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Author: tata Date: Jun 4, 2008 12:45
From Briefing.com ...
Bernanke's comments on inflation are hitting the wires, so we wanted
to give the full quote to put the comments in context... "For a
central banker, a particularly critical difference between then and...
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Author: The TruckerThe Trucker Date: Jun 4, 2008 13:31
On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
> From Briefing.com ...
>
> Bernanke's comments on inflation are hitting the wires, so we wanted
> to give the full quote to put the comments in context... "For a
> central banker, a particularly critical...
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Author: ImmortalistImmortalist Date: Jun 4, 2008 20:14
On Jun 4, 1:31 pm, The Trucker verizon.net> wrote:> On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
>
>> Bernanke's comments on inflation are hitting the wires, so we wanted
>> to give the full quote to put the comments in context... "For a
>> central banker, a particularly critical difference between then and
>> now is what has happened to inflation and inflation expectations. The
>> overall inflation rate has averaged about 3-1/2 percent over the past
>> four quarters, significantly higher than we would like but much less
>> than the double-digit rates that inflation reached in the mid-1970s
>> and then again in 1980. Moreover, the increase in inflation has been
>> milder this time--on the order of 1 percentage point over the past
>> year as compared with the 6 percentage point jump that followed the
>> 1973 oil price shock.4 From the perspective of monetary policy, just
>> as important as the behavior of actual inflation is what households
>> and businesses expect to happen to inflation in the future,
>> particularly over the longer term. If people expect an increase in
>> inflation to be temporary and do not build it into their longer-term
>> plans for setting wages and prices, then the inflation created by a ...
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Author: ZerkonXZerkonX Date: Jun 5, 2008 03:20
On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
> Importantly, we
> see little indication today of the beginnings of a 1970s-style wage-
> price spiral, in which wages and prices chased each other ever upward."
Yes, prices spiral upward, wages do not move which is the same as going
downward.
Is 'inflation' in fact a condition where too many dollars are in the
pockets of those who actually produce aka 'the wealth effect'?
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Author: tata Date: Jun 5, 2008 07:45
On Jun 4, 4:31 pm, The Trucker verizon.net> wrote:> On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
>
>> Bernanke's comments on inflation are hitting the wires, so we wanted
>> to give the full quote to put the comments in context... "For a
>> central banker, a particularly critical difference between then and
>> now is what has happened to inflation and inflation expectations. The
>> overall inflation rate has averaged about 3-1/2 percent over the past
>> four quarters, significantly higher than we would like but much less
>> than the double-digit rates that inflation reached in the mid-1970s
>> and then again in 1980. Moreover, the increase in inflation has been
>> milder this time--on the order of 1 percentage point over the past
>> year as compared with the 6 percentage point jump that followed the
>> 1973 oil price shock.4 From the perspective of monetary policy, just
>> as important as the behavior of actual inflation is what households
>> and businesses expect to happen to inflation in the future,
>> particularly over the longer term. If people expect an increase in
>> inflation to be temporary and do not build it into their longer-term
>> plans for setting wages and prices, then the inflation created by a ...
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Author: tata Date: Jun 5, 2008 07:51
On Jun 5, 6:20 am, ZerkonX X.net> wrote:> On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
>> Importantly, we
>> see little indication today of the beginnings of a 1970s-style wage-
>> price spiral, in which wages and prices chased each other ever upward."
>
> Yes, prices spiral upward, wages do not move which is the same as going
> downward.
>
> Is 'inflation' in fact a condition where too many dollars are in the
> pockets of those who actually produce aka 'the wealth effect'?
Can you explain how that works?
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Author: The TruckerThe Trucker Date: Jun 5, 2008 08:05
On Thu, 05 Jun 2008 10:20:56 +0000, ZerkonX wrote:
> On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
>
>> Importantly, we
>> see little indication today of the beginnings of a 1970s-style wage-
>> price spiral, in which wages and prices chased each other ever upward."
>
> Yes, prices spiral upward, wages do not move which is the same as going
> downward.
>
> Is 'inflation' in fact a condition where too many dollars are in the
> pockets of those who actually produce aka 'the wealth effect'?
NO. Inflation as seen by most people is a deterioration in the value of
money. With some caveats the quantity theory of money is correct. But it
matters how the new money is introduced. If there is a pipe that runs
from the creator of money to the bank accounts of the rich then the
additional money makes the rich richer and there is no "inflation". This
is called Republicanism.
It matters also who YOU see as those who "produce the 'wealth effect'".
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Author: The TruckerThe Trucker Date: Jun 5, 2008 08:24
On Thu, 05 Jun 2008 07:45:00 -0700, ta wrote:
> On Jun 4, 4:31 pm, The Trucker verizon.net> wrote:>> On Wed, 04 Jun 2008 12:45:35 -0700, ta wrote:
>>
>>> Bernanke's comments on inflation are hitting the wires,...
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Author: ZerkonXZerkonX Date: Jun 6, 2008 04:50
On Thu, 05 Jun 2008 08:05:21 -0700, The Trucker wrote:
> NO. Inflation as seen by most people is a deterioration in the value of
> money. With some caveats the quantity theory of money is correct.
I have always understood this as the usual definition.
> But
> it matters how the new money is introduced. If there is a pipe that
> runs from the creator of money to the bank accounts of the rich then the
> additional money makes the rich richer and there is no "inflation". This
> is called Republicanism.
So if the pipe leaks there is inflation?
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Author: ZerkonXZerkonX Date: Jun 6, 2008 05:26
On Thu, 05 Jun 2008 07:51:34 -0700, ta wrote:
>> Is 'inflation' in fact a condition where too many dollars are in the
>> pockets of those who actually produce aka 'the wealth effect'?
>
> Can you explain how that works?
I will try.
"the wealth effect" was a term used by A. Greenspan, the last Fed
chairman. This was a reason he used to raise interest rates even though
inflation did not seem to be a threat. This 'wealth effect' was largely
blamed(!) on the large amounts of dollars many people were making in the
then called 'new economy'.
Another factor, or part of the same factor, was 'a tight labor market'
which I translate as being employers having to compete for labor by
increasing wages. He also said this was the reason that the immigration
policies had to be slackened to exert a 'downward pressure' on wages.
This is why the stock market rallied whenever unemployment figures moved
higher. This was openly discussed then so no theory on my part.
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