Where is the inflation?

[Teddy Pollins]

Interests rates have been near 0 for close to 5 years as the Fed has been pumping trillions of dollars into the economy each year. Why hasn't this caused inflation? Where is the inflation? When can I expect inflation?
Are you sure that American economics will stay stable?
Is dollar reliable value??

 

[Mac1958]

Still too much slack in the economy, we're still not growing fast enough to worry about inflation.

The 10-year Treasury is back up to 2.40%, but it's not very stable.

The trick will be whether the Fed can effectively suck the massive liquidity back out of the system. Too fast and we stall again. Too slowly and we get rapid inflation.

Any bets?

.

 

[Obiwan]

Actually, we've had the same net effect as inflation because wages have been declining...

 

[Sonny Clark]

Interests rates have been near 0 for close to 5 years as the Fed has been pumping trillions of dollars into the economy each year. Why hasn't this caused inflation? Where is the inflation? When can I expect inflation?
Are you sure that American economics will stay stable?
Is dollar reliable value??

Where Is The Inflation?
(1) Rent
(2) Food
(3) Utilities
(4) Health Care

FYI - An economy kept alive by government debt is NO indicator of a stable economy. When government debt is the only catalyst keeping us afloat, the only direction that we can possible go is DOWN, which is where we're rapidly headed.

With government debt supporting government assistance programs, wars, foreign aid, and illegal immigrants, where do you see any economic stability? Have you given any thought to the astronomical amount we're paying in interest payments on the national debt?

 

[Toddsterpatriot]

Interests rates have been near 0 for close to 5 years as the Fed has been pumping trillions of dollars into the economy each year. Why hasn't this caused inflation? Where is the inflation? When can I expect inflation?
Are you sure that American economics will stay stable?
Is dollar reliable value??

Interests rates have been near 0 for close to 5 years as the Fed has been pumping trillions of dollars into the economy each year.

The Fed stopped pumping in new money last October.

Why hasn't this caused inflation?

The added money supply created by the Federal deficit was offset by the contraction in the private debt markets.

 

[presonorek]

Still too much slack in the economy, we're still not growing fast enough to worry about inflation.

The 10-year Treasury is back up to 2.40%, but it's not very stable.

The trick will be whether the Fed can effectively suck the massive liquidity back out of the system. Too fast and we stall again. Too slowly and we get rapid inflation.

Any bets?

.

I'm guessing that things will either get better or they will get worse.

I'm also predicting that tomorrow will either be hotter or colder.

 

[HenryBHough]

Shopped for groceries lately?

No, shelf prices haven't gone up.

But half-gallon cartons of ice cream now contain 1.5 quarts.

Quart jars of mayonnaise now hold 28 ounces.

On the brighter side your shopping bags aren't nearly as heavy as they used to be and you get to see your friendly robo-cashier more often.

 

[deltex1]

No jobs
No money
No demand
No inflation

Expanding the middle class Obama style...

 

[Obiwan]

 

[Obiwan]

 

[HenryBHough]

View attachment 44439

But try to buy a gallon of anything or a pound of anything in 2015!

Those sizes are obsolete! Gallon size containers now hold 3 quarts at no increase in price; only decrease in harmful content. Don't you know The Democrat Party says you shouldn't be drinking so much fatty milk? And consider the pound......when nothing is sold by the pound anymore, only by the ounce or, to make it "easier" to understand, the kilogram.

You have just posted something extremely unObamapatriotic!

 

[Obiwan]

But Obama has a solution...

 

[presonorek]

View attachment 44439

Gasoline is cheaper.

 

[Toddsterpatriot]

View attachment 44439

Gasoline is cheaper.

Not so much.

 

[Obiwan]

View attachment 44439

Gasoline is cheaper.

Gas Price History Graph historic prices
Gas Price History Graph (historic prices)

 

[HenryBHough]

So when comes the Obamadecree that gasoline be sold by the liter so the price will be more "transparent"?

Can He resist?

Liters are sooooooo European!

 

[g5000]

View attachment 44439

Completely manufactured bullshit. Those figures are fake, piss drinker.

 

[g5000]

Interests rates have been near 0 for close to 5 years as the Fed has been pumping trillions of dollars into the economy each year. Why hasn't this caused inflation? Where is the inflation? When can I expect inflation?
Are you sure that American economics will stay stable?
Is dollar reliable value??

The reason we do not have runaway inflation is because the velocity of money plunged after the crash.

You can print a trillion dollars, but if you bury it in the back yard, it won't cause inflation. That's basically what has happened. A lot of that cash is not moving around. Some of it has pushed the Dow up, but quite a bit is buried in the back yard.

 

[g5000]

Average Retail Food and Energy Prices U.S. and Midwest Region Mid Atlantic Information Office U.S. Bureau of Labor Statistics

 

[g5000]

Once the velocity of money picks up, the trick the Fed will need to perform is to take all that cash they printed back out of the economy.

The problem is that the Fed put cash into the economy by paying top dollar for assets. Because of ZIRP, they paid the maximum possible price for those assets, which means they will not be able to get the same price when they sell them. No one is going to pay more for those assets than the Fed paid for them, and that means they will not be able to pull out all that cash they printed. And that means inflation.

Imagine a bond with a $100 face value. If you were an investor, you might bid $50 for that bond, and then you would collect the full $100 when that bond matured.

But imagine if another player came into the market and offered $99.999 for that bond? Clearly, you won't outbid them. So they get the bond.

That is what the Fed has done. They put $99.999 into circulation with that bond. They printed that money from nothing. If you had bought the bond for $50, you would have paid with existing money, and therefore no extra money would have been put into circulation.

To get new money into circulation, and a lot of it, the Fed had to outbid everyone else.

But now they have a $100 bond they paid $99.999 for. When it comes time to sell that bond so they can soak up cash and burn it, who is going to buy it for $99.999 or greater?

Nobody. That's who.

They will have to sell it for less than $99.999 to get people to buy it.

Let's say they are able to sell it for $95.00. The end result is an extra $4.999 in circulation they can't get back out.

Inflation. But you won't see it until the economy begins heating up. As long as things are sluggish, all that extra cash is buried in back yards.