https://www.google.com/webhp?espv=2&es_th=1&ie=UTF-8#q=defin...
So is the "Everything Boom" going to be the new polite way of saying inflation is happening? I mean that is the expected outcome of the economic policies of the past several years is it not?
An example: buying debt is more expensive, if the price is the same, but the interest rate is lower.
If the price of e.g. a car or a sandwich is the same as before then we haven't had inflation.
Stagnant or deflating wages means stagnant or falling consumer spending, resulting in an environment where there don't seem to be any good growth investments (no customers). As a result, you get bubbles in "safe" assets like real estate and bonds and lots of trendy speculation.
I'd say both inflation and deflation are happening. We're getting inflation everywhere it's harmful, and deflation everywhere it's harmful.
We are in a depression.
The correct way to phrase this is: Our inflation rate is on the upswing (so that's like a third derivative), but workers are getting screwed because their wages are under downward pressure.
http://www.bls.gov/news.release/cpi.nr0.htm
It is well in line with historic norms.
Wage Growth is net positive adjusted for inflation again:
http://www.nytimes.com/2014/04/05/business/economy/sign-of-s...
It has a nice graph if you scroll down and don't want to read.
The underlying problem with trying to "fix" wages is the simple fact that with globalization you can't really push the wages for the US much higher than they are [except at the bottom where you can't really outsource the guy working in fast food for minimum wage].
It seems to be more the standard bubble event on investments due to cheap credit and poor allocation of tax burdens/govt spending. We need to do things like shift the tax burden to Capital and reduce it on the poorest of the working population. We need to fix our infrastructure issues while we can do so on cheap credit and when interest rates rise we simply cut back to "normal" (which is really just generating a different kind of debt, you can't ignore infrastructure forever).
CPI is intended to gauge the general rate of inflation over the economy as a whole, not that of specific purchasing patterns by individuals. As such, comparing a CPI from years ago (1999) to now (2014) is roughly equivalent.
You can claim the number itself is wrong but not that is wrong compare to the values it held previously under the same methodology. [e.g. CPI can be claimed to be X% lower than reality, but if CPI is 2.7% in 1999 and 2.1% in 2014 under the same methodology the relative level of inflation is effectively identical]
Even the title is wrong: "If There’s No Inflation, Why Are Prices Up So Much?"
If you look at the CPI from that point in time: http://www.bls.gov/news.release/archives/cpi_03152013.htm
It shows 2% inflation.
It is a linkbait article with a false premise and lots of cherrypicking.
1999: http://www.bls.gov/news.release/history/cpi_01142000.txt
I'm old enough to have lived through a good economic period with widespread optimism: the 1990s. We are in a depression.
Economists. Y'know, people who do that professionally.
> Which choices are correct, and which ones are not?
Or do they use chicken entrails?
The CPI (used to gauge inflation) has been modified in a variety of ways over the past 35 years. Various estimates of what the annual rate would have been over the past four years if earlier methods of calculation had been continued come up with numbers in the 5%-to-10% range.
http://business.time.com/2013/03/12/if-theres-no-inflation-w...
http://www.bls.gov/cpi/cpiqa.htm#Question_5
Its a variance of less than 00.3% due to methodology changes. I understand its a popular myth.
Please provide a source that accurately copies the methodology from the 1970s and agrees with your claim.
If you are unable to do so without citing Shadowstats or another source that wants money to see their full methodology, its an invalid claim intended to milk money from people with fixed belief systems.
https://www.goodreads.com/book/show/32082.The_Great_Wave
If you think inflation is "normal". It may be, but rather in the sense that historical experience shows us that authorities use inflation to confiscate the economic power of the downtrodden.
That is what an economy with no inflation looks like in the modern world.
2) I never said inflation didn't exist. I said it was normal. Overall, inflation is in line with norms. Yes, you can pick one category and say its higher...that is called cherrypicking data.
Strangely, people need clothes and shelter and such too...which was left off. Hmm. I wonder what else could cause this food inflation?
Perhaps droughts in states that normally produce significant amounts of crops perhaps?
http://online.wsj.com/news/articles/SB1000142405270230328780...
Hmm. Same paper, completely different point of view.
However, since I actually want you to be able to read the article:
http://www.usatoday.com/story/money/business/2014/03/18/food...
"Droughts, unusually cold winter weather, rising exports and a virus outbreak in the hog population are among the causes of food inflation, which is expected to accelerate in 2014."
It is almost like the weather and a farmer's access to sufficient water supplies is involved in farm production. :/
It remains a mystery to me why people always cite "food inflation" during unusually tough conditions for food production as "proof" the CPI is wrong. :/
Supposedly this will make people want to buy things now (instead of later). There is this odd effect though, that increasing prices also can make people insecure, as in: Worldwide, more money is piling into savings than businesses believe they can use to make productive investments. In other words, the people WANT deflation.
The net effect though is we will be transferring wealth from the poor to the rich; and then the bubble will pop, the rich will cash out of their assets early, and people with slower investment classes (401ks, pension funds, etc.) will get screwed. And some of these other people will even get fired, putting them into even greater risk.
I'm not going to defend "supply-side" economics, either, because that's got it's own brand of stupid going on.
There is a modest distinction between bubbles and inflation. While inflation guns bubbles and aggregates small, local bubbles into bigger, systemic bubbles, there can be bubbles during deflationary periods, and systemic inflation doesn't necessarily end in a bubble. Bubbles are characterized by a specific set of price dynamics that are guided by human psychology; the most characteristic, but hardest to notice, is when the asset price collapses, typically around twice the speed that it rose.
Pretty much.
>Broadly, the only tool to do this is to "print money"; read: lower interest rates, twiddle with the reserve ratio requirement, directly pay off banks for certain types of activities.
Well, those are the only tools central banks have available to them, but there are much better options. Unfortunately those tools are only available to legislatures, who have decided not to use them.
As I have understood demand-side economics, one additional difference to supply-side views is the source of the demand: demand-siders do not only see business investments as the source of demand, but also private consumption. To support that, wages have to rise (as is happening in China). I think that partly explains the currently active basic income discourse in Europe and the US and the introduction of minimum wage in Germany (done by a coalition of center and right parties!). Both instruments would directly benefit the poorer half of the population, who has a low to non-existant savings ratio (in Germany the "poorer" 60% of the population hold only 3% of the privately-held wealth). Increasing wages for these classes would immediately result in more demand.