Financial News

[StrangeSox]

 

Okay. Whatever. How about trying to actually answer the question instead of being the "WINNAH" at debate tactics?

 

No. It's a meaningless distraction. But keep pretending its a legitimate point, it's funny.

[kapkomet]

No. It's a meaningless distraction. But keep pretending its a legitimate point, it's funny.

 

 

Everything's meaningless to you unless you've thought of it. You can't answer it.

[StrangeSox]

Everything's meaningless to you unless you've thought of it.

 

Nah, just tangential s*** thrown out there to avoid having to actually discuss the issue at hand. Like this thing.

 

You can't answer it.

 

Yeah, I already said that. Good job I guess?

 

Now can you get back to the actual topic?

[southsider2k5]

That would be a compelling question if it actually meant anything. But since it doesn't, it's reflexive defense.

 

So Balta is actually claiming that the 17 FRB governors over the last two years have been essentially worthless, because without the two Obama appointees, they haven't been able to find their way to tackle any of the issues that are out there. But, somehow, if these 2 people had been on the FRB, they would have solved unemployment, the employment gap, economic turmoil, inflation, AIDS, cancer, and Adam Dunn's swing. Yet I am the partisan shill asking questions that don't mean anything?

 

Yeah, speaking of reflexive partisan postings...

[NorthSideSox72]

What prediction of Keynesianism has been wrong so far? Where's the horrible inflation that should come from printing money like crazy? Why did unemployment stabilize?

First, inflation in the direct sense already occurred. Second, inflation in commodities is well under way. The rest of the basket will go there too, but not yet - need a little more recovery traction first.

 

[Balta1701]

First, inflation in the direct sense already occurred. Second, inflation in commodities is well under way. The rest of the basket will go there too, but not yet - need a little more recovery traction first.

The Commodities price spike has already reversed, it never began affecting wages, and it never began hitting core inflation. And even with the price spike, total inflation was still well under the federal reserves inflation target...which might suggest that the Federal Reserve should be taking action to meet their own target.

[NorthSideSox72]

The Commodities price spike has already reversed, it never began affecting wages, and it never began hitting core inflation.

"core" inflation is a garbage measure, in my view - and that was what I was referring to as the "basket", which is usually last to go (and will be here as well). And the price spike has not been anything like "reversed" - its come back a bit off highs, but they are still well above where they were.

 

[Balta1701]

"core" inflation is a garbage measure, in my view - and that was what I was referring to as the "basket", which is usually last to go (and will be here as well). And the price spike has not been anything like "reversed" - its come back a bit off highs, but they are still well above where they were.

Core inflation is a big time difference. If you're seeing legitimate "Core" inflation, it is caused by something entirely different from commodity inflation and it has the exact opposite consequence on the economy.

 

Inflation in commodity prices is caused by scarcity of the items, for whatever reason. When core inflation is going up, it has the same effect as a rise in interest rates...it eats away at the value of income. It is a negative for consumers, and furthermore it does not produce a spike in earnings.

 

Core inflation on the other hand is caused by an overabundance of demand both for workers and for products that are produced. Core inflation hitting is a sign that the job market has finally reached its potential, it simply can't happen right now, because there is nothing to force core inflation when the economy is so far below capacity.

 

The big difference is that if you raise interest rates to fight commodity inflation, you're hurting your economy without solving the problem, since raising interest rates and general inflation have the same effect...both erode people's purchasing power.

 

We have a commodity price inflation problem...because our economy is overreliant on a few select commodities. The solution to that problem should not be "fewer jobs"...which is why its excluded from a reasonable measure of actual inflation.

[Balta1701]

[bmags]

Exactly why it's important to get 2 board governors more focused on employment than inflation.

[Jenksismyhero]

http://www.washingtonpost.com/blogs/fact-c...nefKH_blog.html

 

With some of the economic indicators looking a bit dicey, President Obama traveled to Ohio last week to tout what the administration considers a good-news story: the rescue of the domestic automobile industry. In fact, he also made it the subject of his weekly radio address.

 

We take no view on whether the administration’s efforts on behalf of the automobile industry were a good or bad thing; that’s a matter for the editorial pages and eventually the historians. But we are interested in the facts the president cited to make his case.

 

What we found is one of the most misleading collections of assertions we have seen in a short presidential speech. Virtually every claim by the president regarding the auto industry needs an asterisk, just like the fine print in that too-good-to-be-true car loan.

[NorthSideSox72]

Core inflation is a big time difference. If you're seeing legitimate "Core" inflation, it is caused by something entirely different from commodity inflation and it has the exact opposite consequence on the economy.

 

Inflation in commodity prices is caused by scarcity of the items, for whatever reason. When core inflation is going up, it has the same effect as a rise in interest rates...it eats away at the value of income. It is a negative for consumers, and furthermore it does not produce a spike in earnings.

 

Core inflation on the other hand is caused by an overabundance of demand both for workers and for products that are produced. Core inflation hitting is a sign that the job market has finally reached its potential, it simply can't happen right now, because there is nothing to force core inflation when the economy is so far below capacity.

 

The big difference is that if you raise interest rates to fight commodity inflation, you're hurting your economy without solving the problem, since raising interest rates and general inflation have the same effect...both erode people's purchasing power.

 

We have a commodity price inflation problem...because our economy is overreliant on a few select commodities. The solution to that problem should not be "fewer jobs"...which is why its excluded from a reasonable measure of actual inflation.

Of course core inflation is an important difference - I say its a garbage measure because it fails to reflect real, full impact of inflation (which you are doing as well). Commodity inflation isn't just a real demand problem, nor is it just a reliance on things like oil and gas (though those are factors). Its also a market flight issue. People are going commodities because of the markets and the economy in general, and that will continue to some extent.

 

And core inflation vs commodity inflation are not entirely different in cause, they are related. Furthermore, the effect on the economy is very much related.

 

[Balta1701]

Of course core inflation is an important difference - I say its a garbage measure because it fails to reflect real, full impact of inflation (which you are doing as well). Commodity inflation isn't just a real demand problem, nor is it just a reliance on things like oil and gas (though those are factors). Its also a market flight issue. People are going commodities because of the markets and the economy in general, and that will continue to some extent.

 

And core inflation vs commodity inflation are not entirely different in cause, they are related. Furthermore, the effect on the economy is very much related.

Right now, rising core inflation would be a very good thing for everyone in our economy except banks and people who are sitting on a lot of cash.

 

It would be especially useful for homeowners.

 

Therefore, the Federal Reserve, which is staffed almost entirely with people from the banking and investment sector, has decided that rising core inflation would be a bad thing.

[NorthSideSox72]

Right now, rising core inflation would be a very good thing for everyone in our economy except banks and people who are sitting on a lot of cash.

It would be especially useful for homeowners.

 

Therefore, the Federal Reserve, which is staffed almost entirely with people from the banking and investment sector, has decided that rising core inflation would be a bad thing.

Explain the bolded if you will.

 

[Balta1701]

Explain the bolded if you will.

Core inflation would decrease the value of any fixed-interest rate debt over time. Right now, huge private debt overhangs from the evaporation of $8 trillion in housing wealth are still the single biggest problem in the economy...$8 trillion evaporated and the rest of the population is still struggling to rebalance itself by cutting back on spending.

 

Moderate degrees of inflation...like what the Federal Reserve says its goal is (the goal that it has missed since 2008) would assist in increasing the value of hard assets relative to that debt. It would be a negative for the debt holder (the bank) which makes out like gangbusters right now because inflation is running below target.

 

If you're holding a 15 or 30 year fixed rate mortgage, this below-target inflation is terrible for you, it's actually making your mortgage more expensive.

 

Furthermore, moderate inflation is a motivation for both purchasers and investors to take money off of the sideline and invest it in job creation. Right now, most of the large financial firms are still sitting on enormous piles of cash and making money based on a version the carry trade, where they've borrowed huge sums at 0% interest rate and are making money by putting those funds into other still safe assets. THat is only possible because of the low inflation environment...you can't pull that off as a money-maker if you expect the value of the cash to erode with time, so you have to invest it in something that can grow faster.

 

Edit: Note; this of course does not imply that "Infinite" inflation would be a good thing here, there is a limit to how much benefit you can get because eventually the holders of debt wind up routed in high inflation environments and worker salaries can't adjust to keep up. I should re-stress that a key word there is "Moderate"...similar to or perhaps 1% above the Federal Reserve's 2-3% inflation target.

[StrangeSox]

So Balta is actually claiming that the 17 FRB governors over the last two years have been essentially worthless, because without the two Obama appointees, they haven't been able to find their way to tackle any of the issues that are out there. But, somehow, if these 2 people had been on the FRB, they would have solved unemployment, the employment gap, economic turmoil, inflation, AIDS, cancer, and Adam Dunn's swing. Yet I am the partisan shill asking questions that don't mean anything?

 

Yeah, speaking of reflexive partisan postings...

 

The fascinating thing here is that this post completely fails to address the actual problem at hand. It doesn't even attempt a justification or even a hand-wavey excuse.

[Cknolls]

What prediction of Keynesianism has been wrong so far? Where's the horrible inflation that should come from printing money like crazy? Why did unemployment stabilize?

 

 

Well inflation is caused by the rise in wages which leads to the rise in prices. So that has nothing to do with Keynesianism.

[Cknolls]

Gm boss wants $1 gas tax. Yeah, ok, right after you forgo the tax credits this administration gifted upon you in bankruptcy.

[StrangeSox]

Bernanke cautions against short-term deficit reduction obsession:

In his speech today about the economic outlook, Federal Reserve Chairman (and former George W Bush Council of Economic Advisors Chairman) Ben Bernanke warned that although closing the long-term budget gap is important, policymakers should avoid counterproductive near-term austerity budgeting of the sort that’s failed in the United Kingdom. Specifically, Bernanke cautioned that “a sharp fiscal consolidation focused on the very near term could be self-defeating if it were to undercut the still-fragile recovery.”

 

 

 

 

[Balta1701]

Well inflation is caused by the rise in wages which leads to the rise in prices. So that has nothing to do with Keynesianism.

Actually the fact that you're right is pretty much the key element of the whole topic.

[southsider2k5]

The fascinating thing here is that this post completely fails to address the actual problem at hand. It doesn't even attempt a justification or even a hand-wavey excuse.

 

Which is why I am still waiting for someone to justify how these two were going to save the world somehow. Trust me, I am not holding my breath.

[StrangeSox]

Which is why I am still waiting for someone to justify how these two were going to save the world somehow. Trust me, I am not holding my breath.

 

But your point is irrelevant. Even if I grant you that their appointment is ultimately inconsequential, it doesn't legitimize refusing to allow a vote on their appointment. It's a red herring. It's an attempt to deflect away from a discussion of the larger Republican tactic of refusing to allow confirmation votes on dozens or hundreds of appointments.

 

bmags already addressed your point, by the way, by accurately pointing out the hyperbole. No one claimed they would "save the world," but said that "hey, maybe its a bad idea to hold up fed board nominations for no reason, not good, not bad, but literally no reason during an economic crisis." You responded with a pretty lame and pretty unreasonable standard of "well show me a specific vote they would have changed!!!"

 

Which, again, is irrelevant to the actual issue: preventing Executive branch appointments from even being discussed or voted on as a matter of policy and nothing more.

Edited June 8, 2011 by StrangeSox

[NorthSideSox72]

Well inflation is caused by the rise in wages which leads to the rise in prices. So that has nothing to do with Keynesianism.

Except that's not what inflation is. Inflation in the most base-level sense is the adding of currency to the system, and as I noted, this has already occurred. Wage, core and commodity inflation are all secondary effects.

 

Here is the dictionary definition:

 

Economics... a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency ( opposed to deflation).

 

Note, related to means caused by. The volume of money has already increased. Subsequent rises in prices have since occurred in commodities, but have yet to begin in wages or "core", but as some of us have been saying, this is the inevitable long term consequence of the massive influx of new money.

 

[southsider2k5]

But your point is irrelevant. Even if I grant you that their appointment is ultimately inconsequential, it doesn't legitimize refusing to allow a vote on their appointment. It's a red herring. It's an attempt to deflect away from a discussion of the larger Republican tactic of refusing to allow confirmation votes on dozens or hundreds of appointments.

 

bmags already addressed your point, by the way, by accurately pointing out the hyperbole. No one claimed they would "save the world," but said that "hey, maybe its a bad idea to hold up fed board nominations for no reason, not good, not bad, but literally no reason during an economic crisis." You responded with a pretty lame and pretty unreasonable standard of "well show me a specific vote they would have changed!!!"

 

Which, again, is irrelevant to the actual issue: preventing Executive branch appointments from even being discussed or voted on as a matter of policy and nothing more.

 

Except that the whole point of Baltas thread was that all of these economic issues could have been fixed if these two people had been appointed.

 

That is why there was that specific reaction to his post. The result of voting or not voting these people on is the Red Herring, which came from the original post.

[Jenksismyhero]

So that thing I said about the US government being pretty lax on student loans....not so much I guess:

 

http://www.news10.net/news/article/141072/...ckton-mans-door

 

STOCKTON, CA - Kenneth Wright does not have a criminal record and he had no reason to believe a S.W.A.T team would be breaking down his door at 6 a.m. on Tuesday.

 

"I look out of my window and I see 15 police officers," Wright said.

 

Wright came downstairs in his boxer shorts as the officers team barged through his front door. Wright said an officer grabbed him by the neck and led him outside on his front lawn.

 

"He had his knee on my back and I had no idea why they were there," Wright said.

 

According to Wright, officers also woke his three young children ages 3, 7, and 11, and put them in a Stockton police patrol car with him. Officers then searched his house.

 

As it turned out, the person law enforcement was looking for was not there - Wright's estranged wife.

 

"They put me in handcuffs in that hot patrol car for six hours, traumatizing my kids," Wright said.