The Fed can't ignore inflation risks forever

Keep that printing press humming....

The Fed's gold problem [cnn.com]

Quote : The Fed is likely to stress -- as it has since March 2009 -- that it expects to keep interest rates "exceptionally low" for "an extended period of time." (Rates have been near 0% since December 2008.)

Quote : David Joy, chief market strategist with Columbia Management in Boston, said the economy doesn't appear to be so weak that the Fed should step up its bond buying yet. But it can't afford to be complacent either. "The message we are left with from all the recent data is that this is a sluggish recovery," Joy said. "The Fed may feel a little better about the economy since they last met in August -- but not much."

Quote : Still, some think the Fed may have to think more about pulling back on its easy money policies. That's because there are still niggling worries about inflation. Yes, inflation. Deflation may be the big buzz word as economists fret about whether the United States is heading for its own version of Japan's Lost Decade during the 1990's. But have you looked at what commodity prices are doing? The Fed may soon need to start worrying about that dreaded 1970's throwback of stagflation: the combination of anemic growth and rising prices. Gold is hitting record highs. Agricultural commodities are soaring and in some cases, such as bacon and coffee, producers are passing higher costs onto consumers. And the dollar has been on a downward slide against the yen and euro. While it would be foolish to suggest that the spike in commodities is entirely the Fed's fault, it is fair to say the central bank's more pessimistic take on the economy sparked worries that the Fed will be too slow to react to pricing pressures.

Quote : Ezrati said the increase in commodity prices is evidence that deflation and double-dip talk may be overblown. Along those lines, the latest figures on inflation on a wholesale level, the producer price index, rose more than expected in August. And even though the so-called core PPI number, which excludes food and energy costs, was in line with forecasts, the myopic focus on that number is sometimes silly. People have to eat and drive. If fuel and food costs keep going up, try telling consumers they need to worry about deflation. "You would think the Fed should mention the risk that commodity prices could go higher," said Andrew Busch, global currency and public policy strategist with BMO Capital Markets in Chicago. "The Fed needs to discuss the potential for inflation for the long term."

can the mods make the poll public?

Thanks

Anyone with 1/2 a brain should know that is how the government plans to deal with the national debt without making the hard choices. Inflation (or stagflation) is their goal.

This will also have the unattended goal of dividing the last of the middle class between rich and poor.

Quote from 808Lurker : Anyone with 1/2 a brain should know that is how the government plans to deal with the national debt without making the hard choices.

Well there are plenty on this forum who keep crying deflation, so I was really posting in for their benefit.

Quote from rrc06 : can the mods make the poll public? Thanks

We can't change that parameter after the fact, sorry.

Quote from Doctor_Wu : We can't change that parameter after the fact, sorry.

worth a shot. Maybe next that can be the default option

Quote from Doctor_Wu : We can't change that parameter after the fact, sorry.

what's the fact behind this?

Quote from Cindy82 : what's the fact behind this?

I'm guessing that they don't consider it fair to make it public, after folks have already voted, thinking it was private.....

The public polls don't really make for much in the way of interesting debate material....those that would be questioned as to their votes, simply don't participate when they know they'll be challenged....

I honestly have no idea which is the larger threat - I believe both are dire.

I believe the FED's manipulation of our currency/M0-M3 has caused a buildup of contrary pressures in much the same way a Cold War causes both sides to build up armament.

We have a huge global deflationary pressure, and the FED - in order to spur economic growth - has tremendously inflated the money supply, devaluating our currency, and creating inflationary pressures. While this may in fact stave off a "Depression" (and I do not believe it will: I believe it will simply change its nature - depth and duration), the problem is that I believe that their "cure" is worse than the disease.

What I see is likely somewhat less severe deflation, but then eventually supplanted by a very severe inflation, as the (world) economy begins to recover. Those economies which have not participated in their money supply expansion will not be damaged nearly as much - just as Canada was not nearly as damaged by the housing bubble due to their refusal to allow their Government to meddle in the rules within the housing/mortgage industry.

Quote from Elmer : I'm guessing that they don't consider it fair to make it public, after folks have already voted, thinking it was private..... The public polls don't really make for much in the way of interesting debate material....those that would be questioned as to their votes, simply don't participate when they know they'll be challenged....

Well, as a policy yes it would be appropriate to not change votes from private to public for the reasons you state... but it's not even something that rose to the level of policy as vbulliten doesn't have an option for that... or maybe it's not enabled, but anyway.

Here we go.


http://www.businessinsider.com/kr...her-2010-9


So what will happen? In the end, I’d argue, what must happen is an effective default on a significant part of debt, one way or another. The default could be implicit, via a period of moderate inflation that reduces the real burden of debt; that’s how World War II cured the depression. Or, if not, we could see a gradual, painful process of individual defaults and bankruptcies, which ends up reducing overall debt.

Read more: http://www.businessinsider.com/kr...z10xSQgTLS

Buffett hints at bond bubble [cnn.com]

Quote : The flip side of the lack of confidence in stocks is an overextended bull market in fixed-income securities, Buffett said. The yield on the 10-year Treasury note has tumbled to 2.47% from 4% in the past six months, as investors have begun to accept the notion that economic growth will be weak for years and the Federal Reserve has promised to suppress interest rates to keep a soft recovery moving forward. The soaring bond prices have prompted some bulls to pull in their horns, and Buffett indicated he believes the risk-reward tradeoff on bond purchases at current prices isn't good. For one thing, he said that while he believes the economy will recover over time, the reflationary policies of the Federal Reserve will have to be reckoned with sooner or later. That reckoning isn't likely to be a happy one for those who locked their funds up for the long haul in bonds yielding just a small percent. "We are following policies that unless changed will eventually lead to lots of inflation down the road," said Buffett. "We have started down a path you don't want to go down."

Roubini at Davos: Inflation is biggest threat [cnn.com]

Quote : NEW YORK (CNNMoney) -- Lawmakers need to stop "kicking the can down the road" and attack the massive national deficit from both the spending and revenue sides, celebrity economist Nouriel Roubini told CNNMoney's Poppy Harlow in an exclusive interview Tuesday. And that means taxes need to go up soon.

Quote : Meanwhile, he told the group in Davos that the global economic recovery is underway, but not without risks. U.S. unemployment looks to remain high for years, Europe is still struggling with its debt crisis and China may have been too slow to put the brakes on its rapid economic growth. While some of those risks are nothing new, 2011 brings a basket of fresh worries -- the biggest of which are rapidly rising energy and food prices, he said. Those two things alone could fuel inflation to barrel out of control, derail emerging market economies and incite social and political instability, he said. "When oil reached $148 a barrel in the summer of 2008, that was the tipping point for the global economy, led to global recession,"

Quote : Roubini sounded more bearish on China in particular, even echoing some statements of so-called permabear hedge fund manager Jim Chanos -- who is betting on a Chinese real estate bust. (Watch CNNMoney's exclusive interview with Chanos.) As energy prices continue to rise, Roubini said, inflation could cause the Chinese economy to overheat. China's economy is already barreling ahead at a pace of 9.8%, and in December, it saw food prices alone surge 9.5%. Stripping out food, inflation was 2.1%. Meanwhile, China's government has failed to curb excessive credit growth, and an asset bubble could be forming in commercial and residential real estate there, Roubini said.

Quote : The United States has problems of its own, including its massive national deficit and struggling state and local governments, which Roubini likened to the debt crisis in Europe. "Greece is only 3% of the eurozone GDP, while California alone is one-seventh of U.S. GDP," he said.

This thread reminds me, I really need to get into banking. I mean right now, I cannot borrow for free, but if I was a bank or had me a bank? Pbft, liek no problem mon.

Also, you can read all you want about "inflation" but it's not really the word itself as it is the agenda that drives it. Bernanke "sees' it a lot more different from his POV than someone like me who's dollars have lost their purchasing power. And by that, I'm paying more for things like water, vegetables, and clothes....BUT....i'm not seeing a greater ROI. I mean, it's not like my water is more pure, my vegetables have more minerals, or my t-shirts last any longer.

Spend more, get the same or less. That, my friends, is inflation to a dude like me. And before long, everyone you know will wake up to it in some way or another...and no amount of new greenbacks will cure the problem. Never has, many nations have tried it. It's all ended in FAIL.

Let' see...the US economy will grow 4.5-5% this year...interest rates have been held at 0% for far too long...yeah I would say inflation could be a problem...but I do expect Bernanke to raise rates to at least 1% by years end. Golden times ahead folks....no risk at all of deflation....it is going to be a hell of a 20 year period of massive growth world wide....all the heaving lifting has been done....invest now or get left behind with the shmoes who believe the negative press in the USA.