IMF: Global inflation is alarmingly low!

[Zippyjuan]

Chart shows REAL- not inflated- incomes.

It's all a guise to steal value from savings accounts and some other real property values.

If by "real property values" you mean real estate, until the real estate bubble, the price of real estate has pretty much followed price inflation. If the intent is to "steal value"- who is getting that value which is stolen? Who has that "intention" of stealing it?

You are right though that if people demand ever increasing wages to keep up with price inflation that will only make the price inflation worse since labor is the biggest factor in the prices of goods and services. We want lower prices AND higher wages which can conflict. We get cheaper goods from places like China so now we have lower paying jobs to lower the costs of those goods we used to make here. And a strong dollar encouraged those jobs to leave by making those imports relatively cheaper and our exports to other countries more expensive. There is a trade-off.

 

[vickersvimy]

It shows the flat out thievery of devaluing the currency. If some deflation were to happen every so often, there would be no need to keep increasing the income of the working man and his savings would be much more secure. All increasing the income does is to continue the upward spiral of inflation as more money is printed to make it seem like people are being paid more.

It's an illusion people are just waking up to. They are now starting to figure out, they don't make more money when their income goes up due to some cost of living allowance. The prices also rise due to inflation so that raise means nothing. It's all a guise to steal value from savings accounts and some other real property values.

Savings may not be as secure as you theorize. Less people would take out loans which could increase in value overnight and businesses wouldn't be as competitive.

 

[Dr.3D]

Chart shows REAL- not inflated- incomes.



If by "real property values" you mean real estate, until the real estate bubble, the price of real estate has pretty much followed price inflation.

Imagine how much better that would look if they were not stealing from it with the inflation tax.

Regardless, it seems those who set up this system want to discourage savings. People are being taught to spend that money as soon as possible, before it has time to lose it's value.

I mentioned some other real property as meaning things that lose value due to currency devaluation. Maybe I should have just stopped with the devaluation of savings accounts and left it at that.

 

[Madison320]

The Obama bailout program failed due to its size (7 billion dollars) relative to the size of the US economy (around 17 trillion dollars GDP).

Did you mean 7 trillion not 7 billion? We've had more than 10 trillion in stimulus since Obama took office. We've borrowed more than 7 trillion and we've printed more than 3 trillion.

 

[Dr.3D]

Savings may not be as secure as you theorize. Less people would take out loans which could increase in value overnight and businesses wouldn't be as competitive.

Less people would have to take out loans if the money they put in the bank would maintain it's value.

 

[Zippyjuan]

I suppose we could encourage more savings by having higher interest rates (but again, interest rates on savings accounts have ALWAYS been lower than the inflation rate so banks can make their profits on the difference between the rate they pay savers (depositors) and the rate they charge borrowers). Higher interest rates discourages borrowing and investing by companies who might seek to expand their operations and create more jobs. Again- there is a trade-off.

Are savings levels too low? What level should savings be at? Enough to fund borrowing? (banks have $2 trillion more in deposits right now than they have out in loans- that is usually close to zero)? Who should decide what the savings level should be?

 

[Zippyjuan]

Did you mean 7 trillion not 7 billion? We've had more than 10 trillion in stimulus since Obama took office. We've borrowed more than 7 trillion and we've printed more than 3 trillion.

Budget deficit (the $7 trillion number- which is determined by Congress) is not the same as stimulus. If you consider ALL government spending to be stimulus, then this year's stimulus is about $3 trillion. The stimulus package issued by Congress (TARP) under Bush was initially $700 billion but only about half of that was actually used. But sure- you can include the Fed purchases with that. But then we need to multiply the size of the economy by however many years (seven years times $14 trillion a year- about $100 trillion of GDP their $3 trillion went into).

 

[vickersvimy]

Did you mean 7 trillion not 7 billion? We've had more than 10 trillion in stimulus since Obama took office. We've borrowed more than 7 trillion and we've printed more than 3 trillion.

Borrowing =/= stimulus. I was referring to the Emergency Economic Stabilization Act of 2008. It would have had to have been released at once, a stimulus of around 10 trillion plus an increase in states, welfare and subsidies plus tax cuts and (even heavier) deficit spending. Basically all the government can spend for as long as it takes.

 

[acptulsa]

That is simply explained. The Great Depression was caused by the stock market bubble. Without stocks being worth much then businesses lacked new capital to use. Even then some countries recovered in the early 40's. The current depression recovery has been hindered by conservatives. The Obama bailout program failed due to its size (7 billion dollars) relative to the size of the US economy (around 17 trillion dollars GDP). The stagflation of the 70's can be explained by it being the second form of inflation -cost-push inflation- which occurred due to the oil crisis which pushed the cost of products up due to its importance in manufacturing.

And? There were no conservatives in 1873? There was no bailout at all, then, but the recovery was much faster. Capital evaporated in 1893--big time. The recovery was faster. Oil prices were certainly rising in 1907 in the face of massive increases in demand.

Sound money makes for faster recoveries.

The chart only reflects the effect on prices. It ignores what has happened with incomes over the same time. It assumes that a person held onto a dollar they got in 1913 and put it someplace which offered it zero return on investment

And your chart ignores how the distribution of wealth has restricted--most particularly since Bretton Woods 1971 has removed the last restraints of solid sanity from the formerly fettered Fed.

 

[vickersvimy]

And? There were no conservatives in 1873? There was no bailout at all, then, but the recovery was much faster. Capital evaporated in 1893--big time. The recovery was faster. Oil prices were certainly rising in 1907 in the face of massive increases in demand.

Sound money makes for faster recoveries.



And your chart ignores how the distribution of wealth has restricted--most particularly since Bretton Woods 1971 has removed the last restraints of solid sanity from the formerly fettered Fed.

I said that they hampered the recovery. The recovery was faster! While in some countries this was correct in Britain the recovery lasted into the 1890's. Also the Gold Standard or going back onto it may have helped cause the 1873 recession. The Great Depression was far worse.

The oil prices were certainly increasing however that is different to a sudden supply or demand shock. In this case the market was adjusting properly in a sudden shock the market is trying to quickly adjust and effectively fails.

You talk about how getting off the Bretton-Woods is bad but it was a useless system. The fed couldn't do enough and it was hardly even a standard.

 

[P3ter_Griffin]

Borrowing =/= stimulus. I was referring to the Emergency Economic Stabilization Act of 2008. It would have had to have been released at once, a stimulus of around 10 trillion plus an increase in states, welfare and subsidies plus tax cuts and (even heavier) deficit spending. Basically all the government can spend for as long as it takes.

The alternative to THE GOVERNMENT picking and choosing who gets the money is to do nothing and let prices fall until REAL INVESTORS think the prices are attractive. Deflation- the lowering of general prices- is good, especially during an economic crisis because the most likely reason for the crashing prices is malinvestment-- and thus prices that were to high. Stimulus policies fight the natural forces of malinvestment though by keep prices moderated, keeping companies solvent, and in doing so it makes investment opportunity out of the reach of the people not graced by the stimuli or previously rich, or at a minimum, it makes their entry price less attractive. The policies you support are most harmful to the people you most likely want to help!!

And really, do you really want Bohner or McCain or McConnell deciding how to spend your tax dollars on some stimulus? Or is it just Obama and the leftists who knows how to stimulate? Do you really think bureaucrats will ever be able to make better decisions than individuals with "skin in the game"? Some superhumans we ought to obey and trust?

 

[vickersvimy]

The alternative to THE GOVERNMENT picking and choosing who gets the money is to do nothing and let prices fall until REAL INVESTORS think the prices are attractive. Deflation- the lowering of general prices- is good, especially during an economic crisis because the most likely reason for the crashing prices is malinvestment-- and thus prices that were to high. Stimulus policies fight the natural forces of malinvestment though by keep prices moderated, keeping companies solvent, and in doing so it makes investment opportunity out of the reach of the people not graced by the stimuli or previously rich, or at a minimum, it makes their entry price less attractive. The policies you support are most harmful to the people you most likely want to help!!

And really, do you really want Bohner or McCain or McConnell deciding how to spend your tax dollars on some stimulus? Or is it just Obama and the leftists who knows how to stimulate? Do you really think bureaucrats will ever be able to make better decisions than individuals with "skin in the game"? Some superhumans we ought to obey and trust?

Deflation harms an economy because... well, my income is your expenditure and vice versa. When deflation kicks in I and you lose money to this. You seem to also make the dubious assumption that people in a market place are rational. Most of the time they aren't. They will buy stupid things for high prices. It is also interesting that, in the UK for example, the recovery only began when they started to stop austerity. In the Great Depression FDR turned to conservative policies of leaving the market around 1938 as the economy had almost recovered and it led to progress on the recovery being lost.