You want cheap gas?

[skinfan133]

Exactly, the Fed SHOULD be raising interests rates, our housing market was built on smoke and mirrors anyways.

The Federal Reserve is just smoke and mirors as well, don't forget. why is it that people just assume (and I'm not saying you winslow, just in general) that the institution is flawless and its some other make-believe reason that things don't exactly "work"? face it, the federal reserve has been, and always will be, the source of our economic woes. it is the source of our inflation, the fluxuations of our market based on the artificial insimination of curency, the artifical influence of interest rates that debase our artificial currency, and will be the ultimate source of everlasting poverty because our currency is backed by absolutely NOTHING at all but our faith in the Federal Reserve Bank!

why don't people question why it is we must have a Federal Reserve? (which I might add is NOT a government agency in the least...)

:whoknows:

[MDRedskinsFan]

The Federal Reserve is just smoke and mirors as well, don't forget. why is it that people just assume (and I'm not saying you winslow, just in general) that the institution is flawless and its some other make-believe reason that things don't exactly "work"? face it, the federal reserve has been, and always will be, the source of our economic woes. it is the source of our inflation, the fluxuations of our market based on the artificial insimination of curency, the artifical influence of interest rates that debase our artificial currency, and will be the ultimate source of everlasting poverty because our currency is backed by absolutely NOTHING at all but our faith in the Federal Reserve Bank!

why don't people question why it is we must have a Federal Reserve? (which I might add is NOT a government agency in the least...)

:whoknows:

It may not be flawless, but we've had ONE depression since the FED was instituted in the 1910's, and that was within 15 years of its creation. Its job is to manage growth of the domestic economy, so we don't face another depression. If they devalue our currency, it's so the currency's value doesn't grow too fast too soon. If we grow too fast, then we'll hit rock bottom as fast if not faster. We experienced far more severe slowdowns before the FED was created.

To address your other point, the decision to change the backing of the US currency away from gold wasn't the FED's choice, that was Nixon. I actually support a gold backing, but it takes another president to change back to that.

Why don't some people just understand that economic slowdowns like this are just a way of life, and necessary to maintain net growth long-term?:whoknows:

[Burgold]

Why don't some people just understand that economic slowdowns like this are just a way of life, and necessary to maintain net growth long-term?:whoknows:

It's simple. People don't like pain.

You've also got really bad anecdotal evidence against the Republicans in terms of the economy (at least during my adult life time.) So, some say it's cyclical. Others say it's the Republicans credit card philosophy.

End of Reagan: Recession. Huge defecits. Businesses closing.

End of Bush I: recession. Homelessness. It's the economy stupid.

End of Clinton: Surplusses. Economic prosperity. (okay, there was a tech bubble too)

End of Bush II: Inflation. Oil. Recession. Businesses closing. (at least everywhere I look, I see going out of business signs)

[MDRedskinsFan]

It's simple. People don't like pain.

You've also got really bad anecdotal evidence against the Republicans in terms of the economy (at least during my adult life time.) So, some say it's cyclical. Others say it's the Republicans credit card philosophy.

End of Reagan: Recession. Huge defecits. Businesses closing.

End of Bush I: recession. Homelessness. It's the economy stupid.

End of Clinton: Surplusses. Economic prosperity. (okay, there was a tech bubble too)

End of Bush II: Inflation. Oil. Recession. Businesses closing. (at least everywhere I look, I see going out of business signs)

Well, the first thing that most people need to realize is that supply-side economics doesn't work. Period. It's been done twice, and both times it has resulted in massive budget deficits. The Laffer curve on which supply-side economics is based is flawed, because lower tax rates don't result in increased tax revenue over a long stretch of time.

Bush I followed Keynesian economics, but Reagan had cut taxes enough and left them permanent so Bush couldn't recover in time for that election. I think the next President will face the same situation as Bush I, regardless of whether it's Obama or McCain. They will have to raise taxes because no politician is going to support the massive budget cuts that are necessary to balance the budget. And when your currency is based on faith that the government will pay down its debts, we aren't doing a good job there.

I think the government would have been better equipped to deal with this economic crunch if they had raised taxes when the economy was booming in 2005-2006. Keynesian economics would have agreed with the 2nd round of Bush tax cuts, but not the 1st since it was political.

The 2nd helped to boost a slowing economy. But that is the purpose of a tax cut. When the economy recovers, you have to recover the lost tax revenue, or when the next slowdown occurs, you won't be in a good position to help society out. The only flaw in the Keynesian model is that one can't fight inflation and a recession at the same time. However, it is still the most proven economic theory we have. The sooner both parties realize that the general Keynesian theory of economics is a smoother way to go, the better off we will be in the future.

[Burgold]

Surprisingly, to me, I think we're in agreement. I think it is partly also why I think that whoever is voted President this go around will be a one-termer. Between the new taxes and the pain to undo some of the mess that Bush got us into and some of the mess that just wasn't his fault. I think we will be going through a few rotten years (much like with Bush I) and even if Obama/McCain do the right things, during their time they will not be thanked for it.

[MDRedskinsFan]

Surprisingly, to me, I think we're in agreement. I think it is partly also why I think that whoever is voted President this go around will be a one-termer. Between the new taxes and the pain to undo some of the mess that Bush got us into and some of the mess that just wasn't his fault. I think we will be going through a few rotten years (much like with Bush I) and even if Obama/McCain do the right things, during their time they will not be thanked for it.

This is why I personally believe that McCain is the best equipped to deal with the next 4 years. I think Obama would be very comparable to Clinton in his way of talking to people, but would be the better option 4 years down the road given his youthful energy and unique ideas. 2012 might equal 1992 in that case. The Republican party is in shambles now, and is in need of a total reboot, like Newt Gingrich did in 1994. We strayed away from those ideas and got caught up in the games on Capitol Hill. Even if McCain wins, I'm not certain that he'd want a 2nd term. So I'd give him his 4 years (like Bush I), and then when we can get the war on terror back on track, hand it off to a fresher mind to deal with.

[Winslowalrob]

The Federal Reserve is just smoke and mirors as well, don't forget. why is it that people just assume (and I'm not saying you winslow, just in general) that the institution is flawless and its some other make-believe reason that things don't exactly "work"? face it, the federal reserve has been, and always will be, the source of our economic woes. it is the source of our inflation, the fluxuations of our market based on the artificial insimination of curency, the artifical influence of interest rates that debase our artificial currency, and will be the ultimate source of everlasting poverty because our currency is backed by absolutely NOTHING at all but our faith in the Federal Reserve Bank!

why don't people question why it is we must have a Federal Reserve? (which I might add is NOT a government agency in the least...)

:whoknows:

Dude, that is the truth you are spittin there. I do not think the Fed is flawless, in fact I am raggin on the Fed now for screwin up the interest rates. Our money IS based on fiat, rather than any hard resource (like gold hint hint). You raise a VERY good point about the need of the Federal Reserve, but I find a lack of discussion about gas prices and inflation to be scary. To each their own.

[MDRedskinsFan]

Dude, that is the truth you are spittin there. I do not think the Fed is flawless, in fact I am raggin on the Fed now for screwin up the interest rates. Our money IS based on fiat, rather than any hard resource (like gold hint hint). You raise a VERY good point about the need of the Federal Reserve, but I find a lack of discussion about gas prices and inflation to be scary. To each their own.

I think I already acknowledged that our currency was based on faith in our government to pay down our debts.

There's a lack of discussion because this thread was turned into a "bash the FED" session, and frankly, if the FED did what you suggest they do, we wouldn't have to worry about inflation anymore because we wouldn't have an economy anymore. It would crash!

I guess this slowdown isn't enough for some people, because without a FED to control interest rates, the economy would not only grow uncontrollably, but it would crash without any checks and balances. If that's what you want, then your idea would work. It's all part of the natural business cycle, but if you don't want to acknowledge that, then there's nothing more to debate.

[Winslowalrob]

I think I already acknowledged that our currency was based on faith in our government to pay down our debts.

There's a lack of discussion because this thread was turned into a "bash the FED" session, and frankly, if the FED did what you suggest they do, we wouldn't have to worry about inflation anymore because we wouldn't have an economy anymore. It would crash!

I guess this slowdown isn't enough for some people, because without a FED to control interest rates, the economy would not only grow uncontrollably, but it would crash without any checks and balances. If that's what you want, then your idea would work. It's all part of the natural business cycle, but if you don't want to acknowledge that, then there's nothing more to debate.

The natural business cycle should contract an inefficient business. Our housing market was inefficient, and it was completely our fault. If the FED wants to save it at the expense of a stable currency, this is something that US society will have to pay for in decades rather than years. Americans seem to be fixated on gas prices and saving an intellectually bankrupt housing market, while being blind to currency issues. Not all Americans, mind you, just the ones that talk the most. The economy would not crash if the Fed raised interest rates, portions of the housing sector would, a housing sector that is going to crash anyways and quite painfully too the more we prolong it. Economies are complicated things, and the rise in gas prices DOES have to do with increased demand, but a lot of it has to do with inflation, but for some reason many people poo-poo the thought and instead point to an annual 3.2% increase in Chinese oil consumption as the tipping point. When people talk about Chinese or Indian demand doubling its bpd or bpy, they are starting from such minuscule rates that their effects are overblown (but a far simpler and more effective thing to attack). Besides China imported like 3.2 million bpd last year, using around 7 million bpd total. The US, on the other, often-ignored hand, uses 20 million bpd. Demand from the Other has some explanatory powers, but look at other stuff (speculation, inflation perhaps?)

[MDRedskinsFan]

The natural business cycle should contract an inefficient business. Our housing market was inefficient, and it was completely our fault. If the FED wants to save it at the expense of a stable currency, this is something that US society will have to pay for in decades rather than years. Americans seem to be fixated on gas prices and saving an intellectually bankrupt housing market, while being blind to currency issues. Not all Americans, mind you, just the ones that talk the most. The economy would not crash if the Fed raised interest rates, portions of the housing sector would, a housing sector that is going to crash anyways and quite painfully too the more we prolong it. Economies are complicated things, and the rise in gas prices DOES have to do with increased demand, but a lot of it has to do with inflation, but for some reason many people poo-poo the thought and instead point to an annual 3.2% increase in Chinese oil consumption as the tipping point. When people talk about Chinese or Indian demand doubling its bpd or bpy, they are starting from such minuscule rates that their effects are overblown (but a far simpler and more effective thing to attack). Besides China imported like 3.2 million bpd last year, using around 7 million bpd total. The US, on the other, often-ignored hand, uses 20 million bpd. Demand from the Other has some explanatory powers, but look at other stuff (speculation, inflation perhaps?)

Look, I agree with you that inflation will prove to be a big issue in the near future. I want to see the interest rates increased as much as you do. And I do firmly believe that inflation, and the speculative bubble/"irrational exuberance" has created the commodities bubble, and the only way to stop it is to increase interest rates and pop the bubble.

But, we have to stimulate economic growth before we can worry about it to the extent you describe. The models allow us to fight either a recession, or inflation, but not both at the same time. This hasn't happened like this since the 1970's. The only proven way to fight this is to fight recession first, inflation second. The good news, is that the Fed is done cutting interest rates. They've been cut as far as they can go, but they can't raise them either until the economy shows more signs of growth.

So until then, we're stuck in a rut. We'll make it out of this ok, we just need patience, and that's something we have lost in the information age.

[Winslowalrob]

Look, I agree with you that inflation will prove to be a big issue in the near future. I want to see the interest rates increased as much as you do. And I do firmly believe that inflation, and the speculative bubble/"irrational exuberance" has created the commodities bubble, and the only way to stop it is to increase interest rates and pop the bubble.

But, we have to stimulate economic growth before we can worry about it to the extent you describe. The models allow us to fight either a recession, or inflation, but not both at the same time. This hasn't happened like this since the 1970's. The only proven way to fight this is to fight recession first, inflation second. The good news, is that the Fed is done cutting interest rates. They've been cut as far as they can go, but they can't raise them either until the economy shows more signs of growth.

So until then, we're stuck in a rut. We'll make it out of this ok, we just need patience, and that's something we have lost in the information age.

Haha tru that. Actually I am pretty ok with the high gas prices, it should shock Americans into rethinking our energy policy. Besides, Americans pay quite little for oil compared to other rich countries. 2-3 bucks a liter is how a lot of Euros roll. I can only imagine how many American heads would explode at the prospect of paying that (or perhaps figuring out just how many liters there are in a gallon would do that as well)