A passing economic thought

[lotstodo]

So I read today where the Producer Price Index has risen 6.9% in the past year. The ISM pegs wholesale price inflation above that. I have also read where the ERCI indicates that we are entering another recession, and Roubinni and others using differing indicators agree.

The Keynesians "math" says that you can not have excessive price inflation in periods of high unemployment (yes, apparently they slept through the 70's). So the stagflation deniers who run the government and the FED have just stimulated and money printed out the wazoo in a futile effort to "lift" unemployment with no thought that all this creation of credit and money could actually lead to inflation before unemployment eases. Neo-classical economists along with the monetarists and the Austrians beg to differ, but their protests have fallen on deaf ears in Washington.

Is it now possible that for the first time in history we could see twice normal levels of inflation as we ENTER a recession? This what is occurring in the wholesale markets right now if these studies are correct. This has never happened before in the history of economics. Will the stimulators ever acknowledge that their pouring borrowed money into a stalled economy not only failed to help employment but added to inflation? What other explanation is there (yes a small part is imported inflation, but that cannot account for but a small percent)?

Just a passing thought. I haven't seen the two ideas put together in this way, and I wonder who else has noticed this.

 

[Guard Dad]

Inflation has been coming on for some time now. The costs of wholesale goods and supplies have gone up, the cost of doing business has gotten more expensive; yet most of these costs have not been passed along to the consumer because of the poor economy. That simply isn't sustainable; retail prices have to catch up eventually.

Our nation is being ran by a bunch of idealist academics who have little or no practical economic experience. This is precisely why we need a successful business person in the White House, and many more of them in congress. People who have never held a private sector job should not be in charge.

 

[mei lan]

There is simply NO WAY you can have this much money in circulation and not have inflation. If we escape hyperinflation before the next President is inaugurated in 1/2013 (PLEASE, GOD!!!), we just might pull through.

I've never thought about the inflation at the beginning of a recession, but I don't see why not. Your statements are valid. And we've never seen this level of economic stupidity/destructiveness that I can think of.

 

[Guard Dad]

I don't think the problem is so much the amount of money in circulation, as it is the percentage of that money which is not under the influence of market forces.

 

[lotstodo]

I don't think the problem is so much the amount of money in circulation, as it is the percentage of that money which is not under the influence of market forces.

Are you referring to "parked" money, or "government"<gag> money? Actually, there is a lot of validity to the idea that all of the "parked" money is not harming the economy. That also means that when all of that money floods off the sideline Bernanke will not be able to suck it up fast enough.

Wealth transfer in the form of Government "Stimulus" does nothing to stimulate the economy, because money is not prosperity, it is just currency. If I give you 20 bucks and you give it to someone else who gives back to me. the Keynesian "math" says that we created $60 in positive economic activity. Unfortunately, not one of us benefited. It is the production of goods and the provision of services, and facilitating those, that creates prosperity, not the simple exchange of dinars or drachma. The consumptionists fail to realize this simple fact.

 

[Guard Dad]

I don't think the problem is so much the amount of money in circulation, as it is the percentage of that money which is not under the influence of market forces.

Are you referring to "parked" money, or "government"<gag> money? Actually, there is a lot of validity to the idea that all of the "parked" money is not harming the economy. That also means that when all of that money floods off the sideline Bernanke will not be able to suck it up fast enough.

Wealth transfer in the form of Government "Stimulus" does nothing to stimulate the economy, because money is not prosperity, it is just currency. If I give you 20 bucks and you give it to someone else who gives back to me. the Keynesian "math" says that we created $60 in positive economic activity. Unfortunately, not one of us benefited. It is the production of goods and the provision of services, and facilitating those, that creates prosperity, not the simple exchange of dinars or drachma. The consumptionists fail to realize this simple fact.

Government money. Most of what government is paying for is not under the influence of market forces and it can actually help drive inflation. Healthcare is a prime example.

 

[lotstodo]

I don't think the problem is so much the amount of money in circulation, as it is the percentage of that money which is not under the influence of market forces.

Are you referring to "parked" money, or "government"<gag> money? Actually, there is a lot of validity to the idea that all of the "parked" money is not harming the economy. That also means that when all of that money floods off the sideline Bernanke will not be able to suck it up fast enough.

Wealth transfer in the form of Government "Stimulus" does nothing to stimulate the economy, because money is not prosperity, it is just currency. If I give you 20 bucks and you give it to someone else who gives back to me. the Keynesian "math" says that we created $60 in positive economic activity. Unfortunately, not one of us benefited. It is the production of goods and the provision of services, and facilitating those, that creates prosperity, not the simple exchange of dinars or drachma. The consumptionists fail to realize this simple fact.

Government money. Most of what government is paying for is not under the influence of market forces and it can actually help drive inflation. Healthcare is a prime example.

It's true. When your focus is putting currency into the system and not creating value for the taxpayer dollar, you certainly drive inflation.

 

[copschick]

So I read today where the Producer Price Index has risen 6.9% in the past year. The ISM pegs wholesale price inflation above that. I have also read where the ERCI indicates that we are entering another recession, and Roubinni and others using differing indicators agree.

The Keynesians "math" says that you can not have excessive price inflation in periods of high unemployment (yes, apparently they slept through the 70's). So the stagflation deniers who run the government and the FED have just stimulated and money printed out the wazoo in a futile effort to "lift" unemployment with no thought that all this creation of credit and money could actually lead to inflation before unemployment eases. Neo-classical economists along with the monetarists and the Austrians beg to differ, but their protests have fallen on deaf ears in Washington.

Is it now possible that for the first time in history we could see twice normal levels of inflation as we ENTER a recession? This what is occurring in the wholesale markets right now if these studies are correct. This has never happened before in the history of economics. Will the stimulators ever acknowledge that their pouring borrowed money into a stalled economy not only failed to help employment but added to inflation? What other explanation is there (yes a small part is imported inflation, but that cannot account for but a small percent)?

Just a passing thought. I haven't seen the two ideas put together in this way, and I wonder who else has noticed this.

Holy inflation, batman...I didn't understand ONE word of that LMAO.
I even reread it...now I just feel dumb

 

[lotstodo]

So I read today where the Producer Price Index has risen 6.9% in the past year. The ISM pegs wholesale price inflation above that. I have also read where the ERCI indicates that we are entering another recession, and Roubinni and others using differing indicators agree.

The Keynesians "math" says that you can not have excessive price inflation in periods of high unemployment (yes, apparently they slept through the 70's). So the stagflation deniers who run the government and the FED have just stimulated and money printed out the wazoo in a futile effort to "lift" unemployment with no thought that all this creation of credit and money could actually lead to inflation before unemployment eases. Neo-classical economists along with the monetarists and the Austrians beg to differ, but their protests have fallen on deaf ears in Washington.

Is it now possible that for the first time in history we could see twice normal levels of inflation as we ENTER a recession? This what is occurring in the wholesale markets right now if these studies are correct. This has never happened before in the history of economics. Will the stimulators ever acknowledge that their pouring borrowed money into a stalled economy not only failed to help employment but added to inflation? What other explanation is there (yes a small part is imported inflation, but that cannot account for but a small percent)?

Just a passing thought. I haven't seen the two ideas put together in this way, and I wonder who else has noticed this.

Holy inflation, batman...I didn't understand ONE word of that LMAO.
I even reread it...now I just feel dumb

Sorry. In a nutshell, the President and his "economists" tell us that what is happening right now can't happen. They even have fancy equations that "prove" it. They keep putting more and more dollars into the economy, devaluing the currency through inflation, all the while saying that we can't have inflation with high unemployment. We have, however, never seen inflation as we enter a recession, and the only rational explanation is the unprecedented number of dollars that the government has dumped into the economy in the last two years.

We're screwed, because not only are we unemployed, but we are paying more for everything we buy, and could pay way way more in the near future.

 

[copschick]

ahh...thanks!
Yeah, we are screwed. The prices of anything we purchase aren't budging, unless to go up. The sad thing about it is that you can pass by any restaurant, shopping mall, walmart, etc and see that noone is slowing their spending.
America needs to rethink the story "The Ant and the Grasshopper".

 

[mei lan]

Holy inflation, batman...I didn't understand ONE word of that LMAO.
I even reread it...now I just feel dumb

Simply put (or as simple as economics can ever be), inflation = too much money chasing too few goods. When teh gooberment starts printing money (as it has done now twice in the last three years), then the money is devalued more as more money hits the streets (so to speak). (And I just told you my entire knowledge of economics. OK, maybe not all, but close.)