Roubini About Inflation

melanie911 · Jul 17, 2009

âI have also consistently argued that there is a risk of a double-dip W-shaped recession toward the end of 2010, as a tough policy dilemma will emerge next year. On one side, early exit from monetary and fiscal easing would tip the economy into a new recession as the recovery is anemic and deflationary pressures are dominant. On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long-term interest rates (because of concerns about medium-term fiscal sustainability and because of an increase in expected inflation), thus leading to a crowding out of private demand.

...MORE

http://www.rgemonitor.com/blog/roubini/257299/roubini_statement_on_the_us_economic_outlook

nazzdack · Jul 17, 2009

Quote from melanie911:
âI have also consistently argued that......blah, blah, blah, blah........a crowding out of private demand.

What does any of that have to do with determining where the S&P-500 will be in the next 10 minutes?

ByLoSellHi · Jul 17, 2009

If we have any inflation, it won't be until there is The Greater Depression, 35%+ Unemployment, and people dressed in wooden barrels.

At that point, 1/2% of America will have 98% of the fiat.

Until then, deflation city.

piezoe · Jul 17, 2009

This is not 1930.

melanie911 · Jul 20, 2009

wooden barrels...ah ah ;-)

peilthetraveler · Jul 20, 2009

Quote from ByLoSellHi:

and people dressed in wooden barrels.

You know if you check it out, a wooden barrel costs about $250 bucks. Quite a bit more than a normal set of clothes you could buy at the mall.

http://www.kegworks.com/product.php?productid=172979&cat=1134&page=1

Bestmiler · Jul 20, 2009

Quote from melanie911:

On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long-term interest rates (because of concerns about medium-term fiscal sustainability and because of an increase in expected inflation), thus leading to a crowding out of private demand.

How is private demand crowded out?

mike oxbig · Jul 20, 2009

Quote from Bestmiler:

How is private demand crowded out?

Maybe the chinese aren't a bottomless pit.

Martinghoul · Jul 20, 2009

Quote from Bestmiler:

How is private demand crowded out?

By pushing up the risk-free rates, which in turn pushes up cost of capital, which makes investment unattractive.