Inflation Fears!

[Brett]

What is driving all this talk about inflation? Now that oil prices have dipped, housing has peaked and is on the way down, the Dollar is on an up trend, the deficit has been revised downward and interest rates have stabilized. Sounds like good news for consumers to me! What is it that I’m not understanding here??

 

[Birchtree]

The crowd is obsessing about the silly rent numbers that have been increasing. They will eventually settle out into moderation. Be in to win.

 

[ATCJeff]

Plus personal income and wages are rising.

Jobs report may show an uptick in new jobs created. Strong economy! I'm starting to lean towards a rate increase in the 1st Q.

 

[Quips]

Much of the talk concerns the trillions of US debt held by other nations. If some of that debt was dumped for repayment, well, it would be a problem.

If it didn't lead to a great increase in interest rates, then it would lead to an extremely weak dollar and much more expensive imports. Like being between a rock and a hard place.

If mainland China would allow its currency to float, it would help matters somewhat, but what is really needed is fiscal discipline in national government and less consumer debt.

Some financial analysts see no problem with the FOMC reducing interest rates once or twice next year since the economy is expected to slow, but that would lead to a weaker dollar and less real return for other nations holding/buying US debt.

 

[Brett]

I was just reading, I don't remember where, that the Dollar has lost 1/3 of it's value since 9/11. That is incredible!! If we had inflation, there would be no sanctuary for us TSP folks.

 

[Fivetears]

The other novel question is. "what will your TSP account buy when you retire?" All the more reason to learn to "work the system" offered to us.

I was just reading, I don't remember where, that the Dollar has lost 1/3 of it's value since 9/11. That is incredible!! If we had inflation, there would be no sanctuary for us TSP folks.

 

[Quips]

The Fed has to be talking up inflation for fear of a falling dollar ... and the possibility of higher priced imports from every other country except China.

Some of the Fed governors may be worried about an increase in the minimum wage on the horizon too.

So some on the FOMC talk up the inflation fear to put talk about LOWERING rates on the back burner. It will depend on how the numbers shake out, but the market seems to be stalling a bit now. If the economy slows there will be pressure on the Fed to lower rates, and it it something many on the FOMC do not want to do.

 

[Birchtree]

Damn I do have the temerity to admit that does make sense. Good observations.

 

[Fivetears]

temerity \tuh-MER-uh-tee\, noun:
Unreasonable or foolhardy contempt of danger; rashness.
http://dictionary.reference.com/wordoftheday/archive/2002/07/09.html

Birch, you have improved my vocabulary.

Damn I do have the temerity to admit that does make sense. Good observations.

 

[Quips]

Yeah, it doesn't make sense. Real estate is going through a slump and commodity prices are sagging as well, yet some on the Fed talk up inflation.

 

[EW_ret]

This article really started me thinking about inflation in food prices. It sounds the alarm on possible increases in fruits and vegtable prices. It describes the decimation of our honey bee populations by a mysteroius disease. What if there were not enough bees to pollinate our crops?
The mysterious deaths of the honeybees

Honeybee colony collapse drives price of honey higher and threatens fruit and vegetable production.

By CNN's Amy Sahba
March 29 2007: 5:28 PM EDT

http://money.cnn.com/2007/03/29/news/honeybees/index.htm?postversion=2007032917

 

[Show-me]

It is a HUGE deal for fruit, nut, and vine crop producers. And to me too. I'm the one holding the branch. Should have held my tummy in. LOL :nuts:

 

[The_Technician]

It seems to me that the govt fails to provide any leadership in predicting inflation......I mean look at the economy, people have started to lock up their pocketbooks indicative of weaker retail sales.....everything costs more to you and me.....,what is it that they do not see....oh, maybe everyones income is dropping.....that's gotta be it!!!!

Or maybe they intentively look the other way, saving a broke govt from spending extra cash in retirement COLA's, pay raises, and so forth. What we really have here is a lying public entity.

Who wins, corporate special interest, they get the profit gains from overseas operations while their neighbor goes broke either by loss of jobs or by an increase cost of living without a suitable payraise, ......slavery never went away, it just changed form once again.

We're all here when our fellow human needs us to do some work, but keeping profits from our individual work is getting difficult. Seems to me, more people need to get into their own private business.

So what's new....this has been going on since the start of time.

 

[rconn]

The Fed gov't is 9 Trillion in debt; the budget overrun is abt. 300 Billion; the trade deficit is approaching 1 Trillion per year. Let's just skip over our head-spinning obligations.

So, fundamentally, things sure don't seem too good from a common sense standpoint. But, it's not just how things are, but where they're headed -- the direction.

We're facing our problems square-on and getting our act together! Hillary just proposed a "Baby Bond" -- giving each newborn a $5K bond. One democrat at the gathering where this was proposed, said it was a great idea: babies are already burdened w/ a $27k (not sure if this is accurate) share of the national debt, so this will help offset that... and also encourage savings! I'm thinking... what a great idea, sure... but why be so timid? We should give each baby a $32K bond and then they can pay their share of the debt and have an extra $5k to boot! Brilliant, no?

Seriously, it's frightening. Of course this is political pandering and we hope such nonsense won't take place, but this is the mindset. And, republicans aren't much better.

Anyway, for those where 2 + 2 still equals 4 and making sense isn't a nuisance to be avoided, something has to give.

The trade deficit is a literal measure of the transfer of wealth. And a standard of living based on borrowed money only works when you can keep borrowing forever.

But, if doomsayers are right, and things are fundamentally, seriously, unsound, then where are the consequences?

Low unemployment, rising stocks, consumer spending away. This is America! We can't be held back! More "baby bonds"!!

The clearest measure of the consequences is the declining dollar. It's "the dollar stupid".

I'm not against a dropping dollar. It'll help exports and move towards balance and sounder fundamentals. But, those sounder fundamentals are based on the US having become a poorer, lower real-wage, nation.

 

[Bullitt]

The only country that needs to worry about inflation and doesn't realize it is Canada. 'Canadians' never shopped in Canada anyway because the selection and prices are so much better in the States. Nowadays with the strength of the loonie against the dollar, they are coming by the droves. First off, the strong loonie makes Canadian products even more expensive. Nothing like paying $5K more for the same car you can buy stateside.
Second, their strong exchange rate gives them more fun tickets to play around at the WalMarts and Target's in the US. Cheaper goods have become even more discounted.

To those able to participate, enjoy it while you can. The volatility of the World Currency Market will soon correct the problem and leave the loonie back in the dust wondering what happened. Just like those holding the shares of CSCO that they bought at $80 are wondering. But then again, how well of a gauge is the jobs report in forecasting a recession?