The Big Inflation Scare - Oooooh, How Scary; Prove Him Wrong
- Thread starter ByLoSellHi
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Have you seen the TIPS yield lately?
It's not exactly a redeeming asset class. Explain that divergence to me as of late.
Don't ever trust the government when it controls the metrics by which inflation rates are calculated.
But, Vodka, aren't you just a little concerned about that pesky formula that the Government uses to index the TIPS.
By the Governments computation we have a current CPI of about -0.8%.
As long as you don't eat anything or use any energy, I think you'll be quite happy with the return on those TIPS.
Apparently when Krugman said there wasn't any inflation he was using that marvelously creative government, core inflation formula to calculate it. Either that or he was smoking something.
According to shadowstats.com, CPI as calculated by the 1980 formula is running at about 6% per annum as of 15 May 2009.
Yeah but I'm concerned about a lot of things. Do you have govi guaranteed %6 instrument and I can sink all my money in? If so speak up.
Quote from piezoe:
But, Vodka, aren't you just a little concerned about that pesky formula that the Government uses to index the TIPS.
By the Governments computation we have a current CPI of about -0.8%.
As long as you don't eat anything or use any energy, I think you'll be quite happy with the return on those TIPS.
Apparently when Krugman said there wasn't any inflation he was using that marvelously creative government, core inflation formula to calculate it. Either that or he was smoking something.
According to shadowstats.com, CPI as calculated by the 1980 formula is running at about 6% per annum as of 15 May 2009.
Great points. I think the Japan analogy offers limited utility. Japan is a nation of savers, the US, not so much. We have a country deluded into thinking they are entitled to a world-leading standard of living based on the fact that we have had one for a few decades. We are making policy errors at an increasing rate. In Obama's world, there are no trade-offs. The real world tends to be less forgiving.
Other than bonds what do you suggest watching to be prepared for the next 3 sigma event?
Krugman makes what I think is a false comparison of supply side economists being in favor of tax cuts that produce deficits but against government spending. First, I am not aware of any supply siders who advocated the Bush formula of tax cuts, which in fact were not very supply-side oriented, coupled with enormously increased government spending. The whole premise of tax cuts is that they increase private investment and ultimately tax revenues through increased economic activity. Increasing government spending at the same time is like pushing on the brake and accelerator simulataneously. Ultimately, whatever debt that is incurred through tax cuts should be amortized through increased economic activity.
Deficits caused by reckless government spending have the opposite effect. They may produce a short term sugar high in the economy, but it is neither sustainable nor productive. Consumers are not likely to invest $500 stimulus checks. Hundreds of billions pissed away to prolong the above-market salaries of UAW workers are similarly not productive. They are just disguised welfare. One can question the trillions already directed at the various bank and real estate bailouts. While preventing a total freeze-up of the financial system is a worthy goal, there is no proof that a govenrment bailout of such size was necessary or that alternative methods would not have been as effective without the dislocation and moral hazard the current approach has produced.
Krugman has unfortunately become something of a carnival act, trying to distract readers from his intellectual dishonesty with disingenuous juggling of economic data.
Deficits caused by reckless government spending have the opposite effect. They may produce a short term sugar high in the economy, but it is neither sustainable nor productive. Consumers are not likely to invest $500 stimulus checks. Hundreds of billions pissed away to prolong the above-market salaries of UAW workers are similarly not productive. They are just disguised welfare. One can question the trillions already directed at the various bank and real estate bailouts. While preventing a total freeze-up of the financial system is a worthy goal, there is no proof that a govenrment bailout of such size was necessary or that alternative methods would not have been as effective without the dislocation and moral hazard the current approach has produced.
Krugman has unfortunately become something of a carnival act, trying to distract readers from his intellectual dishonesty with disingenuous juggling of economic data.
The problem is that I think you will find demand very elastic.
I am getting the opinion that business elites have come to the conclusion that there will now be a significant underclass in this nation that will not be able to afford much. Therefore, its not worth their time to focus on that segment. Current strategy is to focus on the affluent or wealthy segment and make up on profitability what has been lost on volume.
That's nice, but when you can see every other home around yours being foreclosed upon (as an affluent type), why would I ever tolerate higher prices? Unless I NEED it, I'll pass, thanks. More of a buzzkill on demand. Elasticity has returned to the marketplace - it was only those dimwits enabled by their MEWS (mortgage equity withdrawls) wealth that created artificial demand and caused price inelasticity. These guys were competing with the rest of us for the Audi TT, etc... and so luxury car prices rose, etc... How's that demand now?
Might work for a while but affluent sorts don't like getting fleeced - that's probably how they got affluent in the first place (by avoiding being ripped off).
Deflationary.
Thank you quite so much. A+
The $4,500 and under cars are in demand, and anything more than that - not so much.
http://www.elitetrader.com/vb/showthread.php?threadid=165358
I've said watch gas and oil prices rise now, and because we're much worse off than back in '07 when they did the same, crude oil will build even more than they did this past winter.
Fewer people working, more layoffs coming, more corporate BK's - if it weren't for government injection into capital markets (which is becoming antithetical to producing growth), oil would be at $25, which is where it is headed.