Inflation is everybody’s problem

Sorry, just one more thought (I’m a hog, I apologize). Now that rates are low enough to “accomodate” refinancings for ARM-holders, but banks are to afraid to part with their newfound
loans;and now that the Fed actions have created serious repurcussions on the dollar’s value;and now that oil,priced in dollars, is at a record….(Get ON WITH IT,they say) Well…in which direction will interest rates go and NOT cause harm in the economy??

Andy:Oops. Manufacturer of goods to replace human effort,for eventually all things flow from good technology. When the hell did it become important for I.T. to have its OWN support services?
Hmmm, pharmaceuticals. Patents challenged daily by generics,sometimes upheld by the courts. Food/beverage. Last time I drank a bottle of O.J., it came from Brazil. The shirt I got last Christmas came from El Salvador. Or Madagascar, or Malaysia. Or–wait for it–China. Lift the stool you’re sitting on,maybe Taiwanese?? Don’t get comfortable saying your business is “100% made in the USA”. Either you are an employee whose usefulness will be short-lived by a VISA holder (everywhere they want to be), or you are an owner who will look overseas for sales,help, or both.
When your technology or drive for cost-cutting sends “lazy” people to retrain and clog the higher education system,pat yourself on the back. They won’t be buying your products anytime soon. Thanks.

Andy( you know who you are), and David in NC: Do you own your business, or work in it on a daily basis, or both? Perhaps a job on Wall Street for dear Andy. Everyone needs a bonus while writing down billions.

The credit crunch is not an issue for my family. The Fed’s cutting the interest rate only hurts those retired or planning to retire on fixed incomes, and those trying to save. Inflation is eating up all that we have; this month we cut the percent going into our 401k by more than half to try to meet current expenses, because the 2% raise that I got again this year comes nowhere near the rate of price increases in Massachusetts.

Andy, Andy, Andy. Where is your compassion? I thought this was to be about how inflation was impacting people’s lives. Apparently you decided it was an open invitation for you to challenge anyone who doesn’t agree with your economic views. If you’re really that smart and have all the answers, then get out there, run for a political office and start changing the world!

Andy may sound like a jerk to many of you, but he is right. I also work for a manufacturing company and one who’s livelihood is dependent upon other manufacturers. I am doing well enough to live comfortably and have a great life. The world is not ending. It’s actually hardly much worse than it was last year when everyone was bragging about how rich they are from flipping houses. It may sound mean, but if you’re lazy, do not get yourself educated or learn some skill, and spend your life rather complaining about how unfair it is that other people have things than you deserve exactly what you have! I was never handed anything and I am very successful. I am not a genius, I am not lucky, I am not special. I just got my act together and made something of my life. If everyone in america did that we would have a much better economy.

Grace from CA -

Thanks for the English lesson. Next time, do it without ending a sentence with a preposition.

Alex from “Mew York” -

There are 400,000 American Manufacturers employing 14,000,000 Americans, accounting for 13 Trillion dollars in GDP. The most common are Pharmaceuticals but Food/Beverage, Tech, Fabrics & Machinery aren’t far behind. The automotive industry isn’t even in the Top 5.

I’m in technology, by the way. 100% Made In The USA (even the circuitry).

As for the Canadian -

You’re far too nice to argue with. Sorry.

As the lone Canuck here, I guess I have to stand up. I won’t wave the flag. I think we are in this together, in one economic world — as I said somewhere else, our pain here will be a lot worse than yours if anything seriously goes wrong. When America sneezes we catch a case of economic pneumonia.

Our economy is more than 10 times smaller than yours and is far more dependent on the U.S. than the U.S. is on us. So naturally our self-interest compels us to worry about your economic health at least as much as we worry about ours — because for us they amount to the same thing. I can understand why your self-interest allows you to mostly ignore what goes on north of our common border. What happens to our economy, on its own, will create little ‘bad news’ for most Americans.

First yes, our taxes are significantly higher. And I won’t say that those taxes are necessarily always wisely expended. I think we are as capable of making mistakes as you are. The state of knowledge that our Central Bankers and economists all operate on is essentially coming from the same playbook. If anyone inferred that somehow I was personally smugly observing unfolding events, then I would like to, at the very least, correct that impression — I never intended such an implication.

So yes, we can be as economically illiterate as anyone else. We ran up what for us were horrendous annual federal government deficits for a couple of decades from the 1970-s to the early 1990-s. This resulted in an unsustainable situation going forward at that time. Our multiple annual deficits had resulted in an accumulated federal debt that was threatening to become “run-away” — at some future point, our tax collections would not even cover the annual interest costs on such debt, especially since we could not control world interest rates and had to take essentially what the markets charged. We could not borrow with a world-class currency like America could. We did not have the luxury of a “reserve currency”. We were caught like the proverbial debt-rat in the proverbial fiscal corner.

Only then did our central government get serious. Man, that adjustment was painful for a lot of municipal and provincial governments for quite a few years afterwards, and for many individuals as well — the word “downloading” became quite a pejorative term, and still is for many people today. But that pain was needlessly suffered and was created by the easy-spending decades that preceded the 1990-s. We were all pretty much the proverbial “drunken sailors” for a couple of decades (no ill-will intended toward sailors). It was no one’s fault but our own.

Since the early 1990-s the Canadian federal government has run annual surpluses by its own design (and yes partly due to higher taxes, but partly also by severe cutbacks of expenditures). All of the major political parties have supported this approach as has most of the public. So while we, as a country, are not ‘out of the woods’ we can at least now see some daylight. That assumes that we won’t have some kind of serious world-wide economic contagion in the near future.

My personal preference for something as serious as what I think is currently unfolding is one of a “team approach”. Please understand that most everything I have personally learned has come from American sources — economists and others.

I would ask you (if you have time) to read at this American link http://mises.org/story/2929

I am not a whole-hearted supporter of everything Milton Friedman proposed — but I liked his (and Anna Schwartz’s) idea of having the FED operate on the basis of a rule-based mandate. What the FED does today is mostly to operate under a regime that seems to “make it up as it goes”.

No one who has any kindness or empathy in them would expect others to smugly sit back and vicariously ‘enjoy’ the misery of others — but understand, if you guys start to hurt economically, then so will we. This is not a case of ‘schadenfreude’ — if it were, then I would indeed PERSONALLY DESERVE the coming pain — a pain that I fear a lot of us are unprepared for.

This is to “Andy” the director of the apparently last American manufacturer (what do you make? Nothing is made int he USA except debt)……poorly designed cars, etc…….

Gas fill up for my car, new record $71.35; a steak @ the market $15! and ice cream (not that 1/2 gallon shrunk to about 1 1/2 Quarts) $5.99, Milk $5 a gallon, eggs $4 a dozen, geesh where do we start and to top it all a 42% ’surcharge’ on truck shipments for fuel costs, lucky that wont get pazssed along…yeah right no inflation the $ is diving, the costs go up & the Fed keep$ printing money & handing it out to banks that refuse to loan it as they need it to protect their sub-prime portfolio’s- this will be a tuff few years me thinks….

Andy from New Haven: If one’s sarcasm cannot be picked up by another English speaking person, one should work on one’s language skills so one’s sarcasm can be better picked up.

Erica from Milwaukee: Only people who has not lived or travelled anywhere else in the world would find America all great and almighty. That’s called narrow vision.
And says who I am not planning on an exit strategy?

Question: “I mean really, when was the last time you saw **MADE IN USA** on a product you bought anywhere?”

Answer: Every day. I’m a Director for an American manufacturer!

The rest of your comments are elementary and silly, frankly. “Spending will only line the pockets of evil financial big wigs, who laugh all the way to the bank”. Take off the tin foil cat and stop hating “the system” just because trendy VW driving, Mac using prissy pants like Paul La Monica tell you it’s the cool thing to do.

You people sicken me.

Inflation is everyone’s problem? Not the Fed; to hear them tell it, there is no inflation. Do you believe it? By the way, Merrill Lynch is losing money and needs Bailor Ben for an emergency bailout. Do you know where he is hiding?

Andy – “I’m not the type of person who settles for mediocrity. Which is why I’m such a more valuable resource to this economy than you.”

Just what I figured, wasting company time to support your non sequitor ideas; GOOD JOB ANDY!

Mediocrity? Is that sarcasm, again?

I’m going to side with the Canuck, spending is not going to improve anything except the corporate banks lining their pockets from interest earned from loans and credit cards; they’re laughing all the way to the bank.

I mean really, when was the last time you saw **MADE IN USA** on a product you bought anywhere? Answer- Almost never, unless MAYBE it’s a small local business. Our economy has outsourced so many services and products that we have no economic foundation to fall back on; we rely heavily on imports.

Keep spending Andys’, China is only getting stronger.

I say vote for the politician that will regulate commercial trading, who will create local jobs, support the National infrastructure by doing away with socialistic programs that promote the poor and lower middle class to rely on the government assistance.
Reduce debt and start saving.

I think we have identified the problem. What is your solution? Realistically, without blowing your paycheck on needless consumable items imported from foreign countries?

As for the Canadian –

Why is it that people from other countries seem to always have the American economy figured out? They lob grenades from outside our borders at our government officials without actually experiencing the effects of legislation here first hand.

And Canada seems to be the worst. Some hack analysts from the RCB has been calling this the Greatest Depression for about a year now. Meanwhile, she’s 2,000 miles from the nearest American and rides a horse to work. Eh?

Sure, your government gets a lot done. That’s what happens when you rape your citizens out of 60% of their paychecks … half of which ultimately gets filtered down to people who make bad decisions. No thanks.

In short, mind your business. I don’t tell you when to ice the puck or how to make maple syrup. Leave the economics to the adults.

Raymond – I don’t know if you’re originally from the South, or the Pacific Northwest is slowing down a bit … but my “crying” about paying $5 more per week in gas was completely sarcastic. It’s roughly 0.002% of my weekly paycheck.

My message (through sarcasm, that obviously sailed right over your head) is that there is absolutely NOTHING to worry about. I haven’t been impacted in the slightest.

And your “security” isn’t a luxury. It’s an unproductive state of mind. You’re content with being content, thus, you’ll always be happier with less.

I’m not the type of person who settles for mediocrity. Which is why I’m such a more valuable resource to this economy than you.

Andy in CT –

Yes, I know it’s possible to live a “Posh Lifestyle” and still be liquid but I chose a simple and secure lifestyle. Yeah, squirreling away my measly government paycheck sure paid off though; I’ve got 13 rental properties in Virginia and North Carolina, and a 2005 ZO6 (paid for) to show for it. Too bad snobs like you are losing their homes to Adjustable Rate Mortgages, freaking out about 50 cents difference on a gallon of gasoline, and paying my rent.

Andy, the only thing comical is your delusions of grandeur. Go practice crying in your pillow, you’re going to need it when they auction your pretty BMW and overpriced home away. Try taking your condescending attitude to the welfare line and see how far that gets you!

New York,

Sounds like you live in a rural area, oil heat and all. Why not try heating with wood, get yourself a woodstove, chainsaw, goggles and go out and have a good time. Woodcutting is great exercise and you will really appreciate the benefits of a woodstove when the temperatures start to drop. It will help cut back on your oil consumption considerably, remember cutting wood warms you twice, once when you cut it and then when you burn it, enjoy!

If you have time, take a quick look at what Anna Schwartz, colleague of Milton Friedman, said back in January, 2008, in blaming the FED for the current mess:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/13/ccschwartz113.xml

One statement in that article that most contributors here would have problems with is that “Inflation fears are subsiding fast”. What?

That is probably not even Anna Schwarz’s comment, but instead might be coming from the article’s writer. Unless the writer means that inflation fears are only subsiding “relatively” because of a much greater, explosively-expanding, exponentially-compounding fear — that of a huge credit contraction or debt implosion — resulting in a very painful economic slowdown.

Because those are the 2 realistic outcomes left to the FED today — to try to deal with the unfolding contraction or to try to deal with price inflation. It cannot effectively deal with both, not, at least, at the same time. That is why so many fear some slight “stagflation”. How quaint. As the Church Lady might say — how special.

The whole problem with the FED’s current plight is that it thought it could “mop up after the bubble had burst”. That it believed it could never identify a bubble in the making (even if the FED had made the bubble) and thus it would be better for everyone if it just mopped afterwards.

Well good luck — some bubble — some mop — that will now be needed.

We have had an “accommodative” money supply policy in one form or another ever since the creation of the FED in 1913.

Monetary inflation is the norm, not monetary stability — stability would also be known as growing your money supply at the same rate as your economy. There are supposedly good theoretical reasons for accommodating “slight” inflation for purposes of “greasing” the wheels of commerce. (Don’t get me started!)

The concerns expressed by previous posts are pertinent — so long as there is substantial rising (price) inflation, consumers will have less discretionary funds for other purposes. That creates downward pressure on aggregate demand for many discretionary goods and services. And many of us are employed in jobs that depend on demand for those “discretionary” goods and services. Ben Bernanke’s putative solution is to MAKE you spend your remaining money fast (just like in Zimbabwe) by threatening to use the power of his money printing presses ( http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm ).

Unless our collective income can grow to match the lost purchasing power from the current price inflation the loss of some of our jobs is inevitable. And this can become a growing snowball fast. As more of us lose our jobs, or as we get more scared, we will pull in our “spending” horns.

What to do? Wage and price controls? Give me a break.

It is not a matter of what has happened so far. If this is as far as the “correction” were to go, then Andy from New Haven would be right — we would have nothing to fear but fear itself. In fact we would be silly to be so concerned given our 100K salaries. And if you were lucky enough to be in a government job with a salary that is CPI-indexed, your limousine would indeed keep you in relative comfort.

I just happen to disagree with Andy in New Haven — there is nothing inevitable about rising prices and it is not Economics 101 — it is simply the way the FED handles America’s paper money. Also, capitalism might be the greatest social system invented, but we haven’t had capitalism since 1913. You might want to read Ron Paul’s entry making that conclusion in 2002 at http://www.quebecoislibre.org/020803-7.htm

Rick A. in New York is closer to the mark. We have to avoid the possibility of this getting much worse — our current problems are nothing. But these issues do threaten to make the situation much worse, first for the poor and then for the middle classes.

I hope Paul R. La Monica keeps running these forums for feedback on at least a monthly basis because it will only be over time that we see the unfolding effects and learn from them.

I like HJ James’ challenges to Mr. La Monica. HJ James makes good points. I tend to agree with the observation that if society uses its scare resources (via government spending of the public’s money — either via printing money, or via more debt to be paid back via the taxed public purse later) to say bail out big hedge funds and others, we might be creating inflation that will hurt us even worse. On the other hand, I am sympathetic to those home buyers who were sucked in by the artificially-FED-manipulated low interest rates that fooled so many to buy homes they could never afford in the long run. On this point, I wrote in one of Mr. La Monica’s earlier Feedbacks at http://cnnmoneytalkback.blogs.cnnmoney.cnn.com/2008/03/21/is-the-worst-over-or-just-beginning/

Those artificially induced low interest rates were what Anna Schwartz was referring to in explaining the house prices that rose to levels no average (median-income) person could ever afford to pay. There is nothing to do — these prices will and must adjust (“deflate”) down. The pain of this adjustment, however, was needlessly created by the FED. Would it be that we never, ever, use the FED’s powers of manipulating the money supply in solving some perceived social ill in the future — that the pain we now will have to go through is so much greater than any gain we might have gotten will become clear in time. Let’s not go through it again. If only! The next paragraph will show that there is no hope for this wish.

The other problem that writers have noted is that the FED is now using the same tactics to “correct” the imploding bubble that created it in the first place. Will the FED ever learn? I doubt it.

Raymond in Everett, Washington, I have empathy for you because you are conservative and careful in your financial affairs. But there were many for whom owning their own home was a dream that suddenly seemed attainable. That is why not everyone can be judged to have been greedy or irresponsible — they wanted something better for their kids. They were fooled by the FED. Not all of them were fooled by greedy mortgage brokers.

AC in Chicago — if only it was the coming summer that was long and sad — I think this summer of our discontent is the first of many, sad to say.

David in Charlotte NC, I think many of us are indeed compulsive consumers, and you are right that this presumption is what the current system is built on. However we need to move away from “pointless things” and try a more stable, slow-growing, system. That does not imply less for the poor. Saving for the future need not make us more poor. But getting from our current system to that system is going to be hard. Once the FED expects you to BUY, BUY, BUY, to the point that the FED threatens to destroy the value of the money you have, guess what — you will BUY, BUY, BUY.

Ron Paul has some answers but I doubt that the political system can accept him as a Vice President of the United States. To return to the roots that built America is not going to be easy. But maybe the difficulty of that journey is what will be necessary to gird us for the future.

Rafael C. in Altadena CA is correct — as an example the “best-performing” stock market in the world last year was that of Zimbabwe. Even in the Weimar Republic back around 1922, the German stock market went to stratospheric levels during the hyperinflation of that time. Real assets of any kind were marked up relative to debased paper money. The problem was that even such “real assets” only retained about one third of their former value. Even in those assets there was real deflation in terms of their relative purchasing power.

Andy — cannot agree with you buddy. Your “solution” is what got us here. What you say has been indoctrinated into us. Spending is not going to solve anything. You are right that saving will also kill us. But that is THE dilemma. Let’s at least acknowledge that our current system is unstable. You cannot blame the media for a situation that is REAL. We need competing ideas. We need to explore this from every angle. All of us have different opinions — yours are no less valuable than anyone else’s. But this is not just bad psychology. We have nothing to fear but fear itself? No, my friend, we have a whole lot more to fear than “just fear itself”. The burritos have not even hit the fan. Get ready. And don’t blame La Monica. Is inflation caused by greedy unions, by human expectations, by aliens? Not by a long shot. Don’t talk to the hand — talk to Milton Friedman — inflation is always and everywhere a monetary phenomenon — http://en.wikipedia.org/wiki/Monetarism

wow Andy you seem like a person I would NOT like to know. There are plenty of people out there that do everything they can to conserve in every aspect of their life and it doesn’t help any. With a small business of my own that is negativley impacted by the economy and two small children it is extremely hard to keep groceries on the table, put gas in the cars and pay the utility bills. But hey if you’r so comfy in your life I could always give you my address and you could send me what money you don’t need at the end of the week!!!

Raymond in WA -

You do know it’s possible to live a “Porsche lifestyle” and still be liquid, right?

I think it’s comical that you accuse us big spenders of ruining the economy while you drive the same car for 15 years, squirrel your money away in buried tin cans and live off a government check that I pay for with my “big salary” income tax.

Let’s not pretend you’re a hero in all of this when in actuality, you contribute a fraction of what I do.

Big rally on Wall Street today! Guess inflation is not everybody’s problem afterall.

Mr. James from IL -

There is no one more excited than I, seeing the “fear sells” agenda Paul and his mass media economic pundits like to push on the impressionable public, being called in to question. However, I think the bigger problem with the statistics you referenced lies with the ignorance of the reader. (However, the ignorant reader is likely a victim of the propaganda in the article itself. Especially considering the statistics are usually skewed by the implication of the question itself.)

Virtually every aspect of the current economic downturn, ALL markets and verticals, can trace the cause of their individual declines to the “correction” in home values. It’s been the driving force behind foreclosures (which nearly collapsed the lending industry), excess inventory (which led to retraction in home building/construction), and it dissolved a significant portion of the real estate market as well as it’s dependent verticals.

The fact that only 3.5% recognize housing as the primary concern is shocking.

Home values drop > LTV is too high for refi > ARMs reset on handcuffed borrowers > foreclosures sweep the nation > lenders post losses/writedowns and subsequently lose capital > bears sell/short, perpetuating the reduction/lack of available capital and affecting other sectors > the fed responds by lowering rates, GDP growth slows > the dollar sees a devaluation.

How do we wiggle out of such a circumstance? Spend, not save. Consumer spending fuels 2/3rds of the economy and has a significant impact on the GDP, interest rates and dollar valuation. Let the expansion of other markets dull the negative impact of the housing bust.

So what does the media do? It starts a fear-based campaign aimed at spooking investors and inadvertently inspiring disposable American income to remain stale or drift overseas, into foreign interests.

“Stuff is too expensive, Don’t buy!”

“But don’t save because interest is too low!”

“Don’t you dare buy a house because the housing market is still crashing!”

People are scared to death and have absolutely no clue what to do. And if the media is hell bent on perpetuating that fear, at least be responsible and tell people what they really have to fear.

I’ll give you a hint, it’s not the fact that Chipotle is charging 7 bucks for a burrito. It’s the fact that they just lost all of the equity in their most significant investment and the only thing they can do about it is wait.

So, wait. Don’t panic and try to sell your house at a loss. Don’t put your money under the mattress (or worse, in foreign interests). And most importantly, don’t tell your friends that the sky is falling. Because it’s not. If you do all this, maybe, just MAYBE you’ll soon see the glory days of a $5 burrito.

Follow this: Today oil was up to another record level, the US dollar was at another record low versus euro, the economy is in a Junior Depression, the banks are scared from their own shadows, the cost of living is going straight up with no stop at sight, jobs are vanishing, you have to look very carefully to find any tracks that are hauling any goods on the highways, the government is lying about the severity of the state of the US economy and inflation levels, the US dollars are being printed 24/7. After all this, the stock markets in the US are rising by better than 2%, Russell 2K rose by 3%, Dow Transports was up by close to 4%!!! Considering the above-listed negative fundamentals, the stocks would normally have headed south, by a lot. The abnormality of stocks rising, tells me something else; THE INFLATION HAS SPREAD LIKE A CANCER AND HAS REACHED THE STOCKS, which will be a cause for the start of hyper-inflationary times.

The $4-gas is here, what is going to happen with the arrival of the $5 gas (yes Mr. President, $5 for a gallon of regular unleaded gas)? A scary thought came to me recently, civil unrests? I hope not.

The irony of all this is that the whole situation could have been avoided, have we had a president who was a well-rounded politician, instead of an intimidating war-loving arrogant small-time businessman, and heads of Feds that actually LEARNED from studying economics and finances. To me, in the court of public opinion, these are already convicted fellons. Just like Greenspan is doing right now, he can run, but he cannot hide from being the puppet-architect of current misery of the “middle class.”

Basic life staples are higher than ever (toilet paper, milk, eggs etc). What is really getting to me is that our local governments are RAISING taxes on property and added gas tax on top of what the Feds are taxing. The Emergency Phone Service wants more money, schools want more money, they want to install a toll bridge to charge drivers more money to go to work, and they said the utilities are hiking their prices within the year. Do they not see there ISN’T any money left in our family budget for tax hikes and additional fees and surcharges? They cry to the tax payers about “we need” and we get criticised for voting tax hikes down. How evil of us! Yet, no local, state or federal government hears the tax payers crying “we don’t have any money anymore” or “my 401k is gone and I can’t retire” or “we don’t have a house anymore” or “we dont’ have a job anymore”. When will our elected officials wake up?

As long as you don’t drive, want to own a house or eat inflation is a non-factor.

Like Andy, I too have a very expensive BMW that is costing very slightly more to drive. It is preventing me from doing other excessive things I don’t need. You may say ‘oh.. tough crap buddy’, but that excessive spending on pointless things is what keeps the american economy going and what gives the low income people what little income they do get.

What I don’t feel for though is the poor people who bought enormous cars/suv’s and now complain that gas is so expensive they can’t eat. You may NEED a car to get to work, but you don’t need a giant gas guzzling one. Get an old honda vs an old suburban and help boost our economy by spending your money on loan payments at 15% for a nice set of chromed wheels instead of gas.

I have always been a saver…but..
I’m in the store buying groceries…Last week it was $3.89 for a loaf of bread. This week I go back and same brand of bread was on a deep discount of $1.89 a loaf. I bout 3 loafs. Thats 1 week of fresh bread and 2 weeks of thawed bread. Milk is $4.00 a gallon. Food is skyrocketing and my paycheck is not. I’m clipping coupons but they are not for products I normally buy. I’m boycotting walmart cause of their work ethics and employee treatments.

Gas forget about it I am driving on fumes at the end of every week Tues-Wed. I do not buy on the weekend (Wed nite – Sunday evening). I told my boss I need to telecommute at least 1-2 days a week just to save money.

The ocunty I live in is about to go to a 10% sales tax!!!

This is going to be a long sad summer.

Government this, Bush that; it’s all their fault and none of my own. Sure, I took the ARM loan on my over-market priced house that parked my 12MPG SUV in, next to my boat and convertable BMW (Andy from CT) that I took a second sub-prime mortgage on my other home to afford. How can I be so doomed? I make 100K a year!

Well, for the dummies like Andy, we should live such a poche lifestyle; then suffer for it. Wake up America! Get off your fat McDonald’s eating rears and get to the polls. How do these idiots who make laws and decide how much taxes we pay make it in office? Because the average American is more concerned about who is going to be the next “Idol” or if 22’s will fit my SUV rather than who is going to be running the local legislature.

I am in the military and made a fraction of Andy’s salary last year. I have no debt, my car is paid for, and I still have money in the bank. Shame on you America for being fat, dumb, greedy, and irrisponsible. Want someone to blame….look in the mirror!

Mr. LaMonica,

Thank you for writing about the concerns of your readership. Here are the results of a qualitative analysis of the 86 responses you received (as of 11:34am on 04/16) to your question “Are you more worried about rising food and oil prices, or falling home prices:”
— 56% cited inflation / dollar devaluation as the primary concern,
— Only 3.5% cited housing as the primary concern,
— 45% of responses voluntarily cited: housing prices too high / let housing markets adjust downward / no housing crisis / no public bailouts of parties to the housing bust

Based on these results, I think your coverage in the subsequent article, “Inflation is Everybody’s Problem” understates the results in two significant ways: 1) it fails to mention that a majority of responses specifically rate inflation as a bigger worry than falling house prices AND 2) it fails to mention that a near-majority of responses (45%), even without prompting, contradict your allegations that “rising foreclosures and delinquencies are not good for the economy” and government intervention in the real estate market “is in the best interests of all Americans.” (While CNN is not the only media outlet spouting these unsubstantiated or misleading claims, it does not excuse CNN from jumping on this bandwagon without critical analysis). Moreover, many of these same responses not only object to bailouts of corporations involved in the housing boom (i.e. Bear Stearns), but also object to public rescues of those facing foreclosure or delinquencies. The issues raised in these objections from the public-at-large typically reflect a thoughtful, ethical reasoning sorely absent in the propositions from Wall Street Barons, politicians, and media pundits.

So, Mr. LaMonica, let’s see if your courage and integrity will lead you to pose any of these questions to your readers:
1. Are declining real estate prices bad for the economy?
2. Which has the worst impact on your wealth accumulation efforts: inflation, falling house prices, or public bailouts?
3. Should public monies be used to rescue individuals facing foreclosure or delinquencies? If yes, for how long should the public bailout extend and should this bailout be retroactive?

P.S. It would be much appreciated to see these questions posted in an article that gives Americans a more detailed picture of the foreclosure / delinquency rates since 2007 by discussing: the drop in foreclosure /delinquency filings in February 2008 (RealtyTrac), the slowing pace of foreclosure / delinquency filings in 2008, the percentage of months since 2000 in which more than 50% of monthly mortgage applications were not for home purchases, the percentage of foreclosure /delinquency filings that are for second mortgages and HELOCs, the multiple filings of foreclosure /delinquency on single properties, and the percentage of foreclosure /delinquency filings for multiple-unit housing structures.

Grace in CA, if you want to see America go down, I suggest you leave this country and see how great life is elsewhere.

As far as the post. In 2005, I purchased a VW diesel. I got 47 mpg on average. The great new was that diesel was cheaper than gas. I would fill up with $20 and that would last me 500 mi. Now due to biodiesel, and ultra low sulfer diesel, demand from India and China (who subdize their diesel costs), it costs me $40 to go 400 mi. Not only has the cost doubled, but I lost mileage.

I do however find it funny that the only countries paying market price for oil are “free trade” countries. There is not a single OPEC country paying these insainly high prices and China and India also control the cost of diesel.

The Feds inflation indicators do not include food or fuel. When these two items are included the inflation is huge.
What happened to the Democrats? They said ‘vote us in and we will fix the gas prices’ that was 2006 and the Democrats are completely silent….shhhhhh. Open up oil and gas exploration and we will see prices go down.

It’s getting absurd. My grocery bills are really starting to get high. A half-gallon of Orange Juice at a Minneapolis area store was at $4.85 today. Coffee shops have raised prices on coffee. Milk is ridiculous. Cereal is really getting expensive too – Cheerios is pushing $5 a box for Pete’s sake.

Even freaking Chipotle has raised burrito prices. What is the world coming to when I can’t get a Chipotle burrito for less than $7?

For Andy, it isn’t just the $5.00 more for week for gas. It’s $150 a month more for fuel oil, $200 a month more for food and a nickel and dime for every other thing we buy. If you think the credit crunch was bad before, wait until middle and lower America can no longer afford the extra expense (most of which is being funded with plastic) and starts defaulting on their debts in a big way. We’re in a recession. The question is can we get out before the real damage sets in. We need to curb the federal gas tax, subsidize farms to lower food costs and lower taxes overall. Get rid of all non-essential goverment and the money will be there for it.

Dee from NC – It IS a laughing matter. (I was being sarcastic, by the way) I find it hysterical that people insist on comparing our current economy with that of the early 30’s. People were waiting in lines 5 hours long to get a loaf of bread. Are we THAT spoiled that 5 or 10 bucks more per week in gas is perceived as some sort of armageddon? Get real.

John from GA – It’s called capitalism. And it’s the greatest social system in the history of mankind. I’m sorry if you’re one of the have nots. Try harder.

Pete from IL – Do you know when food and energy prices typically increase? ALWAYS. Over time, things get more expensive. It’s economics 101.

Grace from CA – I live well within my means and I haven’t felt anything either. I thought human beings picked up the concept of sarcasm at 7 years old? Apparently, it should be considered the United States of Ignorance, not Arrogance.

John in NY – That’s the spirit.

I say we should welcome inflation. When my health insurance increased 17% this year, it was only 3x the rate of inflation, not the customary 5x

Seriously, I am not really feeling anything, yet.

OK, gas IS getting a bit more expensive, but there is nothing too special about.

Wait until gas hits $10 a gallon!!!
America is GOING DOWN!

It’s been a long time since the United States of Arrogance got slammed right before the eyes of the rest of the world.

And boy, I am glad!!!

As a matter of fact, those who can feel it now and whine about it are those who were too greedy and bought too much home, and those who lived beyond their means, like Andy from New Haven.

People who are used to living within their means and saving diligently, are not really feeling anything, yet.

But we will see.

Remember, inflation is only 0.2% according to the federal reserve. Food and energy prices don’t count because they are going up, so we should just ignore that. Core inflation, what a joke! Keep on consuming; there’s nothing wrong here!

One more thing…

I read this morning how the large hedge fund managers made billions this past year. How can people like George Soros justify his hedge fund income with his liberal wealth distribution beliefs while watching the housing/mortgage crisis unfold due in part to his companys’ and other hedge fund managers operations? Seems a fitting question.

Forget about a budget. Forget about saving for the future. The budget gets blown away every week. Oh, and to the guy with the BMW that might have to sell one of his boats, put your comments somewhere that someone might really give a #!*#. You may be doomed, but the majority will find a way to make it, while you’re still crying about it. It’s no joking matter, people are hurting.

To the person with the home heating “horror story” …

First of all, two people using 150+ gallons of oil per month is absurd. The average is around 50. Maybe 90 in a North East winter. So, Tip #1 … conserve.

Secondly, assuming the national average of a 50 gallon per month consumption, the difference between $2.39 and $3.59 per gallon is 15 bucks per week. So, Tip #2 … don’t try to complain like your mortgage payment doubled.

Finally, you should have locked in your oil contract last summer when everyone was telling you to. I’m capped at $2.60 because I pay attention. So, Tip #3 … be smarter.

Let’s recap: You were ignorant to the resources available to you, and wasted energy recklessly which only ended up costing you a couple packs of cigarettes per week.

And that’s a “horror story” about inflation? Seriously?

My inflation horrible story is:
I am afraid that I have problem with my eyes and ears when we talk about inflation…

Everytime I go to a shop, I am shocked by the price raise and my grocery bill grows from $150 to $300. Yet everytime the inflation data comes out from our dear labor department, it is so harmless, so gentel, so soothing, so irrelevent. I feel so good about what heard from our government while I feel so uneasy about what I have seen in real live.

Do I need to see a doctor about this?

The government is lying about inflation. It is actually running about 7% according to the way they calculated it before Clinton and about 12% according to the way they calculated it before Bush 1 (see John Williams’ Shadow Statistics site). Interest rates need to go up so inflation doesn’t get any worse and so that savers get some kind of real return.

Our home is heated with propane, which refiners can adjust in volume (how much gets extracted, how much left in other distillates.) This winter propane went from $2.15 per gallon to $3.15 per gallon. It snows here through April. As for gasolene pricing…I can’t haul hay for our goat herd in the trunk of a Prius. Inflation is the REAL danger, and “Helicopter Ben” isn’t helping…meantime, my hay vendor doesn’t take Euros.

Here’s my story.

We purchased our house last year when heating oil was a manageable $2.39 a gallon. Our last fillup was $3.59 a gallon! With our heating bill averaging approx $500-600 each month between November and March, we did everything possible to stay afloat and warm. My wife is pregnant and it was especially hard for her. We kept the heat at 55 degrees when we weren’t home and a balmy 60 when we were home. We wore layers and left the kitchen oven and toaster oven open after each usage to utilize the warm air they had.

It was not easy. Our bodies adjusted but when people came over they said it was freezing so we would stubbornly bump the heat to 70 where we would start to feel it was hot.

Sad. We’re hoping heating oil prices will come down this winter with the baby. Some things like heating oil should not be traded and we should not be at the mercy of traders. With most of the country on natural gas, no one really cares about us heating oil customers. What happened to the basics of food, warmth, and clothing?

Will anyone help?

Our gurus in the Fed do not think there is any inflation. It does not impact those who count, government bureaucrats who drive government (i.e. taxpayer) fueled limousines and Wall Street financial cowboys. Don’t drive, don’t eat, be happy in your work. Revel in the Wall Street bonuses you are providing.

I have a horrible inflation story.

The other day, I spent $3.50 per gallon on premium unleaded for my convertible BMW. It was $3.00 not too long ago. That’s an extra $5 per week! Unbelievable! How is my 100K salary going to handle such an expense?

Like most Americans, who take their luxuries for granted in an economy that affords them the ability to live at a standard that the majority of the world would kill for (and often does), I might actually have to sell one of my boats.

Clearly, we’re all doomed.