defensive. He spent most of is talk describing in some detail why the
Federal Reserve and its cheap money policies of ZIRP and QE have not
added to the inflation picture.
IMHO Ben should have stepped up to the plate and said to the world that
in fact his policies have contributed to inflation. He should have
confirmed, what we already know, the objective of current monetary
policy is to stimulate inflation. After all, the idea that zero interest
rates do not contribute to inflation is, well, a dumb idea that has no
basis in fact.
While Ben was doing his best to convince the suckers that believe in his
drivel the NY Fed was publishing a blog that concluded quite the
opposite. (Link)
The title of this chart from the report says it all:
The report looks at what is rising in price. It equates it to what we
actually consume. For example, while the fact that Tenant’s Insurance
has fallen in cost is important to the CPI, it has little to do with
what we actually spend money on. The conclusion from the NY Fed:
84 percent of all expenditures in the CPI basket were on items that experienced above-average increases in inflation in the last seven months.
The bottom line is that Ben can’t fool me. He can’t fool the economists
at the NY Fed. He can’t fool the market. So just who is he trying to
fool? I think he is trying to fool himself.
I wouldn't call them dumb-dumbs by any means. I have two of the next generation (my gen, the sandwich, is the one who really got screwed...) and by my accounts, these kids are pretty sharp. Sure, they waste their time on the X-Box and FaceBook now but they sure have mastered that technology overnight. Besides, what is it exactly you expect a 16 year-old to be doing, saving the world from corruption and tyranny? (Looks like my gen is going to be responsible for that one, too...)
Actually, it is amazing when you think that, when I was their age, I had a rotary phone in the hallway and was excited about the extra-long receiver cord.
These guys adapt and master everything at lightning speed. They are in direct communication with kids in Australia, Germany and Ireland- playing games with them, destroying virtual stuff and killing virtual soldiers the way we used to double-dutch on the playground, play on monkey bars. They can know the economic conditions in Azerbaijan rightnow by chatting with a friend of a friend. I didn't even know there was such a place as that. Did you?
Don't count them out by any means. The klds are all right.
exactly. you stole my words
Lynnybee,
Good for you. Just make sure you are pointed at the real problem and solution.
I felt like a right idiot when I discovered exactly how (debt) money worked, but it is deliberately obscure. Some people are making unimaginable amounts of money and wealth off the system as it is, and are more than happy to kill to keep it. It is set up so your savings are literally and legally stolen from you.
Good video here to help explain things. Worth passing round to friends and family. Everyone should watch this.
http://video.google.com/videoplay?docid=-2550156453790090544#
Congratulations Lynny.
Excellent job in realizing the "Royal Scam" of Keynesian voodoo, the FED's fiat money and diluted derivatives games. Well Done!
Take control, be a leader, be prepared, Do it your way. And do it with excellence.
Be prepared to be self-reliant when fiat/derivative/debt monster comes calling.
Firefighter302
My favorite Steely Dan album. Saw them play through the whole album two years ago in the Tower Theater, PA. Awesome.
That's awesome, lynnybee. I am glad for your epiphany, even though the emotions are quite unpleasant.
May I just say the I hope you are familiar with the old saying that if you give someone enough rope, they will hang themselves. I think that is the case here. Be patient. The banksters have plenty of rope and it seems they are taking the short march to the scaffold of their own accord.
:D
" The banksters have plenty of rope and it seems they are taking the short march to the scaffold of their own accord."
Or perhaps driving the bus off the cliff.
The fact that we're on the bus would seem to be a rather significant problem to me, though.
The Greek leaders for instance have apparently already reached the end of the line, or very nearly so, but, although that is apparent to all the world, the Greek people don't seem to be dancing for joy in the streets.
they can drive it off the cliff from far away... THEY aren't going to hurt themselves no matter how bad the country gets!!! wake up!!! they just go to other countries and make a new central bank if they have to.. do you even know how many rebels their are in libya?? do they even exist??
The rule is: if you are selling it there is deflation. If you are buying it there is inflation.
The Bernanke eats shit.
The Bernank's job is to see that you eat shit... And Jamie eats caviar...
Well, technically he is correct. There is no inflation NOW, we have just had a massive bout of it. However, now prices are on a very high level, purchasing power and discretionary spending has been killed, and if prices fall bij even 0,01% we will have deflation.
We can congratulate him on killing the economy and stopping inflation. The man is a giant in his own sick way.
Ah, have you not been paying attention to the 100+ years of Federal reserve history. Ben is fighting for inflation, it benefits the bankers and allows the ponzi to continue because all those "assets" appear so valuable. Moreover, the government (the enabler in this ponzi) can tax all those assets accordingly. That is what you get with "mark to unicorn" accounting.
Bring on the deflation, fine with me. Anyone who is not a banker should be welcoming deflation. The economy is dead because there is no clear valuation or price discovery being allowed (especially on wall street).
Who can predict this shit really.
I get emails from a technical gal Abigail D.
She believes we're going up, then down, then up. (2 mins)
WTFK
She is nice.
True and correct. However, I think the man is now finally out of options. I am long USD (short EUR and JPY) on this risk unwind theory. Whatever he does now is irrelevant, even QE 3.0. It's curtain time for the FED.
The time to get long USDJPY may be at the bounce off the declining trendline at ~ 78.61.
Best of luck to you!
:D
Shopping with an empty cart is always very cheap.
Ben is in the Zone, baby. The ZOI. Zone of Inaction, bitchez.
I think Ben dropped a little too much acid back in the day at Winthrop House.
Frozen in limbo? with a levitated boner going soft?
Three FOMC meetings back, Ben said explicitly that the Fed's goal was to create "a little positive inflation" to get M2 velocity up and improve the economic picture.
The man is a pathological liar, as are all the rest of the Dudleys and Geithners and Bullards and Yellens. They are the overlords. They live and rule by skimming the value of everyone else's labor, since they produce nothing of value themselves.
no, he is a pathologic liar, which is why he and the bankers are in a mutual love fest. he is paid to say what the bankers want him to say, and do. by doing so he will be richly rewarded. he can't try and inflate the debt away without inflation, and he isn't going to say I will inflate the debt away and have currency collapse. it's rather clear that has been the plan all along.
There's an easy way to get the truth out of Ben or Obama. You just say, "What would you tell someone else is the case with..."
Must have his fathers eyes but yeah, there is some resemblance.
Poor harvests, bad weather, low supplies, beetles… that is the only reason food prices are up.
There is no US forces in Baghdad, we bomb them, they retreat to the back...
Can't help but think of Baghdad Bob, when Baghdad Ben spews his ridiculous bullshit.
http://www.youtube.com/watch?v=s27Oq5ot0ZI
fuck them drunk beetles!!! I crush their heads!!
Don't forget that people are eating a more diverse and expensive diet now...because food stamps allow for that.
Water is going to become a real problem, so is fertillizer. Maybe I should not have sold that soybean crop and simply turned in back into the soil. I guess we got greedy when the soybean prices shot up. Oh well. I already turned the paper into hard assets for next year's crop. At the end of the day, market fundamentals win (barring an outright extermination by the government).
Fertillizer is a threat against national security.
So is water.
Nothing but those that taketh away from the fascist states of America.
The state must nationalize fertilizer and water resources. It is patently unfair for private individuals to make "unconscionable profits" at the expense of the proletariat.
remember to outlaw those rainwater gutter gatherers!!! can't have people getting free water!!!
Perhaps he is not considering the asset and commodity speculation as inflationary. Emerging markets are facing a slow down and rate hikes. Global commodity demand that may or may not be due to international dollar hyperinflationary "speculation" should ultimately regress to the mean, when true supply-demand dynamics emerge.
One could conclude there is no true domestic inflation, because wages are not rising and unemployment remains over 9%. Inflation would not be sustainable without mainstreet; people buy less fuel and food when prices are up; if it is cheaper to eat at mcdonalds than cook, more folks will eat a shitburger instead of steaks.
Like it or not, no matter how much the corporate dictatorship wants prices to go up and squeeze consumers, supply-demand dynamics will ultimately win out.
Have to be careful getting too bullish on oil as well; because we can expect more state and/or federal taxation that will compel base price suppression to enable more taxation per gallon.
" Inflation would not be sustainable without mainstreet; people buy less fuel and food when prices are up; if it is cheaper to eat at mcdonalds than cook, more folks will eat a shitburger instead of steaks."
---
I don't think that necessarily holds up to scrutiny. There are many examples of countries with both very high rates of unemployment and very high rates of inflation simultaneously, the Weimar Republic being one famous example.
Are you Christina Romer's love child?
-0-
when the markup of goods go up, real wages are falling.
A great Turk interview on gold and hyperinflation and how what the US is living now is exactly like when they lived thru the continental currency.
http://goldandsilverlinings.com/?p=1158
True, and imo the markup of goods would be unsustainable. All we are seeing now is corporate greed to push the inflation argument onto consumers, in conjunction with market speculation pushing up key commodity prices. This along with the global hyperinflationary push by the international banking cartel to compel a dollar evacuation, leaves an illusory effect of inflation that will ultimately collapse like all bubbles do into yet another financial crisis, as lazy hedge fund traders are caught fat, dumb, flat footed, and over leveraged.
I am so glad that I'm not the only one with the belief that price inflaion is unsustainable without real wage increases. Whenever I mentioned this stubborn "fact," I get shouted down. Many on this board have some strange, delusory idea that we are going all Zimbabwe or Weimar, which, frankly, is just not possible under our current scenario.
If there is no wage inflation to keep up with the demand, then, as 66Sexy points out, hedonics kicks in with a vengeance; filet mignon to dog food. When hedonics fails to stop rising prices, then it will be abstinence. And if abstinence fails to stop it, only chaos and a complete failure of the system would be in order. Get your shotguns and bar the doors.
We are clearly in a period of marked deflation and the Fed is doing everything in their power to prop up prices for their banker brethren. It won't work. The mechanics are simply unsustainable.
Orly said:
Orly, I don't know where you get the fantasy-driven and historically ignorant viewpoint that wages MUST eventually increase to match the rising general price level due to currency debasement, but you are absolutely wrong to believe so. There are countless examples of exactly just that happening time and time again, including in the USA since, oh, 1970 or so.
Yes, price inflation is perfectly sustainable without commensurate increases in real wages --- it is in fact the plan, and is already baked into the cake. The name of the movie is "Falling Standard of Living", and it is coming soon to a theater near you, if it isn't already being screened.
Wage increases are one component of inflation, but labor costs are only a portion of the price of a good. There are also input costs and transportation costs.
There is also no rule that the wages have to increase in the country of consumption. If wages in China or India or Brazil go up, we'll have to pay more here even if we have high unemployment. Plus with government mandates making employees more expensive, we have higher wage costs without the workers actually seeing any improvement in their take-home pay.
The major effect of QE2 is to enrich bankers, not workers. But workers still have to compete with bankers in the marketplace when buying goods.
Orly, are you saying that the fed can just monetize multiple trillion dollar trade and budget deficits as well as bank losses forever and as long as wages don't increase there won't be any inflation?
Sure, if the fed refuses to monetize then there will be a deflationary collapse. But if the fed continues monetizing at current or accellerated rates then it is dollar hyper-inflation and gold deflation that we will have.
You can have inflation without wage increases, it is what is happening right now. Inflation is simply the cost of a good or service rising, compared to what it was worth a month, year or ten years ago. It is a symptom of the value of what it is priced in declining. Consumers experience inflation when the prices rise, but their wages do not.
Deflation occurs when the prices for goods and services declines, it does not necessarily mean that wages will fall, only that the prices are dropping because of oversupply, lack of demand or improved manufacturing processes which allow for more items to be created with less cost.
All of this is of course dependent on the currency that you compare the price to. The price for some things has actually decreased when measured in silver. in 1964, wages were about $1.25/hr, gas was .30 cents gallon. Today wages are $7.25/hr and gas is $3.75/gallon. In dollars, either gas has gotten more expensive or the value of wages has fallen. If you use five silver quarters from 1964, today those quarters are valued at a little more than 6.50 each or $32.50 which would buy you about 9 gallons of gas. So in terms of silver, either the metal has appreciated or the cost of gas has depreciated.
In economics wages as everyone here is used to calling it, is known as labor rents and the price can rise or fall independent of either the rest of the economy or indeed supply and demand. But, it should be noted that both real and nominal wages have fallen in the last few years, and for the majority a lot more than you might think, it has all gone to the top 10% and the higher your household income the larger your raise has been. Simultaneously the wealthier you have grown the lower your taxes have become to what is now one of the lowest rates since the "gilded age" of 1890's.
"Consumers experience inflation when the prices rise, but their wages do not."
I'm not going to go all Mish on you here but, technically, inflation occurs when there is an increase in the money supply. That has not happened to the extent that most people would think it has. The "extra" money created by the Fed has only bought easier financing (ZIRP...), which is a big, big difference. The actual "printed" money is still sitting in banks as reserve ratios because without that extra printed money, they would be insolvent. Inflation is more (insert currency here...) chasing fewer goods.
In order for this scenario to be sustained, the same extra money must chase fewer workers and that is just not happening. Think about your own wages. I know that I would be making the same money I was making about seven years ago. I just can't pay the $9 gasoline and I'm not going to.
A great example here is pork bellies: bacon. Over the past year, bacon has gone from $2.15 a pound to almost eight bucks, then back to $4.50. I'm not going to pay it. I'm just not. I'll pay $3.25 but that's about it. And turkey bacon is like chewing on chicken jerky with an attitude, so substitution there is out of the question, as well.
Since easier financing has occurred, more traders are able to bid up the price of everything from the Russell 2000 Index to palladium futures...and this includes gold and silver, by the way. Prices have gone up because of easy money terms, not because the banks have released more of it into the economy.
true. Also, we need to keep in mind elastic vs inelastic demand. Some goods like fuel, electric power can be more inflationary than say bacon.
all completely irrelevant when supply chain shortages become a problem (yeah suppliers might boost production, then again they might not - what's OPEC saying again?). Why would I take your gold to sell you any heating oil if i) there is none to deliver or ii) I need to keep my own properties warm during the winter and I have just enough in my own tanks to do so.
We had a chance to prosecute the fraud and let true price discovery sort all this out. Now we can only wait for the collapse as possession of hard assets of real value rapidly becomes the law as the markets continue to be gamed and fraud remains the status quo. At some point the BRIC countries either bailout the world, or they invade it, no other options really.
Orly: You say "...If there is no wage inflation to keep up with the demand, then, as 66Sexy points out, hedonics kicks in with a vengeance; filet mignon to dog food. When hedonics fails to stop rising prices, then it will be abstinence."
I think you are confusing hedonics with substitution which is another ploy the BLS uses to mask real price rises. Hedonics is used to actually adjust the price of a single item lower because in their view it's value to the public has increased through quality improvements, ie. a steak that sold for $12.99 per pound last year is now $13.99 but they adjust it down to $11.99 because it contains less fat and thus "is healthier for your heart and arteries" or any other made up reasoning they can produce. That is why price rises in such things as computers and cars have been all but eliminated, air bags make you safer so you are getting more car per dollar, you get more gigs of memory so the real cost is lower.
Substitution is used when they assume that as the price of a thing rises consumers will substitute to a lower priced but similar product. Steak down to burger, or tuna instead of swordfish. (FRN's instead of TP) Generics instead of Marlboros, etc.
And there are many more tricks up their sleves in the reduction of real CPI increases, don't even get me started on the geometric chain weight deflator. In that little gem, in a simple form, they just reduce the weight in the calculations of things rising and add to the weight of items falling.
Here is a BLS page that starts to address it: http://www.bls.gov/cpi/ccpiintro.htm
Exactly. My bad. I stand corrected. Hedonics is the way they use computers to say that the $55 million Cray from the NASA missions is less powerful than the one in your lunch bag, so therefore, you actually have a $55 million computer.
Sorry about that.
Still, the substitution argument applies. When people run out of whiskey, they will make it themselves. Beer, wine, same thing. Grow vegetables, etc. My point was that without wage pressure and the ability to actually pay for rising prices, then inflation (much less hyperinflation...) cannot be sustained.
Thanks for correcting me.
:D