Thursday, August 18, 2011

The Federal Reserve Causing Inflation?

A commenter in my post earlier today declared that Romney is ignorant about the inflation in our country and then proceeded to declare his monetary views as radical. It is pretty hard to make that statement in light of this historical chart that David Frum tweeted today. Changes in the Consumer Price Index have skyrocketed downward since 2008. Must be Ben Bernanke and his inflationary policies, right?

And if you still think that Rick Perry is right, you might want to read this blog post. It is hard to imagine that you could agree with him after looking at the numbers.



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14 comments:

Ohio JOE said...

No, surprisingly, overall inflation has remained low, but it is not going to remain low forever, if we continue to just print money. One of the reasons that we do not have serious inflation yet is that consumer confidence is low and banks do not want to lend anymore. However, that does not take away the risk of inflation nor does it negate the fact that there is inflation among imported goods thanks to the weak American dollar.

However, the simple fear of the future inflation is far from the only problem that the FED faces. The Fed helped get us in this mess in the first by over-heating the economy (read real estate market) then slammed on the breaks. It is not rocket science.

Banking oversight and dealing with the debt ceiling debate by the FED has been down-right sloppy. Most of us in the private sector could get away with such shenanigans for so long. The fact that Mr. Romney recently praised the FED's action shows that he is missing something. While I do not blame the FED for everything nor do I favor its dismemberment at this point, it is lunacy to give them a pass. We simply needed to make some changes because we just cannot carry on the exact same way that we have been going with regards to monetary and banking policies.

BTW, in a strange way, I am kind of glad that the other side got so worked up they I understand I was harshly insulted. Let's just say I often feel like pulling my hair out when I read comments from the other side so we are even.

Pablo said...

OJ,

I am not sure how you can look at those numbers and come to the conclusion that there is fear of future, excessive inflation. It is as if you look at the data and then choose the exact opposite conclusion as to what the data says. We have already had one round of quantitative easing and there has been record low inflation because of it. The uncertainty in the economy has nothing to do with the federal reserve.

I know that you start with disdain for Romney and then work from that starting point. Romney doesn't bash the Fed, therefore OJ bashes the Fed.

Unfortunately the world is not that simple. The Republican Party has rightfully based many of its policies (including Reagan) on a monitarist view of economics. You would throw that out and adopt a Ron Paul style approach.

Pablo said...

I just want to point out again OJ's thinking:

Reality: Record low inflation in the past three years despite zero percent interest rates and one round of quantitative easing. Inflation has been significantly lower than inflation during the Reagan years.

What OJ, Rick Perry, and the WSJ think: Yeah, but you just wait and see. Really big inflation is coming. You just wait.

Right Wingnut said...

Pablo,

Food and energy prices aren't factored in to the CPI. I'm sure you're aware of that.

Furthermore, what happens when consumers come out of their cacoons and start spending again? Too many dollars chasing too few goods.

Right Wingnut said...

Have you been to the grocery store lately, Pablo? How about the gas pump?

Ohio JOE said...

"I know that you start with disdain for Romney and then work from that starting point. Romney doesn't bash the Fed, therefore OJ bashes the Fed." WRONG! Part of my disdain for Mr. Romney is that he does not have the balls to stand up the FED.

"Really big inflation is coming. You just wait." Recent history shows that inflation is more probable than global warning. Again, inflation is not the only problem. Lack of Consumer confidence is not a good thing in and of itself and although Mr. Obama is primarily responsible for this the FED's handling of the banking crises did not help consumer confidence. You guy said 'oh things will get better; just sign this deal or that deal.' Well, I guess you have not looked at the stock market today or over the past few weeks. There is your answer for why anti-establishment candidates are gaining traction.

Right Wingnut said...

Prices have risen sharply over the past 3 years due to high energy costs and copper prices.

Right Wingnut said...

EDIT ABOVE POST:

Prices have risen sharly IN MY INDUSTRY due to high energy costs and copper prices.

Ohio JOE said...

"I'm sure you're aware of that." Ah, but that won't fit on the nice little graph.

"Have you been to the grocery store lately, Pablo? How about the gas pump?" Haha, since when do Romneyites have time to go to the grocery store or the gas station. Remember, they cannot even find time to go to TEA parties.

Right Wingnut said...

OJ,

Remember, you're talking to a guy who would vote for Obama over Palin.

Ohio JOE said...

Yes, I can see why inflation deniers would not vote for Mrs. Palin. It is rather entertaining that they come up with graphs to refute inflation when we all know that the price of gas has gone up because of their economic antics.

Anonymous said...

I think the chart speaks for itself.

Thanks for the info, Pablo. I learned something today!

-Martha

PS. OJ, I go to the market just about everyday, but you're right--I have not gone to a tea party yet.

Pablo said...

Food and Gas are not included in the core index. However the more general CPI rose 0.5 percent in July after it had dropped 0.2 percent in June. When gas and food is taken out of the picture, the core index rose by 0.2 in July after haven risen by 0.3 percent in the previous two months.

Nevertheless, are you really suggesting that Bernanke has anything to do with rising food and gas prices? This still doesn't explain Perry's treasonous comment.

"Inflation deniar?" Yes, that is me. Actually I am a hyper inflation denier. We need some inflation of course. Again, look at the graph. There has been no hyperinflation in the past three years despite zero percent interest rates and one round of quantitative easing.

Pablo said...

"Yes, I can see why inflation deniers would not vote for Mrs. Palin. It is rather entertaining that they come up with graphs to refute inflation when we all know that the price of gas has gone up because of their economic antics."

Gas has gone up because of whose antics? It wouldn't be because of rising demand in China or a war in Libya by chance? Are you blaming Bernanke for rising gas prices?