tangent4ronpaul
09-20-2011, 05:55 AM
I hope Paul gets on a lot of shows these next few days to talk about the economy/inflation.
Federal Reserve Talks Interest Rates and the Economy
http://www.wnyc.org/articles/wnyc-news/2011/sep/20/federal_reserve/
The Federal Reserve holds its Federal Reserve Open Market Committee meeting Tuesday and Wednesday. One of the goals, in line with the Federal Reserve’s mandate, will be to jumpstart the economy at a time when the recovery seems stalled.
...
Greg McBride at Bankrate.com said the Fed action in August surprised him. “It’s bold. It signifies some concerns about the health of the U.S. economy, but it’s also rolling the dice with regards to inflation,” McBride said.
That’s because cheap money can make prices go up wildly, as they did back in the 1970s. According to the Labor Department, consumer prices rose almost 4 percent over last year. The cost of food, rent and clothes all went up.
There's a camp of economists who say inflation may not be such a bad thing. The logic of the pro-inflation crowd is that if prices and costs go up, people's salaries go up too. But their debt — mainly mortgage debt — stays locked in. So they’d have more money to buy stuff.
(except salaries never keep up with inflation and people on fixed incomes and with savings get thrown under the bus)
Professor Raghuram Rajan at the University of Chicago said there’s a problem with that theory. A little bit of inflation, say 4 or 5-percent, Rajan posits, isn’t enough to move the needle. “So to really get debt levels down you need more like 10-15 percent over the next 2-3 years,” Rajan said.
Plus, that kind of inflation is very hard to engineer abruptly. And then you’d have to pull back at some point. “That’s expecting a lot of the Fed,” Rajan added.
The fear is that the pullback would cause another recession or cause stagflation — a scenario where prices go up, but growth stays low, like it did in the 1970s.
...
Federal Reserve Talks Interest Rates and the Economy
http://www.wnyc.org/articles/wnyc-news/2011/sep/20/federal_reserve/
The Federal Reserve holds its Federal Reserve Open Market Committee meeting Tuesday and Wednesday. One of the goals, in line with the Federal Reserve’s mandate, will be to jumpstart the economy at a time when the recovery seems stalled.
...
Greg McBride at Bankrate.com said the Fed action in August surprised him. “It’s bold. It signifies some concerns about the health of the U.S. economy, but it’s also rolling the dice with regards to inflation,” McBride said.
That’s because cheap money can make prices go up wildly, as they did back in the 1970s. According to the Labor Department, consumer prices rose almost 4 percent over last year. The cost of food, rent and clothes all went up.
There's a camp of economists who say inflation may not be such a bad thing. The logic of the pro-inflation crowd is that if prices and costs go up, people's salaries go up too. But their debt — mainly mortgage debt — stays locked in. So they’d have more money to buy stuff.
(except salaries never keep up with inflation and people on fixed incomes and with savings get thrown under the bus)
Professor Raghuram Rajan at the University of Chicago said there’s a problem with that theory. A little bit of inflation, say 4 or 5-percent, Rajan posits, isn’t enough to move the needle. “So to really get debt levels down you need more like 10-15 percent over the next 2-3 years,” Rajan said.
Plus, that kind of inflation is very hard to engineer abruptly. And then you’d have to pull back at some point. “That’s expecting a lot of the Fed,” Rajan added.
The fear is that the pullback would cause another recession or cause stagflation — a scenario where prices go up, but growth stays low, like it did in the 1970s.
...