More capital has exited the system than the Fed has put into the system. Deflation is the Fed's primary concern at the moment. Therefore, inflation is the least of their worries.

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Originally posted by Krypton More capital has exited the system than the Fed has put into the system. Deflation is the Fed's primary concern at the moment. Therefore, inflation is the least of their worries.

Where did it go?

I agree that deflation could devestate an already fragile economy but I think that the effects of the bailouts has yet to really take hold.

By most estimations I've come across, including work I've done on my own, Bush's first bail out should just be really taking effect in the next couple of months. Not to mention Obama's or the Fed's T bill purchases.

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Originally posted by Krypton More capital has exited the system than the Fed has put into the system. Deflation is the Fed's primary concern at the moment. Therefore, inflation is the least of their worries.

Just because something isn't the prime concern doesn't make it our least of worries. Concerns about prospective inflation is almost as important as current worries about deflation. The problem with everything that has been going on lately is the violent swings from one extreme to another. With all the measures being implemented to kickstart the economy (and now avoid deflation), could we be setting up ourselves for a violent swing towards high inflation? Probably!

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Originally posted by jerZ07002 Just because something isn't the prime concern doesn't make it our least of worries. Concerns about prospective inflation is almost as important as current worries about deflation. The problem with everything that has been going on lately is the violent swings from one extreme to another. With all the measures being implemented to kickstart the economy (and now avoid deflation), could we be setting up ourselves for a violent swing towards high inflation? Probably!

Not if that inflation has been leveled out by the gigantic loss of capital which has occured over the last 2 years. I look at it as capital replacement, rather than an increasing money supply. Granted, zero variation in the currency is not rational, low to moderate inflation should be the near term trend. Once the next bubble hits, that's when we'll see the big inflation you guys are talking about. Right about the time it all comes crashing down once again. Don't you love those business cycles?

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Originally posted by atbell Where did it go? I agree that deflation could devestate an already fragile economy but I think that the effects of the bailouts has yet to really take hold. By most estimations I've come across, including work I've done on my own, Bush's first bail out should just be really taking effect in the next couple of months. Not to mention Obama's or the Fed's T bill purchases.

Maybe you're missing the effects of home values that have been halved or stock values that have been halved (or worse). Do you think shorts are picking up all of those losses? No, it's just disappeared and gone to money heaven.

___________________
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Here's American Gladiators, here is 56 channels of it,
Watch these picturary retards bang their fuckin' skulls together and congratulate you on living in the land of freedom,
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We want your soul
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What we have now is disinflation, not deflation..big difference. The money supply is not shrinking at all today (it's soaring actually). Prices are declining from artificially high levels while the fed pumps trillions into the system to ease the pain. True deflation is a contraction of the money supply, and we aren't close to having that. The real estate declines may FEEL like deflation, but they really reflect disinflation...the unwinding of an inflationary binge and a return to more sane price levels.

P.S. Atbell, everything on your list up top is a problem except inequality.

Last edited by Capitalizt on Apr-14-2009 at 06:10

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Originally posted by Capitalizt P.S. Atbell, everything on your list up top is a problem except inequality.

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As of 2006, the United States had one of the highest levels of income inequality, as measured through the Gini index, among high income countries, comparable to that of some middle income countries such as Russia or Turkey, being one of only few developed countries where inequality has increased since 1980.

U.S. Gini Coefficient: 46.3%
Mexico Gini Coefficient: 45.0%
Denmark Gini Coefficient: 23.2%

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I'm not disputing the fact that inequality exists. I'm disputing the idea that it is a "problem" to be solved politically. The world is unequal. People will always live in different circumstances and have unequal skills and ambitions..so naturally inequality will exist. There's nothing wrong with that.

Wow.

Your philosophy seems to be 'capitalism creates poverty, so therefore poverty is perfectly fine.'

The United States currently has greater income disparity than Mexico and India. 71% of American economists responded in a survey that income inequality is a very big problem, as it creates structural poverty endemic to the system. 81% responded that "income redistribution" is a valid issue to be taken up by government. Upward social mobility in unequal societies is the biggest myth propagated by libertarians - it simply doesn't exist. Inequality is the single greatest determinant of poverty after conflict.

In the past decade, more Americans have fallen into poverty than have climbed out of it - a product of the widening gap between rich and poor dragging up the standard of living (and the poverty line).

But yeah, let's focus on inflation that doesn't actually exist.
http://krugman.blogs.nytimes.com/2009/02/11/deflation-risks-again/

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Originally posted by Lebezniatnikov In the past decade, more Americans have fallen into poverty than have climbed out of it - a product of the widening gap between rich and poor dragging up the standard of living (and the poverty line).

The fact that people are becoming impoverished because others are becoming wealthier seems to be a terribly weak argument. I find it difficult to believe that people who weren't technically below the poverty line before are now worse off because other people have made more money in the meantime.


Wealth disparities in countries like Saudi Arabia are much more problematic than wealth disparities in the US. Contrary to the belief of many in the democratic party (and i am a democrat), it is NOT more difficult to climb the proverbial economic ladder than it was when my grandparents came to the US in the early 1900s (At 27, I have accomplished more than any other person in my family). Achieving success in the US never came easily. The change that appears to make it more difficult is the attitude of entitlement to the so-called "american dream." Unfortunately, I think people have lost sight of the basic fundamental that the effort you put in directly reflects the outcome. There really are no short-cuts in life and many aren't willing to put in the effort (e.g., attending law school, med school, etc...).

Certain segments of the population idolize athletes and rappers who portray the fast money lifestyle. That happens to be the same segment of the population that find it difficult to claw out of poverty. If poverty is a result of personal choices, and not a systematic exclusion, I am not quite as concerned about it. I am not saying we should ignore poverty or that we shouldn't provide better education, etc... to these communities (because I firmly believe we should), but i dispute the claim that they can't rise out of poverty. More blame should be attributed directly on the person who can't climb out of poverty than the system in which we live.

And, before someone calls me some sort of elitist republican, while i was growing up my mother was a teacher's assistant and I was on the federally funded free lunch program (i.e., my family was teetering on being poor).

Last edited by jerZ07002 on Apr-14-2009 at 14:14

One of the most despicable beliefs of laissez-faire capitalism is the acceptance of inequality. You must be dying for a workers' revolution because that's what you'll inevitably get.