30 Mar 09
Question:
Similar to the early 1980's recession where central banks turned on the printing presses to try to stimulate the economy, today's Central Banks (particularily the US) are printing money in gigantic amounts.
In the 80's in order to quell inflation after all the money had been printed the central banks needed to tighten the money supply. They did this by jacking up the interest rate to a whopping 21%.
My question, is will we see interest rates like that again once the central banks see inflation taking hold? Will we see +20% inflation rates soon?
30 Mar 09
Originally posted by uzlessI don't know. It is hard to see any way inflation won't start up at some point -- but if the money being printed isn't being lent out, folks still aren't buying anything, so I don't think your scenario will happen soon, IMHO, if at all.
Question:
Similar to the early 1980's recession where central banks turned on the printing presses to try to stimulate the economy, today's Central Banks (particularily the US) are printing money in gigantic amounts.
In the 80's in order to quell inflation after all the money had been printed the central banks needed to tighten the money supply. They ...[text shortened]... ain once the central banks see inflation taking hold? Will we see +20% inflation rates soon?
for one thing, inflation would make payback to China and others cheaper, so my guess is the Fed won't try to fix it too quickly or too drastically.
for another, I think bringing on double digit inflation would only beg another recession fairly quickly -- and with Mr Volcker still around, I would think he'd speak to that.
The chief source of our monetary problem, other than the recovery plan, is still the Iraq and Afghan wars. We have to find a way to stop the one and to minimize the cost of the other.
If we can get the pilot light of credit relit, then there is a good chance we can cook up enough economic growth to make the interest rate solution not as drastic or not as necessary.
30 Mar 09
Originally posted by uzlessThey have fire hoses outside the printing presses in Philly, they're getting so hot. I cooked a Philly cheese steak over one of the presses yesterday.
Question:
Similar to the early 1980's recession where central banks turned on the printing presses to try to stimulate the economy, today's Central Banks (particularily the US) are printing money in gigantic amounts.
In the 80's in order to quell inflation after all the money had been printed the central banks needed to tighten the money supply. They ...[text shortened]... ain once the central banks see inflation taking hold? Will we see +20% inflation rates soon?
GRANNY.
30 Mar 09
1 edit
Originally posted by uzlessUnlike some economists, I think the US (and even more-so the UK) are risking the possibility of double-digit inflation.
Question:
Similar to the early 1980's recession where central banks turned on the printing presses to try to stimulate the economy, today's Central Banks (particularily the US) are printing money in gigantic amounts.
In the 80's in order to quell inflation after all the money had been printed the central banks needed to tighten the money supply. They ...[text shortened]... ain once the central banks see inflation taking hold? Will we see +20% inflation rates soon?
I was of the opinion that dried up interbank money markets and avoiding bank collapses were the main reasons why monetary authorities had to intervene with some urgency. Now it seems that the focus is changing and quantitative easing is used to avoid potential deflation and a deep recession. I think it's early to go down that route. Money markets seem to be functioning well and the problem seems to no longer be liquidity but a (more general) fall in economic activity. I don't have access to proper real-time non-financial data to say this with more confidence, but this is what my take on it is. Also, Japan's positive experience
Regarding interest rates, I don't think they'll go that far. Mostly because indebtment levels are much higher now so those levels of interest rates seem even more suicidal.
30 Mar 09
Originally posted by smw6869I had lunch Sunday at Louie's in Rehoboth Beach.
They have fire hoses outside the printing presses in Philly, they're getting so hot. I cooked a Philly cheese steak over one of the presses yesterday.
GRANNY.
You ought to try Pig & Fish if you haven't -- ask for Chipper.
30 Mar 09
9 edits
Originally posted by Scriabinfor one thing, inflation would make payback to China and others cheaper, so my guess is the Fed won't try to fix it too quickly or too drastically.
for one thing, inflation would make payback to China and others cheaper, so my guess is the Fed won't try to fix it too quickly or too drastically.
The chief source of our monetary problem, other than the recovery plan, is still the Iraq and Afghan wars. We have to find a way to stop the one and to minimize the cost of the other.
How long will china accept and hold US debt/treasury bills that are losing their value as inflation rises?
The chief source of our monetary problem, other than the recovery plan, is still the Iraq and Afghan wars. We have to find a way to stop the one and to minimize the cost of the other.
I think Paul Kennedy would definitely agree with you there...("Rise and Fall of the Great powers"😉
01 Apr 09
Originally posted by PalynkaInterest rates follow inflation higher.
Unlike some economists, I think the US (and even more-so the UK) are risking the possibility of double-digit inflation.
I was of the opinion that dried up interbank money markets and avoiding bank collapses were the main reasons why monetary authorities had to intervene with some urgency. Now it seems that the focus is changing and quantitative easing is ...[text shortened]... tment levels are much higher now so those levels of interest rates seem even more suicidal.
http://www.investopedia.com/terms/f/fishereffect.asp
01 Apr 09
1 edit
Originally posted by Metal BrainThe fisher effect is about the effect of expected inflation on market interest rates, not about the effect of policy rates on inflation.
Interest rates follow inflation higher.
http://www.investopedia.com/terms/f/fishereffect.asp
Interest rates follow inflation higher.
Is this supposed to be English?
Edit - LOL, it's funny how you can't even get one thing right.
04 Apr 09
Originally posted by Scriabin"The chief source of our monetary problem is the Iraq and Afghan war..." You are absolutely incorrect. The chief source of our monetary problem was that borrowing money was too cheap for too long.
I don't know. It is hard to see any way inflation won't start up at some point -- but if the money being printed isn't being lent out, folks still aren't buying anything, so I don't think your scenario will happen soon, IMHO, if at all.
for one thing, inflation would make payback to China and others cheaper, so my guess is the Fed won't try to fix it too ...[text shortened]... gh economic growth to make the interest rate solution not as drastic or not as necessary.
I think Iraq is a shameful situation, I believe a well-executed war in Afghanistan is regrettable but necessary. But I can't let an outlandish, underinformed comment by someone with an agenda stand without a challenge.