Explain economics

[Trader5287]

Abducens,

I had no education in economics and it has haunted me.

I now have a decent mentor with "compelling" views on this difficult subject at a reasonable price (free) -- I picked Alan Greenspan:

http://www.fmcenter.org/site/pp.asp?c=8fLGJTOyHpE&b=235933

This simple appearing site is massive. Anyway, about every other day or so an FOMC member speaks. It takes just a short time to read what they say. I have noticed two things that I think are important: (1) very few people in this biz actually read what these people say and (2) generally speaking, FOMC members are not likely to take actions that would contradict their previously written, widely disseminated, views on a subject. These are laid out in the Governors Speeches and Governors Testimony sections.

Flip through some of the materials from 2003 and or 2004 and I think you'll have some good ideas on what is going on now. It takes about a week for them to post a written version of a current speech.

Geo.

 

[Lights]

the higher price of oil has been offset by our trade imbalance with china who are manufacturing everything at a fraction of our labor costs. also, the U.S. transformed from a manufacturing nation to a service nation years ago. dunno about inflation, a hotdog in the city is still a buck and so is a slice.

Quote from hanseng1:

Perhaps I should reign in the topic and interject with my (semi-) qualified opinions....

If energy prices go up, then everything goes up. Oil is both an input to production and a necessity to transporting those products. Oil costs = inflation. This is why looking at the core CPI is pure bullshit; it doesn't reflect one of the most important factors of inflation (cost-push).

Prices of most things are going up. If one uses inflation (agian, non-core) figures from the CPI-U over teh last three months, our 10-yr yields are around -2.4%. Yields are still negative if you use the PPI for an inflation estimate. Saying that oil price increases are not an issue is absolutely stupid.

If production declines in this circumstance, it means that goods are not being sold, probably because the higher costs have reduced consumer spending. This is absolutly inflationary.

On the other hand (lol) the Fed looks at the core CPI when assessing inflation. the core is steady, so the Fed had ease up of the rate hikes. Personally, I think this is royally stupid, as the inflationary effects of high energy will be seen for an entire inventory cycle. So we will see an even higher discrepancy between yeilds (assuming the current bond trends don't continue) and inflation. Having high negative real rates is not good for investment, especially when so many dollars are held abroad.

As far as economics as a science, I have to agree that the whole subject is as soft as jello. Economics is an exercise in rational thought and debate, not a science (but then why do I have a BS?????). And, though I am against welfare personally from moral and economic standpoints, economics is the study of welfare and resources. It can be argued that by increasing the general standard of living through welfare, it is economically beneficial to all Americans.

On the other hand..........

 

[fan27]

Quote from The Kin:

Another thing I'd like to see is the United States bring into force monthly Baby Bonus checks and integration of Head Start into every child's education, starting at an even earlier age then they have now along with daycare and other after school programs provided in every elementary school in the country.

I'm a big sap into this whole investing in the future

I'm pretty much textbook libitarian.

You call yourself a libertarian. I think you mean Librarian.