The Fed to push harder on the rope?

[Larry Gude]

That's what I hear. He may have helped keep us out of the Great Depression II - unfortunately, he may also have helped doom us to the Great Stagnation. At the very least, he helped keep us comfortably encapsulated in the Great Delusion.

My argument has been that he has been, like so many leaders throughout history, is fighting the last war. This would have been great 80 years ago but, the economy is soooo much more dynamic and responsive now and way more consumer driven.

 

[Larry Gude]

The first time I was greasing an antenna rotator that was new to me, I was told to take the grease gun and grease it. Zerk fitting - ah, grease until grease pops out. One whole grease gun later - nothing. WTF? Was the gun full, or was there a huge air bubble in there? Hmmm.... So I open the door, and there is a big pile of grease inside, all over the motor and control circuits.

Lesson learned - before you start greasing something, find out how much grease to use, where it is supposed to go, and what else it might affect.

I have a bad feeling that this isn't a good year to be a guy named Ben - lose the superbowl, squirt grease everywhere, and cause the economy to go haywire. I guess the real question that affects me: will wages keep pace with inflation? In my situation, they can't.

I heard a talking head say that oil prices are up because the dollar has been devalued. If that's the real reason, is there anything that makes you think it won't continue?

Good story.

As far as the dollar and oil, you would have had to go out of your wya to ignore me on that one;Repeal of Glass/Steagal reopened the non industry speculation in commodities, one of the primary reasons of GS in the first place; to LIMIT it.

Big money people can simply buy into oil, help cause a rise, it protects their dollars, they all keep buying new contracts as the old ones expire, up, down, it doesn't matter, they can NOT lose because they are MAKING the market. They can go long for awhile and then simply short when it's time to maybe put some money somewhere else.

It is criminal the way two administrations in a row have tried to hide so many of their economic policy sins on the backs of people who can least afford it.

 

[Pushrod]

Perhaps.

Perhaps they realize they've already screwed the pooch with regard to price inflation, so they even more desperately need to, somehow, force some wage inflation. And, pumping grease is about all they can think to do, so pump grease they will - and hope and pray that whatever's seized up in there (who knows what it is, but it's gotta be in there somewhere) will eventually break loose.

Price inflation AND wage inflation = we can live with that
Price inflation WITHOUT wage inflation = Egypt (well, probably not really, but you get the point)

I know that my and my wife's wages have not kept up with the food inflation that our government tells us isn't happening. Every month our spending power seems to get less and less.

We may not be heading for hyperinflation, I can't predict the future, but is Stagflation really any better?

 

[Tilted]

Fed's Warsh, Inflation Hawk, To Leave at End of March

Kevin Warsh, the Federal Reserve's youngest-ever governor and a vocal inflation hawk skeptical of recent monetary easing efforts, said on Thursday he is stepping down from the central bank's powerful board.

No reason was cited for Warsh's decision.

He joined the Fed on Feb. 24, 2006, and will have served just over five years when he leaves at the end of March. His term was not due to expire until Jan. 31, 2018.

 

[Tilted]

I know that my and my wife's wages have not kept up with the food inflation that our government tells us isn't happening. Every month our spending power seems to get less and less.

We may not be heading for hyperinflation, I can't predict the future, but is Stagflation really any better?

The Fed focuses primarily on Core Inflation when it comes to assessing inflationary conditions/risks and deciding/justifying its monetary policies. Core inflation excludes energy and food prices from the measurement of inflation in general. The Fed thinks the pricing of those things is volatile, and that their inclusion can tend to distort the real inflation story.

Energy and food pricing is volatile. No #### sherlock. Pump a little more money into the already bloated money system - that should help mitigate the volatility.

 

[Tilted]

Stagflation Still Regarded as Economy's Dirty Little Secret

Despite rising commodity prices and a bleak employment picture, “stagflation” remains a word not uttered in the polite company of the financial world.

But there remain only a few more tumblers to fall into place for a return to that awful word that conjures up images of the “malaise days” of the late 1970's and early ‘80s, where rising inflation and slumping employment tamped down economic growth.

Oil’s foray Wednesday above the psychologically important $100-a-barrel line only helped stoke the historical comparisons.

 

[MMDad]

Stagflation Still Regarded as Economy's Dirty Little Secret

I understand that they use a broad range of items to determine inflation, but it's starting to seem bogus. To say it's "stagflation" discounts the very real impacts on most of us.

I can see how housing, cars, luxery items, and tech prices are steady or decreasing, but the things that impact the average person the most are rising drastically.

From January 2010 to January 2011:
Beef is up 9.7%
Pork is up 9.9%
Citrus is up 10.6%
Butter is up 19.6%
Fuel oil is up 17%
Water/sewer are up 6.2%
Gas is up 13.5%
Diesel is up 16.4%
Medical care is up 3% (even with PelosiCare)
Tobacco is up 5.2%
Airline tickets are up 9.8%

The few things going down:
Electronics
Household furnishings and appliances
Natural gas


The Seasonally adjusted annual rate percent change for the three months ending January 2011:
Rice is 21%
Citrus is 66.5%
Fuel oil is 85.7%
Gas is 53.5%
Diesel is 117%
Airline fares are 33%


Inflation is there. We have just shifted our buying patterns from the nice to have items to the must have items. Leaving food and energy out sure makes the situation look better than it is, but does not change the fact that we are being bled dry.

 

[Tilted]

I understand that they use a broad range of items to determine inflation, but it's starting to seem bogus. To say it's "stagflation" discounts the very real impacts on most of us.

I don't think the term 'stagflation' is generally used to discount the real impacts (or existence or magnitude) of price inflation. Quite to the contrary, it is used to refer to the problematic combination of inflation and unemployment - the presence of price inflation in the absence of economic growth.

I can see how housing, cars, luxery items, and tech prices are steady or decreasing, but the things that impact the average person the most are rising drastically.

From January 2010 to January 2011:
Beef is up 9.7%
Pork is up 9.9%
Citrus is up 10.6%
Butter is up 19.6%
Fuel oil is up 17%
Water/sewer are up 6.2%
Gas is up 13.5%
Diesel is up 16.4%
Medical care is up 3% (even with PelosiCare)
Tobacco is up 5.2%
Airline tickets are up 9.8%

The few things going down:
Electronics
Household furnishings and appliances
Natural gas


The Seasonally adjusted annual rate percent change for the three months ending January 2011:
Rice is 21%
Citrus is 66.5%
Fuel oil is 85.7%
Gas is 53.5%
Diesel is 117%
Airline fares are 33%


Inflation is there. We have just shifted our buying patterns from the nice to have items to the must have items. Leaving food and energy out sure makes the situation look better than it is, but does not change the fact that we are being bled dry.

But, but, but... it wouldn't make sense for the Fed to look at food and energy costs for indications of (worrisome) rises in consumer prices because, well.. food and energy costs sometimes lead to spikes in consumer prices.

 

[Tilted]

More on the issue of how the Fed looks at inflation from Rick Santelli and Jim Bullard (the president of the Federal Reserve Bank of St. Louis and a voting member of the FOMC during 2010):

Bullard Gauges Inflation - CNBC Video (Skip to about 11:30 for the part of the conversation I'm referring to.)

 

[Tilted]

Pimco Goes to Cash, Exits Treasurys

Pimco has dumped all of its US Treasury bond exposure in its flagship Total Return Fund.

The move makes sense given Pimco chief Bill Gross's public statements that Treasurys are over-valued.

"It just gives people that follow him the bias not to bullish on the Treasury market," said Jefferies Treasury Strategist John Spinello. "He thinks rates are going higher."

 

[Tilted]

Review & Outlook: 'I Can't Eat an iPad' - WSJ.com

The former Goldman Sachs chief economist gave a speech explaining the economy's progress and the Fed's successes, but come question time the main thing the crowd wanted to know was why they're paying so much more for food and gas. Keep in mind the Fed doesn't think food and gas prices matter to its policy calculations because they aren't part of "core" inflation.

So [New York Fed President] Mr. Dudley tried to explain that other prices are falling. "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said. "You have to look at the prices of all things."

Reuters reports that this "prompted guffaws and widespread murmuring from the audience," with someone quipping, "I can't eat an iPad." Another attendee asked, "When was the last time, sir, that you went grocery shopping?"

 

[n0n1m0us3]

Review & Outlook: 'I Can't Eat an iPad' - WSJ.com

There seems to be a major disconnect between Mr. Dudley/the Fed and reality for the American people. I would have loved to hear what the answer to the grocery shopping question was. Utterly clueless

 

[Tilted]

Fed's Bullard Jolts Bonds and Dollar—But Not Stocks

Fed officials have been singing different tunes about monetary policy recently, but one voice has risen above the rest to boost the dollar and pressure Treasury bonds.

It may be that he has had the most appearances in the last several days, but the hawkish words of St. Louis Fed President James Bullard are being heeded more than usual by the foreign exchange and Treasury markets.

On Tuesday, Bullard was even more strident in his comments against the Fed's quantitative easing program, saying the economy is strong enough for the Fed to stop $100 billion short of its planned $600 billion Treasury purchase program.

 

[Tilted]

Fed Could Raise Rates by Year-End: Kocherlakota

The Federal Reserve could raise rates by the end of 2011, far sooner than expected by financial markets, according to comments by a senior Fed official in the Wall Street Journal on Thursday.

Minneapolis Federal Reserve President Narayana Kocherlakota signaled the Fed could raise benchmark borrowing costs, which are now close to zero, by three-quarters of a percentage point by the end of the year, the newspaper said.

The U.S. economy should grow by 3.0 percent this year, Kocherlakota said.

 

[Tilted]

Fed Is Likely to Raise Rates By End of the Year: Lacker

Richmond Federal Reserve President Jeffrey Lacker told CNBC Friday that he "wouldn't be surprised" if the central bank raised interest rates before the end of the year.

In an interview at a banking meeting hosted by the Richmond Fed, Lacker said ending the Fed's bond-buying stimulus program also "deserves consideration."

He gave no timetable for the rate hikes and other actions. "The exact sequencing of that is something we’re hashing out and trying to think through," he said.

 

[Tilted]

Bernanke Says US Inflation Spike Won't Last

A recent increase in U.S. inflation is driven primarily by rising commodity prices globally, and is unlikely to persist, Federal Reserve Chairman Ben Bernanke said on Monday.

The comments stood in sharp contrast to a string of U.S. central bank officials, some of whom have argued the time is coming for the Fed to begin tightening monetary policy.

Earlier on Monday, Atlanta Fed President Dennis Lockhart struck a similar note, saying inflation would probably remain moderate.

 

[Tilted]

Santelli Reacts to Bernanke - CNBC

Ben Bernanke: "I think the increase in inflation will be transitory, but it will pass and that we'll go back to a level of inflation which is consistent with our price stability mandate. That being said, we have to monitor inflation, inflation expectations extremely closely because if my assumptions prove not to be correct then we would certainly have to respond to that and ensure that we maintain price stability in the United States."

Again, problematic inflation is something to be prevented (more to the point, not caused), not something to be dealt with once it is observed.

I think that smoldering in the corner won't amount to much, it will put itself out and not burn the house down. That being said, we have to keep an eye on it because if my assumptions turn out not to be correct, and the house does start to burn down, we would certainly have to respond.

 

[Tilted]

Bernanke: Fed May Launch New Round of Stimulus

Federal Reserve Chairman Ben Bernanke told Congress Wednesday that a new stimulus program is in the works that will entail additional asset purchases, the clearest indication yet that the central bank is contemplating another round of monetary easing.

Bernanke said in prepared remarks that the economy is growing more slowly than expected, and should that continue the central bank stands at the ready with more accommodative measures.

"Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation," he said[sic]

 

[Larry Gude]

Bernanke: Fed May Launch New Round of Stimulus

This long ago stopped being funny. This guy is at the helm, steered us into the rocks with TARP, has backed up and rammed us straight back into them again and again and STILL can't seem to grasp that is is no longer 1929.

I suppose he has met his goal; avoiding a nasty, but short, depression and displacing it with an inter-generational recession that still, despite his never ending fighting of the last war, has all the makings of a global economic collapse that may take the word 'great' out of the history books from the last one.



Of course, he has had lots of help but, I think that is another book long over due;

"Ben Bernanke and Winning the Last War; an in depth study of why 2008 had nothing to do with 1929"