energy or food they will lag significantly.

Official data includes food and energy. However, they'll separate out food and energy to look at "core" inflation excluding the effects of commodity price volatility.