They're not a significant problem if they're in response to one-off exogenous events---witness how America grew past its' debts post WW2. Inflation isn't a problem in small controlled amounts, which is what it will be in the foreseeable future given the deflation deleveraging implies. Do you want to know what is really wiping out your savings? A slowing economy dragged down by private market failure. All in all, America can help its' recovery along by raising taxes, regulating the financial sector, and slashing certain misplaced expenditures (excessive military spending chief among them.), but there is nowhere near the need for drastic action such as removing monetary policy discretion or a balanced budget amendment.
Just because you keep repeating this - and adding exclamation marks - doesn't make it true. There's been no inflation in the last 4 years unless you only want to buy gold and silver. Please detail how exactly your savings are being wiped out when you can buy the exact same things for the exact same prices that you could 4-5 years ago.
Dude you are really wasting your time here. I know you just consider this academic practice but you need to move up from A ball. Maybe there's a debate board at The Economist or get your own Huffington blog.
It hasn't really hit us yet because foreign nations were still willing to loan us money. Now in 2011, the Fed purchased 61% of our debt created (i.e. the money was printed for the debt). In other words, if we continue down this road of $1 Trillion dollar deficits with Fed monetizing most of it, there is a big risk we'll face crippling inflation.... So artificially low interest rates = some amount of savings? You'll have to explain that one to me...
No there's not - while we had a huge injection into the money supply, we had a simultaneous destruction of wealth taking money out of the money supply. It's pretty simple. If you can buy the same amount of milk, gas, housing, and everything else with your same amount of money that you could 5 years ago, your savings are not being wiped out in any way, shape, or form by inflation. By definition, having inflation wipe your money away would mean you can buy less than you could with that same money a few years ago. That's not the case, thus that's not happening.
Except in order to make people "understand the cost", you're destroying the country. With a BBA, you'd have equal revenues to expenses. So when an inevitable recession hits, your revenues go down and of course your social services costs go up, meaning you are running a deficit. For example, in 2008, our deficit went up by more than $500B as a result of the recession. So now, in this recession, you want the government to either raise taxes or cut spending? That's the absolute dumbest thing a country could do. Or on the flipside, let's say WW3 happens. You want the country to now pass a law raising taxes - which won't take effect until the following year - and then wait until next year to start producing the equipment to fight back? Again, terrible policy and terrible planning. All a BBA does is limit policy options in times of need. It prevents a government from doing its most basic duty - providing for the general welfare of its citizenry - by forcing it to make economically irrational decisions.
You didn't answer my question, how does the Fed's artificially low interest rates = same amount of savings? I mean, you understand that lower interest rates = less savings, right? This is on top of price inflation....
With your policy what we get is a President who actually lowered taxes and fought two wars at the same time. They did it because they had the flexibility you are demanding. It exactly is what we are doing right now is the dumbest thing a country could do... Umm.....there is no reason you have to wait until the following year to raise taxes..... It can still provide for the general welfare of the citizenry - except that they have to pay for it through taxes instead of inflation...
I never said it does. I specifically was responding to this absurd claim: Don't worry, the fact that this private bank - the Federal Reserve - is wiping out your savings is no problem at all! This simply is not true. Yes - and if we as a country disagree with this, we can boot that President out of office. The problem with your vision is that you take options away and as such eliminate even the possibility of making the rational economic choice. We make budgets on a yearly basis. You'd spend billions of dollars constantly adjusting taxes throughout the year. Again, you're forcing us to make economically stupid choices in order to survive as a country. No, it really can't because you've taken away the rational option for doing so. Borrowing serves a rational and useful purpose, both for individuals and for government. To ban it entirely because it's been abused is ridiculously shortsighted and stupid.
Yes, and? They've also gone down over the last 4 years. Gas prices go up and down - it's part of the business cycle. When the economy goes up, gas prices go up. When the economy goes down, they go down. It has nothing to do with inflation. You can see that simply by seeing that gas prices are rising in other currencies as well.
Yes it is. By artificially driving down interest rates they are wiping out savings - this isn't complicated.... And wait 4 years? So that someone like Bush has enough time to get us bogged down in a disaster such as Iraq?.... Umm.....you'd only do it if you are starting a war - which was the scenario you were positing... The only 'rational' option to provide for the general welfare of the citizenry is through borrowed money? That is news to me. Then again, I don't worship the feet of Paul Krugman either...
Argument from ignorance. And while I can't say inflation has nothing to do with it as my knowledge of economics is fairly shaky in general, Middle Eastern tensions and the fact that China and India are no longer third world hellholes are much, much bigger factors. Personally, gas prices were pretty bad a month or two ago - and it wasn't because of inflation ( otherwise the prices of other stuff such as bread would have gone up and they didn't), it was because tensions between Iran and the US had increased. Now that they have relatively simmered down, the prices have gone down.
Believe it or not I agree with everything you said here. But what Major was saying is that it had nothing to do with high gas prices when obviously it is one of the factors involved...
By the time you see inflation its too late. Its easy putting the genie back in the bottle. The economy is standing on the brink. While we're mostly treading water right now there are only two possible outcomes: crippling inflation or a severe deflationary recession. We're getting one extreme or the other, the choice is the FEDs. (that's why everyone says inflation) One or the other is going to happen before this economy gets back to any sense or "normalcy."
Obviously? Demonstrate. Show the portion of oil prices that comes from inflation as opposed to supply/demand issues. And once you do that, please explain why that inflation/loss of value in the dollar only affected oil prices and not milk and all the other basic goods we use. Please show us how the dollar inflates only when buying one item but not others.
Yeah - gold and silver are unique because their pricing is sort of arbitrary. Outside of some industrial and jewelry uses, much of their demand is simply based on fear or arbitrary speculation. So they kind of move to their own tune unconnected to everything else.
