Well Bernanke and Co. are at it again, completely ignoring inflation factors and cutting interest rates, twice in 11 days, come on get real. I am starting to hope this cutting of the Fed Funds and Discount Rates comes back to bite the boys at the Fed in the ass. I just know inflation is going to get out of control (if it isn’t already) which is o.k. with me, maybe we can get back to those good old days in the late 70’s, early 80’s when interest rates where going through the roof. My father-in-law made a fortune, not in the stock market but with plain old bank CD’s. He bought CD’s that were paying 14.5%, took them out for 10 years and did quite well, especially after things settled back to some type of normalcy, he was still collecting the big interest, I hope that is where we are headed, maybe I can get a piece of that action, I know I will be ready because I know its coming.
True inflation is much higher than the government massaged CPI. Oil, gas, food, healthcare, real estate, tuition, etc…… those prices are through the roof, but the government numbers weigh inflation as if you buy a big screen television or computer every day. Overweights the discretionary stuff not the stuff everybody uses everday. That doesn’t count the fact that wages have stagnated over the last several years while everyone uses their homes like an ATM. The goverments answer? Lets you and the government go further into debt and prompt you to buy more stuff on a loan! Social Security look away, medicare look away. 2008 will be a year of reckoning.
We as American’s are economically screwed…
1) Falling overall wages due to lack of full time work (with medical benefits)
2) Rising Housing costs which force many families into rentals and lose all their prevously owned homes equity…
3) Good, dependable, employable people don’t exist, because of a failing educational system in America… So ofcourse business’s look to reliable overseas labor, not only are they cheaper, but smarter, and more dependable, (and not spoiled pigs like American’s are)
4) How many people really need a hummer? You would never find one of those pigs over in China, India, or Japan…
Basically, America is selling itself out because of selfish reasons, primiliarly GREED… Many Americans now adays a selfish, greedy, lazy, pigs….
I do not understand why the feds are not seeing the size of the problem Americans face.
1 gal of gas last year $2.0 now $3.0.
1 gal of Milk last year $2.97 now $3.78
1 loaf of bread last year $1.54 now $1.97.
chicken, beef and other produce went up
and this is close to 30% a year not 0.3% like some economists claim to find
in the latest months.
Please stop reporting lies and accept the fact that the economy is pointing
south due to a war with no real cause
that is benefiting a few people in charge of government and sunking the US
dollar and its economy.
It is time for Bernakie to leave when Bush leaves. We need a CHANGE in both these positions. America, we need CHANGE, clean house and start over with people who will respect every person in our ecomomy. Not just the RICH…
Of course, the few of us that actually have made an effort to pay off our debt and accumulate some savings are getting screwed. The lower yields on Money Market savings accounts and CD’s are made even lower by the income tax on our interest earnings. The goverment says it wants people to save (bs of course, its wants us all to spend) but sticks it to you when you do.
People can’t eat interest rates, no matter how many times you cut it. I can’t figure out why people blame FED for the disaster but not Bush. FED doesn’t have any authority on things that matter, namely government budget.
What about savers? My interest rate is going down because I don’t blow my money on a house, or car, or gas, etc. And I am being penalized. Of course, Walmart is going to make a huge amount of $$$ when the gov’ment gives citizens the measly $500 (or whatever). Immediately to Walmart to buy Chinese made garbage. Are Americans as dumb as this current idiot in the white house? Or maybe I’m the idiot?
I stopped worrying about inflation. . .you don’t “worry” about a reality, you just try to deal with it. My fear is the hyper-inflation experienced by virtually every country whose debt exceeds 6-8% of GDP. The government’s inflation numbers such as the PCE are contrived misrepresentations. The elimination of M3 instead of fixing its deficiencies was intended to hide the debasement of the US dollar (compare the US Dollar to the inverted Global Dollar index). Someone needs to tell the folks in Oz who don’t drive, eat, go to doctors, take medication, or have to pay for their kids educations that things are not going well here in Kansas.
Thanks Bernanke for the rate cut. I believe Helicopter Ben will live up to his name and his successor will have to clean up the mess. This is what happens if you put mediocre people in the places such as FED.
I agree with Jennifer. We are certainly
in a mess and I doubt we are going to get out of it soon! There is simply too much going on for the feds to be able to control it.
Rising costs for energy and food is a real problem for most normal people. Housing prices and medical insurance prices are rising too, making it worse. Add in growning unemployment, few raises in income and the fact that credit card companies can just start charging you 37% on your credit card because you didn’t pay a medical bill on time (the one your insurance company was supposed to pay!) – you have the perfect storm brewing.
I would also really like to know why the feds so believe that a little interest rate cut is going to help! They keep saying “Oh, if we cut our rates, then banks will cut theirs for the consumer!” Please tell me they are kidding. Considering banks are screaming about all the money they are losing over the mortgage crisis, do you really think they are going to “pass the savings on to the customer”? If you beleive that, I know a Nigerian official that needs your help with a bank transfer…
While that tax refund our government is talking about giving everyone might be nice for most people, do you really think it will increase retail sales? I rather doubt that. I think a lot of people will be using it to attempt to pay bills because more and more people can’t afford their bills now.
This whole mess is scary. I see a very bad snowballing effect happening in our economy and I think alot of people are going to drowned under it.
Never mind recession. We are going straight for a depression.
(Weird investment tip – invest in Monsanto Seed company – I think alot of people will start putting in more kitchen gardens in an attempt to reduce their grocery bill! I know I will be this spring!)
Inflation is not something new it is a constant factor of a growing economy. The problem is the rate of inflation. For the entire time Bush has been in office there has been no attempt to restrain spending. The War effort has been funded by debt.
Foreign investors are buying the United States of America. The terrorist we fear so much are not as big a threat to this country as the very real threat of being owned by China, and the oil producing countries that we are in debt to.
Yes as Inflation rages and the U. S. Dollar weakens on the world market it is cheaper for people around the world to visit America and see the lap of luxury we have been living in for so long. The envious eyes of those that have gone without crave to acquire the blessings we have taken for granted.
This is not a situation that will pass quickly. For too many years PROFIT has been the only motivation in the USA. Out sourcing job to gain quick profit, making sucker loans to people that could not be expected to repay them just to earn a fat fee, and stocking the housing bubble until it had to pop, as the price of a home exceeded what a working person could afford to pay have all come to play in bringing us to this point.
Now we are in an election year, and who ever wins the election will face problems far more dangerous than any president before. Not only are we still, bogged down in a stupid war, we are as a nation so far in debt that funding for much needed reforms in Health care, education, and true defense needs will not be funded just to pay the interest on the debt..
I am not sure anyone in their right mind would really want to win the upcoming election.
Has Congress and the Fed lost their minds! Economics 101 should teach them that holding a market from returning to a normal state after a huge growth spurt is par for the course. Now here we are messing with these rates so that all the morons in the world that went out and bought a house they can’t afford don’t get foreclosed on. It is time for greedy lenders and stupid borrowers to pay the piper!
The Feds do have a difficult balancing act. Try to make the chicken littles of wall street happy and attempt to keep our ever increasing cost of living in line. By lowering interest rates they are only setting the table for the next downturn which will be much worse.
The Fed should allow blood letting for the fiscal profligates, wild speculators who brought houses in defiance of gravity,banks who lent without any basis to fuel the speculation. Let these guys bleed their sins of commission and in the process if some die – good. That is how the market works. Let us not fall back on bleeding heart socialist policies of propping up bad deals and investments.
The tax break would have been better spent on Health Insurance for all those in real need. That would have been a good investment.
Cutting rates will discount the greenback, increase prices, and worse will undermine confidence in the USD. Already there is talk of Petro Euros and that would be truly a bad thing to happen.
Do not CUT THE RATE again – please!,b>
Are you surprised by the stagflation? Back in March 2003, I wrote to the local paper,”The Dothan Eagle” that untamed spending and the continuing budget deficits will bring us stagflation. The governement has been miscalculating both the inflation rate and the true amount of the budget deficits since Reagan was in the office. The inflation has been there, the problem with trying to control the inflation now is that we have to raise the intrest rates, and the higher intrest rates will in turn will enlarge the federal deficit, and there will be a need for spending cuts and tax increases, that no one will want, so what you think the result will be, what will the Fed do? what will the next president do? Anyone still standing for America, or we at the proverbial place without a paddle?
THERE IS MORE AT MY BLOG
tombstone001.blogspot.com
I own a restaurant franchise and have experienced rising food and fuel costs since July of 2007. Along with these continued cost increases I’ve witnessed consumers cutting back on their spending during this time as well. I understand that this economic downturn isn’t a “tech” bubble and the need for the Fed to protect the ailing financial insitutions vs. letting them go under but the Governors need to address the already huge inflation problem and just let the business cycle work it’s way through this downturn on its own.
The real problem is wages have been flat or declining for this whole decade. The housing bubble masked that problem by giving people unsustainable purchasing power. Off shoring, outsourcing, and unmanaged immigration is the cause of flat US wages. No matter what we do about interest rates or inflation getting the balance back in the labor market is the only answer.
our system is starting to look like communism–gov manipulting all the numbers–ppt in the market—where did free markets go?
The government must be reading out of date price lists to come up with their inflation numbers. I think they fudge on purpose because they base increases to retired people on what the inflation rate is. Considering we are a totally bankrupt country 9 Trillion dollars in debt is pretty much bankrupt in my book it does not surprise me that they lie about inflation. They lied about the Iraqi War being paid for with Iraqi Oil money so why should we believe anything they say. After all most people start lying when they are broke to cover up that fact.
Inflation is here. It is in home prices, gas prices, food prices – all your major monthly expenditures. The gov’t wants you to think there is no inflation so that they can keep on paying low interest rates on Treasuries while they continue to build the mother of all deficits.
Inflation is definitely a concern and it is mainly due to factors that can’t be controlled by the Fed. We can adjust our interest rates up and down all we want, but it won’t change the surge in energy demand coming from China, India, etc. At some point the US is going to have to face up to the fact that we are not controlling the world economy any more. Unless we can control the effect that a limited oil supply has on the cost of the goods and services that we consume, inflation will continue to grow.
Inflation is only a problem if you buy groceries, gas, or heat your home. Despite WalMart’s much publicized news release yesterday, the Ocean Spray Diet drink I purchase went from $1.98 to $2.68 a bottle—an increase of 35%! Other items have not gone up as much—but have consistently risen. And yet, most news agencies have not paid that much attention to the real increase in the cost of living that the average American faces.
It looks like we do repeat the past. Two common elements have come together here that we’ve seen previously. Increased energy costs and a lending system colapse. We saw these in the 70’s and 80′d and now they’ve come together in the perfect storm. Stagflation is a huge risk now. Until speculation drops out of the energy markets (looking for the quick buck) and lending standards are better managed (lend to those that meet real criteria and stop lendig to anybody and anyone just to generate fees) it will be a bumpy ride. Let hope European lenders were not as greedy pushing people into loans they could not afford just to generate the fees. If they did, it will only get more interesting as the lending crisis grows and other markets fall apart.
Well, if Milk prices and by that I mean consumer items go from 99 cent to $3.50, inflation is least of our worries right now.
Consider this scenario: US currency is cheaper than other currencies such as Euro, Sterling pound, Dinars, Canadian Dollars, so obviously US now is cheaper for people from these parts of the world.
People from Europe, Mideast Asia, Canada can come here and since US consumer goods will be cheaper, they could afford to pay more for a commodity item such as Milk, and therefore the risk of prices going higher couple of years from now is even more. I was in Asia for a while, and remember we did not care the price of items in that market, because their currency was so cheap as compared to USD then.
I think lot of Stock Market operators at the moment are actually the frontend for foreign investors who are in the process of invading US markets. So naturally for them it makes sense to keep the US currency cheap, which translates to further lower interest rates.
US consumer and financial markets investors can only hope that Fed Chief Bernanke and team will justify the trust and faith that US investors, and consumers have invested in them.
And as I said it will be interesting to see when our beloved Jim Cramer will spend an episode that enlightens us on such banking and insurance issues.
Give ‘em one (1) more reduction of a .5% – with the caveat that there WILL NOT BE ANOTHER CUT until the minimum hold-back til 7/1/2008; and only then if it is NEEDED.
They are to get off their dead-asses and fix their problems on Wall Street and stop expecting the FED to bail-’em-out.
I am not worried about inflation in the short term. Although there has been some increases in consumer prices due to “cost push” inflation associated with rising oil prices, these price increases act as a “tax” on virtually all goods and many services in the economy. The net effect of the oil price “tax” is less discresionary money available for consumers to spend.
I am somewhat concerned that the deficit spending that the federal government has been doing will result in inflation in the future that will be tough to alleviate.
The federal government should live within it’s income and that means not funding continuation of the Iraq war as well as reigning in congress for discresionary spending for which there is no review (i.e. pork projects for politations home states).
We have a unique opportunity in this election year to “throw the bums out”. By doing so, the voters would send a strong message about fiscal responsibility, foriegn policy, oversight of intelligence agencies, etc.
As recently as June, Ben Bernanke said there was no housing bubble. Then he said there was one but inflation was under control. Then he said…
As recently as September, almost all the Presidential candidates said the economy was in great shape. Mike Huckabee claimed the other day that he alone disagreed with the crowd, but that is a deliberate deception since not only has Ron Paul predicted this very crisis throughout his entire campaign, AND AT EVERY DEBATE since May (wasn’t Huck there?), but has predicted it for the past several years.
Just as Paul warned that going into Iraq would be an endless quagmire while everyone else was saying it would be a cakewalk (3-6 months and out), he once again proves to be prophetic.
And it’s not luck. Dr. Paul has studied economics for decades, and has more economic knowledge in his pinky than the other candidates have combined.
How many times does Ron Paul have to be proven right before people start listening?
“The only thing we have to fear, is fear itself”, and too many greedy individuals connected to the trading internet. Don’t purchase items for which you can not pay. Start using more cash and less cards while paying as you go. Purchase made in the U.S.A. Do more walking and less riding. And my three last items, “If it looks too good to be true, it is”, “You can trust your government, ask any Indian”, and last, “In all you do keep it simple stupid (KISS).
Inflation is already here. It started many years ago. The reason why you people don’t see it is because you gage it based on prices of goods made in China. American goods and services have been going up for a long time. The reason why you don’t see it is because you got your heads buried in the sand right where Globalization proponents want you to be. The only thing that will save the US economy is Manufactoring in USA not China!
Of course the Fed should be worried about inflation. It is one of their two main charges besides the one that they have added to the docket in the last decade or so: propping up Wall Street. Unfortunately inflation is a distant third on their list of priorities, if it even is on their list. You wouldn’t know it is a priority based on their recent actions.
The sad thing is that the inflation numbers are already so understated that it is hard to know whether one should laugh or cry. If people really understood how the Treasury employs hedonics to understate reality they would be screaming, but it is too arcane for most folks to understand so they don’t react to it. And look at the nonsense in regards to focusing on the core numbers. In many regards food and energy are some of the biggest expenditures for most households so why would any reasonable reading ignore those factors? ‘Oh they bounce around too much’ is the excuse. Well bounce around or not they are hugely important expenditures for most households, so they really do matter. The reality is the Treasury, the Fed, and the administration don’t want people to know the truth because folks would go nuts and cleaning up the mess too costly.
And in case anyone does not realize there is a real conflict of interest here, there is a huge one.Entitlements like Soc Security are directly linked to those figures, so that is why last year – a time of unprecedented increases in food and energy was also a year when soc sec recipients received an increase of about $20 on average. Is that a joke or what? I guess not since the Treas/Fed is clearly a tool of the politicians and not the people. When will mainstreet wake up and ask for some accountability?
The only solution? Drain your accounts and put the money into hard assets. The Fed/Treasury can’t manipulate those quite so well, YET.
Inflation? Who has any spare money to spend on the plethora of goods out there? May be not trying to solve our energy problems by using corn for bio fuels might lower the cost of food? What idiots thought that would work? Except for the farm lobbyists, And yes both parties are owned by them. The fed screwed this one up by doing 18 consecutive quarter point raises and nottaking any breaks to gauge the effects. What did they think that would do to the housing market? Anyone with any sense would have told you that all those quick raises would eventually collapse it.
Inflation is so obvious. The reason the economy is going down is because people are watching the value of their homes drop as the market is flooded with all these foreclosures. Instead of handing out $600 checks the government should be handing out tax breaks for buying a home. Clear out these extra houses and you will see consumer confidence return. The Dems know this- they just want to see Bush fall flat on his face before the election.
I’m very worried about inflation and that the credit card market is headed for a collapse, just like the mortgage market. The end result of that one-two punch would be devastating. Imagine cost of living going up, income not keeping pace, and middle America not having access to credit cards to help them weather the crunch. I also don’t think this is something that will get fixed easily. I think we’re in for a very rough 3-8 years. I feel very powerless to prevent it, but I’m doing my best to get my own finances in order – reducing spending and debt, increasing saving – whatever I can to minimize the blow.
Stagflation has been here for a few years now. And the “experts” are just now figuring this out?!!!
WAGES HAVE NOT GROWN WITH INFLATION! The real wages have gone down. Corporate America (with the exception of Microsoft) is not competative in the global market because of monopolies and other corruptions and anticompetative practices. Has anyone NOTICED THE TRADE DEFICIT? How does the U.S. greenback have any value with the trade deficit being rescued from it’s highest level?
With this in mind, where is this mysterious “GDP growth” coming from? Real Estate? Real Estate is retail, it’s completely codependant on other sectors to perform. How did the “experts” not discuss this?
If anyone was bright enough to look outside of the Real Estate market/ wages have depreciated quite a bit. There is no economy to support housing at their peaks, and fit hits the shan once the leveraged could no longer leverage themselves.
Gas/energy prices are going to be factored into all of consumer goods. Irrelevant it’s not, it hits our bank accounts the same way.
There was NO economy to support the housing prices that was 180% above the national CPI. Stagflation started when the gas and housing prices went up. THe stats are typically used to impress not those who are goign thruogh it.
How many Americans can you say are underemployed, displaced or unemployed since the tech bubble burst? Stagflation started then.
Don’t tell me that we (as a country) are so gullible to overlook such obvious facts. They didn’t have the wages necessary to afford homes priced at 180% of it’s national average value. How did the banks not factor this in? The facts were out there. Banks are supposed to be conservative, error on the side of caution; not sketchy.
Yes we know the boomers are looking for retirement funding because social secuirty is MIA (fixing Clinton’s national budget) and these investments are supposed to buffer their financial situation. However, this was the logic behind the tech and housing bubbles, which infact bumped even young buyers out of the market.
I’m glad to see this correction. These baffoons can’t hide the sick economy any longer. If (big “if”) they fix the fundamental problems, the U.S. has plenty of opportunity costs in the global market. WAY TOO MANY OPPORTUNITY COSTS, we should not have these problems to worry about.
The Fed should not be looking at oil prices and food . They should only focus on wage inflation which is the real core issue. The prices of oil are not in our control and either is food. Both items are greatly effected by Washington policy i.e. using corn for fuel production and oil not being offset by alternate sources of energy. The bottom line to look at is the productivity of the american worker which is still increasin. The issue with the fed is the mind set to save our banks from bankruptcy which of course will take down our economy in the blink of an eye. The banks assetts underlying there loans are deflating and they are out of trust. meaning they cannot borrow money under the current ratio system assetts/liabilties. No different than an individual. If the banks stop lending moey there will not be an economy to support for some time.
Nope. I worry about inflation in a growing economy. In a decelerating economy I do not sweat it so much as the data lags. The the worst is behind us on that front. It seems that so many people forget the unusual pressures that were put on the housing markets and other resources from Katrina a the other large loss hurricanes of 2005- not to mention China and it’s huge infrastructure build going into the 2008 Olympics. This stuff has worked through and the pressures are disipating. Sure the emerging markets are stoking demand abraod but that too will cool along with the U.S. economy. The fixes the Fed is putting in, even if they are aggressive here, can barely hope to get this economy to stay in (or return to)positive growth mode in the near term. The Fed just needs to be as vigilant with their tightening policies in the future. Had they done so in 2004 we would not be having this discussion to day.
I’m sorry, all this talk about higher food costs is an effect of higher population, less land, more climate problems, higher energy cost. It has little if anything to do with the fed. I believe by cutting rates to help the economy as a whole, we can help the individual take care of the rising food costs.
What I don’t get is why the government thinks that giving people money is going to help stimulate the economy. If we would just cut capital gains taxes or heaven forbid, get rid of them altogether, we’d see a huge investment boom! What this economy needs to stimulate growth, more than a few hundred dollars that will probably go into a saving account or just be spent on groceries that will only get higher priced due to higher demand.
Official inflation rates (minus volatile food and energy) are a deliberate understatement of true inflation. It saves the government cost-of-living increases for social security and corporations COLAs in wages. To top it off, the federal government no longer reports M3 so we cannot know how much more money is in circulation. I suspect unreported inflation is in the 7-8% range.
I am not worried about inflation. I will just strip out energy and food. Even the core i will do hedonic adjustment so that it will appear lower.
I am not an economist, but my theory is this. We are on the verge of a recession. However, the reason for the inflation is due to the fact that idiots are still using their credit cards to pay the high prices for these products. There will always be high demand when you arm irresponsible individual with the power to borrow. Meanwhile everyone goes deeper in debt. I know this is true, because it is happening to me right now as I write.
Stagflation is the real problem here. Not only is the fed increasing the money supply and weakening the dollar, it is basically telling Americans to not save any more. Any Money and Banking textbook will tell you that banks make money by lending out money that is saved. If there is no money saved, banks can’t make money. Leave interest rates high, people will begin to save money again. Heck, just leave interest rates at this stage. When a bank can get a loan for 3%, why would they pay savers to lend them money. Sure, some banks will fail. It’s called capitalism and free enterprise.
Also, while we’re throwing around “textbook” definitions here, the US is not in a recession (two consecutive quarters of negative GDP growth). Our economy would do much better if the Fed would just let the market determine rates (obviously they seem incapable of doing that) and the government stops wanting to give money to everyone, when we’re the ones who have to pay for it. It’s not a stimulas plan, its a government sponsered cash advance.
The Fed’s number one priority needs to be inflation. The fact is that cutting rates won’t save the U.S. economy. Consumer spending makes up the largest portion of GDP and U.S. consumers are simply tapped out. We’ve been shipping billions upon billions of dollars over-seas for years. The Fed needs to keep a lid on inflation and let the next president (hopefully a much better one) fix the current account and trade deficits which will put our economy where it needs to be.
“Those who do not learn from the past are doomed to repeat it.”
Iraq = Vietnam
Bush = Nixon (criminals!)
Hi gas prices = Long gas lines
Al Queda = Iran
American Idol = The Gong Show
Lindsay Lohan = Farah Fawcett
SUVs = Gas guzzling station wagons
Coincidence? George Bush and Dick Chaney never left the 1970’s. We are in one of those wierd sci-fi time warps. Be afraid.
No, since the rise in basic food and energy costs is such a small % of personal income today compared to what it was in the 60’s and 70’s. Why do you think we hardly notice when the price of gasoline is up roughly tenfold over the time period?
Also, the loss in imaginary real estate equity paper$ will have more of a moderating effect on consumer prices.
No time for panic. We can stand recession, but with interest rates keeping it low, we can drive to bigger mess that is inflation. With china and Middle east having 2 trillion dollar surplus, they are having all our dollars. If we stimulate with 150 billion more, they will get 149 B of that. on top this we have 9 Trillion dollar debt. You can guess where we are heading. As all these things are happening, the last thing we do is panicing. Citizens, elect a governament who know economy, don’t elect them on the basis of race, religion, abortion and Gay rights.
Yes, I’m very worried. One fear is that the FED will cut the iterest rates again and cause another housing bubble. Housing prices are still outrageous. I’m also am worried that lower interest rates will result in less foreign money being invested in the USA that’s needed to finance our national debt. They will send the money to Europe instead. This entire situation regarding the financial fundamentals of our country is starting to feel like “tube” time for much of our population.
Inflation is more to worry about than a recession and an idiot whos says we do NOT have INFLATION has not paid LATELY, any taxes, bought insurance, paid medical bills, telephone and cable bills plus, clothes,groceries gas, THE LIST GOES ON BUT THE IDIOTIC FEDS CAN’T SEE IT!
What’s the surprise? Our nation has outsourced so much… What’s left but consumer spending funded by equity lines of credit? The “short term”, “feel good” answer has to be to lower interest rates, force people out of secure safe havens into speculation and promote ever increasing debt. We must keep the party time illusion alive, no matter the ultimate cost.
But even a crack-head knows he’s got to come off his high and pay his pusher – Wish the Fed was as smart…
I’ve been worried about the economy for more than seven years now—I saw the writing on the wall even back then. I had what was a fairly good-paying job for 12 years, making around $48,000 per year, and then lost my job with the union. It was quite the wake-up call to realize that I was not in the norm for what I was earning—going back to making less than $30,000 a year, which is what I was earning 15 years ago, put me in a position to sell my house and my car, get an apartment in a pretty bad neighborhood in Minneapolis, and walk to work. It’s been difficult, but it’s a reality check for how the rest of the majority of the people are living, and it’s not great. There are more PayDay loan companies in the depressed area that I live in, grocieries are way overpriced, along with the housing industry. Median price of home still above $200,000?? You have to be kidding me!! And what’s even more absurd is when I was making my good salary 10 years ago, and bought a home, I only qualified for a $120,000 loan—with excellent credit—-and now, I qualify for a $250,000 loan, making $20,000 a year less, and my credit score is worse. Try and tell me that the banks don’t know what they’re doing—-this is one big mess, the whole economy—housing, groceries, medical expenses, insurance, cable—it’s all skyrocketed in the last few years, and it’s going to take years for it to readjust.
I would love to see the media leave the housing market out of the news for one week. I realize that increasing interest rates caused many people with sub-prime mortgages to go into forclosure, but it is without a doubt that the constant media attention on the housing market has had a tremendous impact on worsening the condition. Why doesn’t the media try to do its part and try to look for ways to build consumer confidence? Interest rates couldn’t get any better.
In many parts of Long Island you have to heat with home heating oil because the developers did not put in a natural gas supply line and the townships are not aggressively participating in citizen requests to retrofit. If Americans are concerned about scarcity (or the price) of petroleum based commodities then Congress needs to get involved in the delivery of safe, convenient and cheaper natural gas to Americans who want reliable, North American based Energy products!
Yes! What’s the point of saving if the Fed lowers interest rates and banks then do the same all the while decreasing the value of the dollar? Then with our dependency on imports, we pay out more dollars for everything from oil to shoes, tainted food, etc importing inflation via the back door. Its a double whammy. Hell, I might as well blow it while I still have some purchasing power left!
For those with a sense of history, wheeling a wheelbarrow full of dollars to the grocery store like the Germans did with Reichsmarks in the Wiemar Republic isn’t funny, particularly when one considers what followed – NAZI Germany. Can’t happen here? Don’t kid yourself, some Americans would welcome Fascism as a successor to “compassionate conservativism.” After all it has laid the groundwork…
yeh, i’m concerned as of 3 years ago when energy prices started accelerating and the government number crunchers were telling us all about ‘core prices’ minus food and energy. this fairy tale to fake the true inflation numbers is the cause for everyone not being prepared for the stagflation we’re going through now. of course greenspans denials and lack of understanding economic “conundrums” was a big contributing factor.
Yes, too many in the financial world only know of inflation from their text books. “It’s the consumer stupid” the consumer is debt ridden and even with lower interest rates the consumer cannot afford his current standard of living. The 90″s stock market run was incredible and when it ended the housing maket contiued to grow at historic levels. All of this allowed the consumer to live above his means. Credit card debt is probably the next domino to fall. Now, add inflation on top of all that (price of fuel and food compared to just three years ago) and you have a cusumer in trouble. The cure may be a bitter pill to swallow.
What phases me the most is how our government has not adopted one core area of business. Increase profitability by decreasing costs. This adminstration has simply spent so much money, that the debt from money spent by the government coupled with housing has driven the value of our dollar down. I am confident that if we continue to reduce the prime at some point we are going to devalue our dollar, that we are going to not need the assistance of other countries, we are going to need them to help us with core needs; food, water etc. At this point our only solution is to withdraw from the war, and reduce oil prices.
It is the #1 thing on my list of worries! Anyone who is not concerned about inflation needs to take a visit back to the late 70’s and realize we’re making the same mistakes over again. Cutting government spending, not cutting interest rates, is the only way we’re going to get out of this mess. No matter what, we’re in for lean times at this point, but there is still opportunity to limit the damage.
Let the economy grind to a halt.
It is too out of whack and needs to readjust and replenish itself.
These constant bandaides mask the problem in this economy and ensure that at some point in the not to distant future the bill is going to come due and acome due in a really big way.
It is time for the unproductive money in this economy to be shaken out of the tree so that it can be put to good use.
We live in a global economy, where wealth is now highly portable. If we keep letting a small group of individuals accumulate a disproportionate amount of the wealth they will one day port it elsewhere. Then we are really screwed.
Wake up people. It is time to allow the free market to correct the excesses going on in this economy, before it is too late.
We average a major economic upheaval every 50 years in this nation and we are way overdue!
Yes it should…the Chinese are raising all manufacturing costs for the clothing/textile industy by an across the board 15% effective immediately…
Oh, and one other comment regarding the user below who says the that the real way to stimulate the economy would be to cut oil prices…
Sir, you need a lesson on what actually moves oil prices in an inflationary environment. The Big Oil companies do not control the price of oil. Futures control the price of oil. Exxon could post tomorrow that it wants to lower prices, yet the price of a barrel of oil will still remain the same on all bourses the world over. Look into futures, speculation and do an analysis of the last year or so with regards to Fed Fund Futures and Oil Prices.
What inflation? According to CNBC, inflation is under control.
I agree, as long as you do not include the little things we need and use everyday such as food, gas, clothing, etc…
Those users posting on here that there is no inflation, that inflation is tame, that the Fed lowering rates will be “hardly noticed” (that one was good for a laugh) need a few classes in Macro Econ.
Inflation is essentially defined as “too much money chasing too few goods and services”. Lowering of the rate of Fed Funds does two things – it increases the money supply, and it causes a de facto lowering of the US Dollar purchasing power through the flight of investment in US securties to those of nations with higher yield.
This serves as a double “whammy” on inflation. Forget the technical analysis – I’m not going to waste your time with it. All you have to do is go to your local grocery store to see how prices have risen high double digits on some, middle double digits on others.
The dollar is at all-time lows against most major currencies (with the exception of the Japanese Yen, the only major country with rates worse off).
Those looking/hoping for a cut are those in desperate need for either the market to go up or to refinance something they shouldn’t have been in in the first place. Those who are hoping – praying for the future of the US know better.
There is no stopping inflation. The only way for governments and corporations to get out of debt is to pay it off with cheaper dollars. The fed has garrentied higher inflation.
I am ready for some inflation! My house is really inflated and needs everything around it to catch up. Don’t believe the hype about salaries NOT catching up. In my field (Software Development) I have seen a 20% increase in salary over the last year and so have all my friends.
We are way past inflationary pressures and heading straight to hyperinglation and a severe recession, thanks to the unwise Fed Reserve, which is more concerned with short term stock valuations than long monetary policy. The unabated inflation in energy prices mirrors those of the mid 70s. It took 2-3 years for the OPEC shock to trickle through the whole economy (exactly where we will be late 2008 early 2009. The FED needs to wake up and stop giving rewards to speculative financial markets and focus on sound monetary policy.
Bush and the Republicans, rather than honestly pay off the national debt, will monetize the national debt. They’ll do it by printing money and this will result in stagflation.
Hey W., you’re doing a heck of a job!!
Damn right I’m worried about inflation. My yearly wage increase already struggles to stay ahead of inflation. It’s never a good feeling to work hard all year to get a raise and realize that you’re actually making less than you made the year before when you factor in inflation.
No I’m not worried about inflation. The FED cutting rates will help the economy but it will be hardly noticed. The real way to stimulate the economy, would be cutting oil prices. The big oil companies could cut their gross margins a little, thus passing savings to the U.S. consumer and get thier confidence back! Instead of the senate giving money back to the taxpayers, use the money to buy down the oil prices, that would stimulat the economy faster!
Hello inflation – OUR NEW FRIEND!
The American worker is in desperate need of a weaker dollar. Everyone has lots of ideas on how to magically make our labor competitive on the world market. Balancing the value of our money against the world is the only “real” way. Accept paying more for “toys”, understand that the price actually does need to pay a living wage to AMERICANS if the system is going to work in the long term.
And if you want to pay less for oj, milk and bread, stop burning food in your cars – fools.
I believe the question should have been “are you worried inflation will ever be measured properly?” As Scott comments we are already experiencing higher inflation, you only need to go to do your groceries or fill your car gas tank. The problem seems to be in the way the statistics are built, they do not reflect the reality.
Yes I’m very worried about loosing purchasing power.
Yes, I believe inflation is much stronger than the Fed wants to admit. Product food sizes are getting smaller even though prices stay the same or get higher. I would like to see the Fed fight inflation better rather than creating bubbles and bailing our banks and hedge funds by cutting rates! They seem to care more about politics and appeasing supporters then supporting the people.
It’s too late to worry! It’s already hitting us – in the wallet!!
It’s going to get MUCH worse than this…just wait until summer when the “flow down” of all the higher prices (and our “worthless” dollar) finally reach the “consumer”.
Afraid Mr. Bush’s bailout will only be a drop in the bucket (with a BIG hole in it). Save your chicken fat boys and girls, VERY lean times ahead.
Inflation? Of course I’m worried about inflation and I have been worried about it for the past 12 months. When I go shopping I have this new mentality, “Just Say NO”. I’m not paying 46% more for frozen O.J, 35% more for a loaf of bread, meat prices have skyrocketed along with dairy products. I suspect if enough consumers “Just Say No!” the prices will eventually come down. Unfortunately I’m hurting the American workers of those companies. But most importantly, if the products I’m buying are not made in America I have stopped purchasing them. We MUST stop exporting our U.S. Dollars to foreign countries thus making those countries wealthier and driving the price of our commodities higher due to higher global demand. “Just Say No America!”.
We have had a great deal more inflation for the last few years than the government is willing to admit. Sure computers are going down in price, and maybe some other high tech items, but you can’t eat computers, and a dvd player is not going to keep you warm at night. Has anyone looked at their water bill lately, or maybe stayed in a hotel lately. Even fast food is double what it was three or four years ago. The media and the country, needs to wake up and start asking the right questions. First of all they need to realize the core CPI is only part of the real world. College education, sporting goods, travel, clothing, and medical expenses, in addition to medical insurance are not in the CPI. It is time the government establishes an index that is a true indicator of infation or lack there of in the economy.
Stagflation is a wage deflation with a price inflation and the solution is to cut govt spending and raise rates. Hyperinflation is a wage-price spiral upwards which doesn’t end until a deep depression sets in. I do not fear stagflation. I fear hyperinflation and the mass starvation that it incurs. With Ben’s constant cuts and overprinting of money, he’s heading us to hyperinflation. With the runaway spending of our govt, they’re heading us to hyperinflation.
We all know we cannot SPEND OUR WAY OUT OF DEBT.
Fed fund rate increases didn’t crash the housing market, greedy banks, uneducated borrowers, and shady loan originators did. The housing market has and should operate just fine at a 5.25% Fed funds rate. Now the fed is seriously jeopardizing our future to widen the credit spreads for the big financials that put themselves into this situation. It’s all about being too big to fail. How about the U.S. economy… is that too big to fail? That’s what we’re being set up for. I never thought I’d see the day when the powers to be would decimate the currency and responsible savers in favor of a segment of the society that engaged in patently dangerous and irresponsible financial behaviors. It’s a new paradigm folks, and the message from both the government and the Federal Reserve is clear..spend it all, borrow more, and then borrow some more. Worry about the future in the future. I couldn’t be more disenchanted with the actions of both the Fed and the government in both fostering this mess and now in their reckless attempts to arrest it. Say goodbye to America as you knew it. When and if we emerge from this, the country you knew will be a very different place.