Who is believing in the current monetary policy is still the right course and why?

[piezoe]

When the word 'inflation' is used in an economic discussion, unless specified otherwise, it means price inflation. The word itself does not say anything about the cause. Generally speaking, in the macroeconomic sphere, inflation has a monetary cause.

Friedman said, " inflation is always and everywhere a monetary phenomenon." In a microeconomic sense, which is not the sense that Friedman meant, his quip is categorically wrong. But now we have ample evidence that it can be wrong in the Macro sense as well. Had he not been so given to overstatement he might have said, "inflation is usually a monetary phenomenon" and let it go at that, but his ego would not permit a more more modest phrasing.

http://www.bis.org/publ/bppdf/bispap77e.pdf

 

[der_kommissar]

these are not unconventional methods. it is used routinely by second and third world countries like argentina and brazil etc. it is used by first world countries when they run out of money to pay for their socialist agendas.

I am using their own language...OTOH, when they mentioned "emergency measures", they blew their credibility by keeping those measures in place for more than 7 years...and this whole deflation argument...well Japan moved to the zero bound and essentially never left it, so I fail to see the point that Piezoe and Mav are trying to make when they support this monetary policy...after 7 years they still don't have the "economic conditions" that they are looking for to begin raising rates.

 

[cdcaveman]

Look at the situation this way. The Fed has to face the issues that they actually have control over.

I would believe the Fed more speculates then anything.. I think i would worry more about how much control they actually have in the longer run.. All i read is very Austrian in nature so I tend to follow the idea that intervention leads to more intervention.. Maybe within the context of FED accomplishing their goal inflation is good.. But i think it just ends up begging for more and more controls..

 

[piezoe]

I am using their own language...OTOH, when they mentioned "emergency measures", they blew their credibility by keeping those measures in place for more than 7 years...and this whole deflation argument...well Japan moved to the zero bound and essentially never left it, so I fail to see the point that Piezoe and Mav are trying to make when they support this monetary policy...after 7 years they still don't have the "economic conditions" that they are looking for to begin raising rates.

It helps to keep in mind that 7 years is short time in economic cycle terms. While only about 1/3 of Treasury debt on the Fed's balance sheet is long term (i.e., maturities ten years or greater) the majority of its MBO debt held is long term.

 

[zdreg]

It helps to keep in mind that 7 years is short time in economic cycle terms. While only about 1/3 of Treasury debt on the Fed's balance sheet is long term (i.e., maturities ten years or greater) the majority of its MBO debt held is long term.

I am least impressed by posters who use acronyms to show off.

what does MBO stand for? manager buyout is inconclusive.

 

[piezoe]

Sorry. I apologize and I agree with you.. MBO = Mortgage Backed debt Obligation. also Called MBS for mortgage backed security. In the case of the Fed, these are mortgage backed securities guaranteed by Fannie, Freddie or Ginnie.

 

[tandh]

I could not disagree more with this post!

All you have to do is pull up a dictionary definition from before the word was changed. What does inflate mean? It means to make bigger? The result of making the money supply bigger is higher prices.

In order to understand how dictionaries work, you have to understand how the English language works. You see there are two correct pronunciations for the word spigot. It can also be pronounced spikot because people in the South pronounce it that way. Once something is used and accepted, it become English language law.

If you doubt what I say about the word inflation, just do some research and you will find that what I say is the complete truth.

 

[piezoe]

All you have to do is pull up a dictionary definition from before the word was changed. What does inflate mean? It means to make bigger? The result of making the money supply bigger is higher prices.

In order to understand how dictionaries work, you have to understand how the English language works. You see there are two correct pronunciations for the word spigot. It can also be pronounced spikot because people in the South pronounce it that way. Once something is used and accepted, it become English language law.

If you doubt what I say about the word inflation, just do some research and you will find that what I say is the complete truth.

Sorry , but you are incorrect. In the lexicon of economics, unless otherwise specified, the word inflation refers to price inflation.

 

[maler]

Reading threads like this reminds me
that it is difficult to get someone to understand something
if his paycheck depends on him not understanding it.
Rather than talk about the inflation/deflation equine carcass,
it would be more enlightning to talk about what is money/credit,
how it is created, who creates it, who gets it first.
Cui bono cuts through the fog.

 

[piezoe]

Reading threads like this reminds me
that it is difficult to get someone to understand something
if his paycheck depends on him not understanding it.
Rather than talk about the inflation/deflation equine carcass,
it would be more enlightning to talk about what is money/credit,
how it is created, who creates it, who gets it first.
Cui bono cuts through the fog.

There isn't anything to disagree with here. But I quite seriously doubt Mr. Sinclair's witticism is applicable. There can't be many ET posters whose paycheck depends on not understanding money and credit half so much as it it depends on understanding it.

Naturally, what you suggest has been done. What money/credit is, how it is created, who creates it, who gets it first, etc., has been "talked" about, ad nauseum, in endless ET threads of the past. And naturally too, half the posters had not a clue about what they were talking about.