Could the U.S. central bank go broke?
- Thread starter itcanbedone
- Start date
You have to do some work on your own. Look at the 2008 numbers and compare them to the 2009, the CPI was negative YOY for most of 2009. The low was a 2% decrease in July of 09 (when compared to the previous July), but was down every month from Mar 2009 to Oct 2009... this is why Bernanke did both rounds of QE and this is why your cries of hyper-inflation are absolutely ridiculous.
5yr
I've never made any "cries of hyperinflation".
You see deflation as a bad thing, I see it as a positive. Admittedly it would be disastrous for those in debt, but it would clean them out and enable the whole system to be cleaned out. Have you looked at Japan's economy lately? They made all these mistakes of QE, fiscal stimulus just because they, too, were afraid of deflation. What has their policies done for them over the last 20 years? Nothing, just made it all worse. OTOH, have a look at Iceland. They bit the bullet, had a horrible couple of years, but are now recovering.
As for the UK, i've never said we have a " model" economy. That's about the last statement I would ever make! We have similar problems to the US and our authorities are just as dumb as yours. However, they are taking some positive action such as reducing govt spending, even though it's not enough of a cut. We have also had consumption tax hikes recently. The central bank here, although misguided in doing QE in the past year or so, has wisely refrained from any more because our own measures of inflation are rising rapidly. Indeed, there is talk of a possible rate hike this year.
Wasn't QE 2 continued by Bernanke to keep the yield curve steep, otherwise the banking system in the US would really be bust?
I don't think QE2 has anything to do with encouraging inflation/deflation by themselves... But as a side effect, keeping the yield curve as steep as it is would likely encourage bubbles elsewhere in the world, as we currently have.
There are other comments you can make about things if you accept that a steep yield curve is being engineered in order to try and save the banking system in the US.
Things like - rates are only moving in response to people running levered bets along the curve, which override any kind of real policy regarding long-term rates. In other words, rising long rates in this environment positions the US for another recession going forward. It also exposes people to higher rates eventually because it encourages everyone to borrow at the short end of the curve.
Finally, falling rates damages the ability of savers to save and retire comfortably, but aids the stock and commodity bubbles. So there is a kind of carry in the yield curve that the bankers are benefiting from.
I don't think QE2 has anything to do with encouraging inflation/deflation by themselves... But as a side effect, keeping the yield curve as steep as it is would likely encourage bubbles elsewhere in the world, as we currently have.
There are other comments you can make about things if you accept that a steep yield curve is being engineered in order to try and save the banking system in the US.
Things like - rates are only moving in response to people running levered bets along the curve, which override any kind of real policy regarding long-term rates. In other words, rising long rates in this environment positions the US for another recession going forward. It also exposes people to higher rates eventually because it encourages everyone to borrow at the short end of the curve.
Finally, falling rates damages the ability of savers to save and retire comfortably, but aids the stock and commodity bubbles. So there is a kind of carry in the yield curve that the bankers are benefiting from.
to spend less than 1% on gas, either your salary is really high or you walk or ride a bicycle !! so you shouldn't use yourself as the average for comparison, inflation does hit the average really bad, people are suffering, worse for those unemployed and has no other income, the CPI numbers doesn't even include basic necessities, that should tell you something
Do you actually take those numbers seriously? If you do, then you got a long way to go before seeing the real picture.
US Dept of Labor CPI & PPI are more applicable to fantasy land than USA.