Has the Fed lost control of inflation?

[barbarus]

Bloomberg.com: Exclusive

Though they'll be pilloried as tinhats by the ERF regulars, have a look at what some folks believe.

[twaddle]

How does a negative real yield suggest that the fed has lost control of inflation?

Wouldn't investors demand a higher yield on nominal bonds if they feared higher inflation?

I think "flight to safety" makes more sense than the article's thesis.

[chinaco]

Pressure from the whitehouse to keep interest rates low over the last 7 years.

That has made investing in the US a little less attractive and affected the USD.

I saw a projection yesterday. It stated that we would be in Iraq in 2017 and the total cost would be $1.7T Gotta crank up the printing presses to destroy a country and rebuild it.

[al_bundy]

Quote:

Originally Posted by chinaco Pressure from the whitehouse to keep interest rates low over the last 7 years. That has made investing in the US a little less attractive and affected the USD. I saw a projection yesterday. It stated that we would be in Iraq in 2017 and the total cost would be $1.7T Gotta crank up the printing presses to destroy a country and rebuild it.

what exactly did the white house do?

[RockOn]

Quote:

Originally Posted by al_bundy what exactly did the white house do?

house(s).....politically encouraged gross lying about the actual inflation rate

[HFWR]

Quote:

Originally Posted by al_bundy what exactly did the white house do?

Lost the veto pen?

[newguy88]

The fed can do NOTHING about Inflation now. The genie is out of the bottle. It is gasoline and heating oil and natural gas costs. The fed can do little in the way of bringing the price of crude down. 108 118 128 a barrel is ruinous to the economy. Add that to people who are making less money at their jobs and the value of their homes has dropped well what is a poor boy to do??

The country was put together by CHEAP ENERGY, and without railroads well its going to be a really rough patch of road.

[DblDoc]

Quote:

Originally Posted by newguy888 The fed can do NOTHING about Inflation now. The genie is out of the bottle. It is gasoline and heating oil and natural gas costs. The fed can do little in the way of bringing the price of crude down. 108 118 128 a barrel is ruinous to the economy. Add that to people who are making less money at their jobs and the value of their homes has dropped well what is a poor boy to do?? The country was put together by CHEAP ENERGY, and without railroads well its going to be a really rough patch of road.

Well they may have bought themselves some wiggle room today. It wasn't cheap - $200b - but if it works they may be able to reign in the free fall of interest rates.

DD

[newguy88]

Quote:

Originally Posted by DblDoc Well they may have bought themselves some wiggle room today. It wasn't cheap - $200b - but if it works they may be able to reign in the free fall of interest rates. DD

How does printing more money help?

Look at prices for food and energy. Look I know my numbers and can live as frugally as the next guy, but that will not help the spending economy we have here in the states. People will go into debt just to fill up the vehicle. Charge with the VISA weekly food trips to the grocery. Who knows but its weird out in the trenches.

[Notmuchlonger]

Quote:

Originally Posted by newguy888 How does printing more money help? Look at prices for food and energy. Look I know my numbers and can live as frugally as the next guy, but that will not help the spending economy we have here in the states. People will go into debt just to fill up the vehicle. Charge with the VISA weekly food trips to the grocery. Who knows but its weird out in the trenches.

Might have to move out of the country. Keep them options open.

[RockOn]

Quote:

Originally Posted by newguy888 How does printing more money help? Look at prices for food and energy. Look I know my numbers and can live as frugally as the next guy, but that will not help the spending economy we have here in the states. People will go into debt just to fill up the vehicle. Charge with the VISA weekly food trips to the grocery. Who knows but its weird out in the trenches.

The good news is they are not printing any more money, at least not yet. That is a misconception of what is going on. The whole thing is complicated but this plan is just a swap of different types of debt. It only last 28 days. It is supposed to boost confidence and might not solve anything. The Fed has not been printing money this year. Inflation might not jump as many think, Bernacke could be correct about that. The Fed is acually fighting inflation as they lower rates, do not be fooled. It could change but so far, so good on that front.

The stimulus will have the effect of adding money to the eonomy because debt was used to fund it, it was not a good idea IMHO.

[barbarus]

Quote:

Originally Posted by RockOn The stimulus will have the effect of adding money to the eonomy because debt was used to fund it, it was not a good idea IMHO.

Adding money increases the money supply, no?

Milton Friedan's classic quote comes to mind.
"Inflation is always and everywhere a monetary phenomenon."

It seems to me they've throws gasoline onto a fire that was already beginning to blaze.

[newguy88]

Quote:

Originally Posted by RockOn The good news is they are not printing any more money, at least not yet. That is a misconception of what is going on. The whole thing is complicated but this plan is just a swap of different types of debt. It only last 28 days. It is supposed to boost confidence and might not solve anything. The Fed has not been printing money this year. Inflation might not jump as many think, Bernacke could be correct about that. The Fed is acually fighting inflation as they lower rates, do not be fooled. It could change but so far, so good on that front. The stimulus will have the effect of adding money to the eonomy because debt was used to fund it, it was not a good idea IMHO.

How does the fed think inflation is in check?? OK housing is in the crappa, and the cost of autos is well flat but Gasoline is waaay up food waaaay up airline tickets waaay up booze is waaay up. Sorry but its expensive around the country these days.

[barbarus]

Quote:

Originally Posted by DblDoc Well they may have bought themselves some wiggle room today. It wasn't cheap - $200b - but if it works they may be able to reign in the free fall of interest rates.DD

Doc, could you explain why you think this will decrease interest rates?

[DblDoc]

Quote:

Originally Posted by barbarus Doc, could you explain why you think this will decrease interest rates?

What I meant was the Fed may feel less pressure to continue lowering interest rates which could help fending off inflation and further falling of the US dollar. Whether it will work remains to be seen. Sorry I wasn't clear.

DD

[newguy88]

OK, I'm the world's greatest pessimist and cynic. Caution is the name of the game for me when I am working on my financial plan. __________________

No you are not I IS!

[Running_Man]

Decade Inflation Chart

Fed is clearly showing they are worried about the banks for now and not inflation. Over any given 10 years the inflation rate is all over the map, we have had an incredible stable 20 years. Long term it averages 3.42 and our present rate is above the long term average from 1913-2007 The inflation rate seems to be accelerating, here is the monthly inflation year over year increases January 2008 was 4.28.
2007 Jan 2.08% Feb 2.42% Mar 2.78% Apr 2.57% May 2.69% Jun 2.69% Jul 2.36% 1.97% Sep 2.76% Oct 3.54% Nov 4.31% Dec 4.08%


It could be worse we could be in China.


China’s inflation jumps to nearly 12-year high - World business - MSNBC.com