The Economy

[method man]

What do you guys think? I think Bernanke might be a bit too trigger-happy and that these rate cuts have very temporary effects.

[Ancalagon the Black]

This sure ain't the first thread that has been started on the economy, but I'll play along.

The Fed should not be cutting interest rates.

[JMS]

What do you guys think? I think Bernanke might be a bit too trigger-happy and that these rate cuts have very temporary effects.

Problem is the rate cuts benifits might be temporary compared to the negatives. Do you fear the impending bank collapse more or do you fear inflation? Clearly Bernanke is erroring on fearing the bank collapse, and openning the economy wide for inflation.

I don't know if you remember the good old days of Jimmy Carter when we were running 12% inflation and 8% unemployment. (Misery Index!!) When home morgages were topping in at 18%. Like buying a house on your credit card. Since that time inflation has been the prime concern of all subsequent Fed Chairmen. From Volker, to Greenspan. Bernanke's acts very well could usher in a new era of inflation, so invest in Gold, and in Realistate and make sure your job is secure.

Historic Unemployment data..

Historic Inflation Data

[chiefhogskin48]

I think we've all seen that Bernanke is NO Greenspan. In his defense though, he has been faced with far tougher times, on average (though Greenspan helped us avert sizeable recession in 2001/2002).

[frommd]

I think Greenspan played a big part in where we are today. The subprime debacle came about on his watch. That said, there is no easy fix to this problem.

[GibbsFactor]

Historic Inflation Data

Heh. Imagine that. All fiat, no red. :doh:

[JMS]

I think we've all seen that Bernanke is NO Greenspan. In his defense though, he has been faced with far tougher times, on average (though Greenspan helped us avert sizeable recession in 2001/2002).

Fact is Greenspan contributed to this problem. By keeping interest rates at historic low levels and by agreeing to privatization of Fanny Mae, the primary Federal Mortgage company, He drastically increased the incentive to make loans while he kept the disencentive low via federal bank insurance.

Fanny Mae had all the motivation in the world to make loans and none of the risk for bad loans. Fanny Mae then passed along the bad dept to other financial institutions by reselling the loans. That is at the root of the impending bank catastrophe.

Bernakee's choice is of which evil is better; banking collapse or inflation. Already we've had many of the largest banks in the country remain solvent only through massive input of capital from Kuwait, Saudi, and China.

[Fergasun]

I think we've all seen that Bernanke is NO Greenspan. In his defense though, he has been faced with far tougher times, on average (though Greenspan helped us avert sizeable recession in 2001/2002).

What are you talking about? History is not going to be kind to Greenspan... and hasn't in the 2+ years since he has left office. Bernake looks like he is being played by the stock market. Still waiting for a contentious Fed meeting. Most of the Governors have gone along with the rate cuts. Seems like Bernake likes to cut rates and give lip service to inflation.

[PeterMP]

Heh. Imagine that. All fiat, no red. :doh:

Which of course is counter balanced because the blue peaks are much smaller. By my count the top peak after all fiat is about the 8th tallest peak on the graph.

The difference in net inflation over extended periods of time post and pre-only Fed is not significantly different, and at least twice there was what appears to be double the amount of the inflation at a peak.

Of course, I've posted data on this several times, but you continue to ignore it.

Which do you think it is easier for businesses and individuals to plan for, a pretty steady, but constantly increasing inflation rate or an inflation rate that shows wild variability?

[method man]

Look international as well. Developing countries are starting to decouple from the US. Sensex is booming for example.

[Kilmer17]

The real solution is to raise the rate to 10-12 percent. Make the Dollar strong as hell and give us buying power.

Unfortunately, it also bankrupts the lower middle class.

So that's out.

On a micro level, rate cuts are a big deal to the FLA economy. A worthless dollar means loads of foreign visitors and investors in local real estate and businesses.

I just cant wait to get my 2100.00 bucks though, Im torn between a 54 in plasma or a trip to the Bahamas. Thoughts?

[JMS]

The real solution is to raise the rate to 10-12 percent. Make the Dollar strong as hell and give us buying power.

Unfortunately, it also bankrupts the lower middle class.

So that's out.

On a micro level, rate cuts are a big deal to the FLA economy. A worthless dollar means loads of foreign visitors and investors in local real estate and businesses.

I just cant wait to get my 2100.00 bucks though, Im torn between a 54 in plasma or a trip to the Bahamas. Thoughts?

Actually a cheaper dollar also helps American manufacturing which has been devistated under Bush.

I think realistate is actually quite a good hedge against inflation, as is gold.

[GibbsFactor]

Which of course is counter balanced because the blue peaks are much smaller. By my count the top peak after all fiat is about the 8th tallest peak on the graph.

The difference in net inflation over extended periods of time post and pre-only Fed is not significantly different, and at least twice there was what appears to be double the amount of the inflation at a peak.

Of course, I've posted data on this several times, but you continue to ignore it.

Which do you think it is easier for businesses and individuals to plan for, a pretty steady, but constantly increasing inflation rate or an inflation rate that shows wild variability?

I haven't chosen to ignore it. I disagree with your analysis of the data. I see constant up and down spikes (the phenomenon which is inflation) during the history of this country. You can point out when we had major wars just be looking at that graph. It's uncanny. For the last 50 years, however, you see nothing but inflation. The market never naturally settles and devalues. Prices just keep going up. Now we have to artificially manipulate rates to keep everything from the price of food to peoples income in check. It's all inflation. Sure it's better to plan for it. But it sucks when you can't save a dime, you have to invest and play the market to make any money and the price of everything continues to rise, never resetting. It's not natural. That's the problem.

[Ancalagon the Black]

The real solution is to raise the rate to 10-12 percent. Make the Dollar strong as hell and give us buying power.

Yes, because what we need is to destroy our export industries and import more stuff from other countries.

[PeterMP]

I haven't chosen to ignore it. I disagree with your analysis of the data. I see constant up and down spikes (the phenomenon which is inflation) during the history of this country. You can point out when we had major wars just be looking at that graph. It's uncanny. For the last 50 years, however, you see nothing but inflation. The market never naturally settles and devalues. Prices just keep going up. Now we have to artificially manipulate rates to keep everything from the price of food to peoples income in check. It's all inflation. Sure it's better to plan for it. But it sucks when you can't save a dime, you have to invest and play the market to make any money and the price of everything continues to rise, never resetting. It's not natural. That's the problem.

It isn't my analysis. It is a basic fact. Before the move away from the gold standard and after it we saw essentially the same net inflation over long periods of time.

That's a fact.

The average value lost to a dime over extened periods of time is essentially the same pre-gold standard and post-gold standard so the idea that you could "save" money by simply placing it a bank account "better" pre-gold standard than post-gold standard is just false when you look at extended periods of time.

That's not my analysis. Those are the facts.

[Ancalagon the Black]

Not to mention that deflationary periods are disastrous for economies.

[SkinsFanAnt]

The economy is ****ed as long as we're in Iraq and as long as we have Bush in the White House. It's really not that hard to figure out :doh:

[Ancalagon the Black]

Looks like the Fed has panicked again.