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Hmm thats a funny graph, the actual graph goes back a longer time and then you can see it diverge a bit more.
Have to agree though that its odd they look so much alike in the past years, maybe its not adding a constant by shadowstats, but removing a constant by the government lol.
annyway:an article 2 years ago had a suprisingly good idea about what would happen. (also included the graph but then from 1980 on towards now)
http://www.policymic.com/articles/4952/is-america-hiding-its-true-inflation-rate-and-could-the-u-s-be-as-insolvent-as-greece/category_list
"This creates a dangerous situation for inflation. If enough governments dump U.S. treasuries because they fear the U.S. is insolvent, the interest rates will skyrocket unless the Fed prints the money to buy those bonds. However, if the Fed buys the bonds, domestic inflation rates will skyrocket."
only 2 years in since the bond buying started, inflation always lags behind monney creation.
I still think that even official inflation figures will rise to 5% within 3 years from now.
http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/
just googling a bit on "real inflation in the usa"
Now i just read that food and gas prices are not part of the core cpi ,wth lol?
(lower income households spend 30%+ of their income on food and gas)
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@sam If that starts to happen the FED can step in with contractionary monetary policy. A good part of the reason the market doesn't expect inflation is that at the first signs of it they expect the FED to step in and remove liquidity from the market.
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by raising interest rates?
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Not only that, but yes, that's the main means of doing monetary policy
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The goal behind having a higher inflation target have nothing to do with the finance. It's the same old discussion around the phillips curve.
There are other ways to control the credit.
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MACKINAC ISLAND, Mich. (AP) -- Sen. Ted Cruz says he will fight "with every breath" to stop the health care overhaul, even if it means shutting down segments of the federal government. That approach, warns former Florida Gov. Jeb Bush, is "quite dicey" politically for Republicans.
A clear divide over President Barack Obama's health care law separates the emerging field of potential 2016 GOP presidential candidates. And it offers a preview of the battle Republicans nationwide will fight in their effort to build the party and win back the White House.
On one side of the health care fight are Sen. Marco Rubio, R-Fla., Texas' Cruz and others who say they are standing on principle and willing to oppose the law at all costs.
On the other side are those taking what they call a pragmatic approach by accepting the law, if grudgingly, and moving on. Holding that view are New Jersey Gov. Chris Christie, Louisiana Gov. Bobby Jindal and Wisconsin Gov. Scott Walker, who says that shutting down the government would violate the public trust.
The Republican-controlled House passed a short-term spending plan Friday that would continue funding government operations through mid-December while withholding money for Obama's signature domestic accomplishment. Some GOP lawmakers also advocate holding back on increasing the nation's borrowing limit, which could result in a first-ever default, unless what they call "Obamacare" is brought down.
Obama, who has warned of "economic chaos" should Congress pursue such a strategy, said Friday in Missouri: "We're the world's bedrock investment. The entire world looks to us to make sure the world economy is stable."
Source
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Holy shit, Bobby Jindal being reasonable? This shutdown is going to really shake things up, it's been fun Tea Party.
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On September 22 2013 05:45 sam!zdat wrote:
but isn't inflation a problem for the exact reason jonny keeps saying it isn't? If we only don't have inflation now because banks are tightening credit and shrinking the money supply, that means if they ever do start lending again we would see a lot of inflation... Right?
The Fed has tools (like interest rates) to reign in inflation if it should "get out of hand." It's not like they're just releasing money and letting the market have it's complete way with it.
Inflation is a lot like a car with many different levers for accelerating and braking. Even in a normal car, you can regulate your speed by taking your foot off the gas, or by braking harder than you're accelerating. The same principle applies.
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I wonder if any Republican "masterminds" are sitting in a corner somewhere thinking a "default" is a win-win, in the same way some saw the Sequester. Treasury bonds would definitely see a spike, making a case to "reign in spending."
I hope nobody would think that, but I have a sad feeling that maybe some are.
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yeah I understand the principle. I'm just skeptical that we have as much control over it as we think we do. Recently I switched from gas stove to electric and I can't control the fucker. I'm afraid monetary policy is like that but worse, only we have the priesthood of Science telling us how much the understand because their math is very complicated
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On September 22 2013 06:52 aksfjh wrote:
I wonder if any Republican "masterminds" are sitting in a corner somewhere thinking a "default" is a win-win, in the same way some saw the Sequester. Treasury bonds would definitely see a spike, making a case to "reign in spending."
I hope nobody would think that, but I have a sad feeling that maybe some are.
I would feel a lot better if I thought there were evil Republican masterminds at work right now like there were during the Bush years. Unfortunately this is the work of idiots like Ted Cruz who are actually fucking over even the Republican Party itself for their own political gain. And of course because of genuine beliefs: I think for example that the line that Obamacare is anathema probably started as spin but took on a life of its own.
For Dune fans, the GOP here is the Bene Gesserit and and Tea Partiers are the Fremen and the anti-Obama rhetoric is the Missionaria Protectiva, and what we're seeing now is the Arrakis Jihad.
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On September 22 2013 06:52 aksfjh wrote:
I wonder if any Republican "masterminds" are sitting in a corner somewhere thinking a "default" is a win-win, in the same way some saw the Sequester. Treasury bonds would definitely see a spike, making a case to "reign in spending."
I hope nobody would think that, but I have a sad feeling that maybe some are.
If the US defaults on it's debt and the world plunges into a new and worse recession the GOP loses the House and never sees control of the Senate for years to come.
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At least we'll be able to ignore the libertarians for another generation after the tea party fucks over the country.
Literaly the same shit they tried back with newt and the 1993 revolution. If obama is any kind of man at all he'll just do exactly what clinton did and take congress back.
TBH I'd rather there be a democratic congress then a republican congress and democratic president. And libertarians piss me off.
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On September 22 2013 07:02 sam!zdat wrote:
yeah I understand the principle. I'm just skeptical that we have as much control over it as we think we do. Recently I switched from gas stove to electric and I can't control the fucker. I'm afraid monetary policy is like that but worse, only we have the priesthood of Science telling us how much the understand because their math is very complicated
Economists, especially in the academia, often fetishize complicated models and hard math, but more often than not math is just a tool for economic modeling. It seems to me that you're saying the economics profession is a monolith led by these academic economists, which could not be further from the truth (unless your only perspective is that they're united behind the goal of furthering capital accumulation, which would be a largely true statement but open to interpretation when outside of its marxian origins).
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the people running the fed are all academics
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Right, but their policies are inherently a more practical side of economics, which is often detached from what you see in the academia. Heck, you can understand the reasoning for their policies from a standard undergrad macroeconomics course (following the Blanchard/Mankiw/Krugman textbooks, for example).
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yes but my point is I'm skeptical that they have an adequate humility and they probably think that they understand and are able to control things much more than is reallt the case
so we say 'dont worry, if there's inflation the fed will fix that also' and I understand in principle they have this gas pedal where they can affect things, but do I have faith that things will really work out that simply? No
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It's like you're saying "I understand economics enough to doubt their ability to understand economics", which is a very strange thing to say for obvious reasons. But then again, you seem have a thing against against the economic profession in general.
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why is that strange? It's been my experience learning anything that it's only when you know nothing about something that you can believe that the people who supposedly know about it actually do
edit: it's true I dislike the economics profession, largely because most economists do not understand the purpose of economies. They also don't think very much about history, or anything outside of their own narrow disciplinary constraints (economics is the academic discipline which cites least outside of itself)
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It's strange because you're blindly questioning without making an argument more elaborated than "they don't understand because it's too complicated and they don't accept that reality because of hubris". I believe you're blalantly underestimating the predictive power of economic theory and economic policymakers (in this case the fed), but I'm talking from my own experience as an economist, so to tell the truth I don't know how to try to convince you of this. Economic history from outside a marxian perspective would be good, but sadly my knowledge is mostly restricted to Brazil, so I can't really recomend you anything to read.
Also, I'm not saying you should have blind faith in economists. I just I think your doubts have weak bases (and what I would point out as an unecessary predisposition against mainstream economic theory).
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EPT
