oldreliable67
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Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits. Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.
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the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.
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Bernanke’s actions have made the question of hyperinflation a murky one. The Austrian’s depiction of hyperinflation as being the inevitable fate of central banking has always been cartoonishly simplistic, and it remains so. However, economists of all schools must now admit that hyperinflation is at least a possibility. If the dollar appears to be on the verge of collapse, what will the Fed do about it? Sell their AAA-rated securities for cash and destroy the cash? But what if nobody is impressed with the AAA rating and won’t buy their securities at any price? Then the Fed will be in the same position as the Continental Congress: Benevolent men with no desire to see their beloved nation racked by hyperinflation, but who have no more ability to recall the paper money that they have printed than Frankenstein had to recall his monster.
Since this paper was written in the spring of 2008, Bernanke has also begun purchasing commercial paper and long-term T-Bills. Note that the Fed polluting their portfolio is no more inflationary than buying short-term T-Bills; any purchase made with cash created out of thin air causes inflation. The Fed could bail out the automakers by buying used cars and stacking them on top of each other the length of Pennsylvania Avenue and it would not be any more inflationary than if they issued their notes only in the discount of good bills, at not more than sixty days’ date. What buying crap does is make withdrawing cash from the economy more difficult in the event that inflation should ever threaten to become hyperinflation. Causing inflation and setting up a situation in which hyperinflation is difficult to check are not the same thing. This is a rather fine point, but one which many critics of this paper do not seem to grasp.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period...."
Onion Eater said:The issue is not the pace ($75B per month) but the re-sale value of what they are buying.
Although low inflation is generally good, inflation that is too low can pose risks to the economy - especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.
Even absent such risks, low and falling inflation indicate that the economy has considerable spare capacity, implying that there is scope for monetary policy to support further gains in employment without risking economic overheating. The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.
...
Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
Actually, they don't have to sell anything under any circumstances. The Fed has been actively involved in setting up and testing reverse repo arrangements. Should the need arise to shrink the balance sheet at a time when rates are rising, reverse repos would most likely be the preferred response. Moreover, while the Fed has, with this announcement, stated its intention of buying longer dated Treasury securities (judging by the duration target, this would be mostly 7- to 10- years, with a few 30's as well), up until now, the majority of their purchases have been in the two to five year range. Given the movement in rates since these purchases began, many of these securities are now held with a significant unrealized gain. Further, because this portion of the portfolio is relatively short term and as they roll down the curve will approach par, this portion of the portfolio is considerably less susceptible to mark-to-market looses from rate increases as time goes by, thus minimizing the risk of being forced to sell at a loss. These two factors suggest that the Fed portfolio is significantly less susceptible to losses than you suggest.
Very gloomy outlook for the next year. It kinda does look like stagflation, with incomes remaining low and unemployment remaining high and economic growth below 3% of GDP and all the money in the hands of few who refuse to spend it. And too, this has been going on now for almost three years. <sigh>
"
So interest rates will remain low for an extended period. I kinda figured they would since the Feds want people to spend instead of save. It will also probably help the government pay down the trade deficit. But I don't see it doing much to stimulate utilization of production or lower unemployment. So I guess I'm kinda leaning towards Thomas M. Hoenig opinion that it will "cause an increase in long-term inflation expectations that could destabilize the economy". Cuz frankly, I'm feeling pretty pessimistic especially now that the Feds have given such a gloomy outlook for an extended period. It's kind of like a self fulfilling prophecy.
washunut said:Let's remember that the fed thinks of inflation differently than real people. They exclude food and energy. This means that much of what a middle class family spends their money on, they could care less about. They are all about creating inflation in housing.
You're missing something important, here, IMO.
The Fed's preferred inflation indexes are the Price Index for Personal Consumption Expenditures excluding Food and Fuel and the Cleveland Fed's Mean CPI and Trimmed Means CPI measures. It isn't that the Fed doesn't 'care " about things that a family spends their money on; it means that the Fed recognizes that it cannot control/influence inflation in the direct manner that it can control short-term interest rates and heavily influence long-term rates. Therefore, the reason the Fed focuses on certain 'core' inflation measures is that it is trying abstract from the impact of short-term variations in commodity supply/demand and isolate as best it can, the influence of monetary policy on underlying, more fundamental, inflation.
Inflation, as measured by the various calculated indexes is observable but not directly under the control of the Fed, and can only be influenced indirectly with varying and unknown time lags. How many times have we seen commodity prices zoom higher (or lower) due to unusual or unexpected weather/growing conditions or production interruptions/startling new supply announcements, only to revert to more 'normal' or expected price levels with the passing of the unusual circumstances? One certainly cannot ascribe those price variations to monetary policy, can one? While imperfect, these 'core' measures will have to suffice until something better is devised.
Bottom line: if the Fed pays attention to these (or any) particular time series in it's policy deliberations, for whatever reason, then we, as market participants or observers, darned well better pay attention to them as well.
I agree that whatever the Fed is looking at we should as well. This gives us a hint what they may do in the future.
I disagree with the thinking that the Fed can't control things like food and energy. That is true under their normal actions of moving interest rates. Things are a bit different when they decide to print hundreds of billions of dollars, thus lowering the value of the dollar. In a world economy lowering the value of the dollar makes our oranges or wheat cheaper in other currencies increasing demand. Same with oil etc. The Fed has all but said they do not care. So people who have the resources to invest and offset these adverse consequences, the middle class and poor will suffer the most. All in the name of trying to inflate housing prices so banks do not take another hit.
I disagree with the thinking that the Fed can't control things like food and energy. That is true under their normal actions of moving interest rates. Things are a bit different when they decide to print hundreds of billions of dollars, thus lowering the value of the dollar. In a world economy lowering the value of the dollar makes our oranges or wheat cheaper in other currencies increasing demand. Same with oil etc. The Fed has all but said they do not care. So people who have the resources to invest and offset these adverse consequences, the middle class and poor will suffer the most. All in the name of trying to inflate housing prices so banks do not take another hit.
The Fed has been actively involved in setting up and testing reverse repo arrangements. Should the need arise to shrink the balance sheet at a time when rates are rising, reverse repos would most likely be the preferred response. Moreover, while the Fed has, with this announcement, stated its intention of buying longer dated Treasury securities (judging by the duration target, this would be mostly 7- to 10- years, with a few 30's as well), up until now, the majority of their purchases have been in the two to five year range. Given the movement in rates since these purchases began, many of these securities are now held with a significant unrealized gain. Further, because this portion of the portfolio is relatively short term and as they roll down the curve will approach par, this portion of the portfolio is considerably less susceptible to mark-to-market looses from rate increases as time goes by, thus minimizing the risk of being forced to sell at a loss. These two factors suggest that the Fed portfolio is significantly less susceptible to losses than you suggest.
Not that I agree with their theory of inflation leads to economic growth... The goal is to provide a positive slope on the yield curve and making sure long term debt has higher premiums than short term debt. They wish to keep the slope of the yield low, so they will buy the US T-bills, keeping the coupon rate low.My understanding is if the Fed is going to be successful in reflating the economy, it's going to have to flatten the yield curve.
2 year, 5 year, 10 year, 20 year, and 30 year bonds. Concentrations of buying on shorter term than longer term will keep short term rates lower than longer term rates.How will it do that if its purchases are concentrated in shorter-duration debt?
I am not an expert on RP's and RRP's, but it is common practice. Basically it is a short term loan a day or 2. Terms are agreed to and bid on by banks to allow RP's and RRP's. I can't really answer too much more of the risk portion as I really have limited knowledge on this part of the question you pose.Also, if the Fed uses reverse repos on a large scale, something it's never done, doesn't that just shift the interest-rate risk to the counterparties who originally sold the bonds/notes to the Fed?
Yes and no. The goal is to minimize long term raises in the coupon rate and keep the rates stable. The face value of your bond does not change. Your resale value will be decreased if interest rates go up.I mean, if the Fed's program does what it wants--increases inflation--that means the inflation premium on long-term debt will rise and the prices of the bonds will drop, right?
Is there ever a position where there is never a winner and loser? If the price goes up on the bond, there is also a loser, right? Once you buy the bond, the government does not win or lose on the market flucuations of the price of that bond. If you hold it to term, the government still has to pay you face value. If the coupon rate increases on that bond, then the person selling the bond is the "loser". On every auction, the government is the loser, because they will pay you 105 dollars for your 100 loan.If the prices of the bonds drop, that means there's a loser, right? But if the loser isn't the Fed, then who is it?
Read 1 quote and 2 quotes down... Can you explain this contradiction of your own opinion?So interest rates will remain low for an extended period. I kinda figured they would since the Feds want people to spend instead of save.
Low or high rates?So I guess I'm kinda leaning towards Thomas M. Hoenig opinion that it will "cause an increase in long-term inflation expectations that could destabilize the economy".
The key to stagflation is high interest rates, not low rates. Do you agree with the first or second quote you made?It kinda does look like stagflation, with incomes remaining low and unemployment remaining high and economic growth below 3% of GDP
Are you one of the have's or have-not's? And what do you suggest should be done about the "problem" of saving and investing money?and all the money in the hands of few who refuse to spend it.
If the next year is gloomy, what was the prospect end of 08 in your opinion?Very gloomy outlook for the next year.
How long should the trough of the economic cycle take?And too, this has been going on now for almost three years. <sigh>
Why does the government need to stimulate you to buy something? Let the economic recovery move at a natural pace.But I don't see it doing much to stimulate utilization of production or lower unemployment.
I mean, if the Fed's program does what it wants--increases inflation--that means the inflation premium on long-term debt will rise and the prices of the bonds will drop, right? If the prices of the bonds drop, that means there's a loser, right? But if the loser isn't the Fed, then who is it? Banks? The same banks that are already holding trillions of dollars of paper on questionable residential and commercial real estate (as in, the collateral is worth less than the loan value of the debt)?
Note that I pointed to the distinction between what the fed can "directly" control (e.g., the fed funds rate, the discount rate) and what they can "influence" (but not directly control). The fed funds rate is an administered rate; the prices of commodities are influenced, but not determined, by their carrying costs.
I really have no idea what you're asking. The Feds said interest rates would remain low for an extended period and Hoening said the Feds recent policy of QE2 could cause an increase in long term inflation expectations that could destabilize the economy. So what don't you understand?Read 1 quote and 2 quotes down... Can you explain this contradiction of your own opinion? Low or high rates?
I think you are mistaken. High inflation and high unemployment are the key to stagflation, not high interest rates. Paul Volker had to actually raise interest rates higher in order to shock the economy out of stagflation in the early 1980s. So if you can find anywhere in this definition of stagflation below, that high interest rates are key to stagflation, then by all means, do let me know.The key to stagflation is high interest rates, not low rates. Do you agree with the first or second quote you made?
Well, I'm not a banker if that whats you mean. Are you? The reason I said what I did is because the banks aren't lending and if they aren't lending then people don't have access to money to buy homes, refinance or expand businesses. So unless the banks start lending, the Feds QE2 policy won't work. One of the reasons the banks aren't lending is because they raised their borrowing standards so high that now fewer people can qualify for a loan because the recession destroyed their credit rating. But even people with excellent credit scores are finding hard to refinance with the low interest rates because the banks are devaluing their homes so their equity ratio is lower and they don't qualify for the loan. That almost happened to me with my refinance. IMO, the banks are still playing a dirty game.Are you one of the have's or have-not's? And what do you suggest should be done about the "problem" of saving and investing money?
Why is that relevant?If the next year is gloomy, what was the prospect end of 08 in your opinion?
It can take years to recover from a recession, but I think the economy is just starting to slowly come out of the trough and I hope it will start to get better. I think QE2 will be good for Wall Street but not so much for Main Street where it will still take years to recover.How long should the trough of the economic cycle take?
Did I say the government needed to stimulate me to buy something? I agree, an organic economic pace is better, but then the financial crisis wasn't exactly a natural cause, so why should the recovery be?Why does the government need to stimulate you to buy something? Let the economic recovery move at a natural pace.
You agree with both positions. Both positions reside in opposite ends of the economic universe. If long term interest rate expectations remain low, that means long term inflation expectations will remain low. Interest rates are derived from inflation expectations.I really have no idea what you're asking. The Feds said interest rates would remain low for an extended period and Hoening said the Feds recent policy of QE2 could cause an increase in long term inflation expectations that could destabilize the economy. So what don't you understand?
I don't like wikipedia as a research tool because of the wiki vandalism... however here is the first sentence in the wiki link you provided "In economics, stagflation is the situation when both the inflation rate and the unemployment rate are high."High inflation and high unemployment are the key to stagflation, not high interest rates.
Seriously, how do you profess to understand anything about economics and not understand the simple correlation between interest rates and inflation? In your world, how are interest rates set?So if you can find anywhere in this definition of stagflation below, that high interest rates are key to stagflation, then by all means, do let me know.
Paul Volker had to actually raise interest rates higher in order to shock the economy out of stagflation in the early 1980s.
You said, and I am paraphrasing here, but please reread what you actually wrote, that most of the money is in the hands of the few and they refuse to spend it. It reads like you are stating there should be a redistribution of money because the people who have money are not spending enough. Banks do not spend the money, they lend it.Well, I'm not a banker if that whats you mean. Are you? The reason I said what I did is because the banks aren't lending and if they aren't lending then people don't have access to money to buy homes, refinance or expand businesses.
No, individual decisions destroyed people's credit rating. Living outside of their means finally caught up to people. We, me and you, are all living in the same economy. Why do you have a problem with getting a refi, but I have been pre-approved for 500K (with 20% down) for an investement property? People need to take responsibility for their own financial being, and blaming the recession for not having a good credit score is like blaming the Ferrari dealership for reposessing the car you couldn't afford.because the recession destroyed their credit rating.
Where do you get your stuff from? A BPO that banks use to determine home value is from a mortgage broker... Banks don't price the home, you did when you bought it, and your neighbor when he bought his home...even people with excellent credit scores are finding hard to refinance with the low interest rates because the banks are devaluing their homes so their equity ratio is lower and they don't qualify for the loan.
What does that even mean?I think QE2 will be good for Wall Street but not so much for Main Street where it will still take years to recover.
I am not a supporter of the banks as they helped put us where we are today. You say they "raised" the standards implying that you are entitled to the loan. The truth is they returned to better lending standards. If you don't understand that it was lending money with low standards which put us in this mess that we are in today, please say so here. If you can accept that the poor standards which brought on this problem then why should the banks NOT have ammended their lending standards?One of the reasons the banks aren't lending is because they raised their borrowing standards so high that now fewer people can qualify for a loan
Yes, you implied it. Maybe I misunderstood your writing. "I kinda figured they would since the Feds want people to spend instead of save. It will also probably help the government pay down the trade deficit. But I don't see it doing much to stimulate utilization of production or lower unemployment."Did I say the government needed to stimulate me to buy something?
That past 3 recessions have been followed with continued stimulus though the better part of cycle. This was the 4th. We do not have any reserve left. The comments from the IMF, Moody's, S&P, all show the actual risk we are facing. To throw caution to the wind so you can get to where you want the economy to be through government spending does not fix the fundamental flaws. The economic rules do not change because the pressure placed on the economy snapped from expanded debt. To further add debt does not bring you to a better place.I agree, an organic economic pace is better, but then the financial crisis wasn't exactly a natural cause, so why should the recovery be?
I don't agree or disagree, I was just stating what the Feds said, that low interest rates would be for an extended period. The expectation of higher inflation is projected by the Feds injecting liquidity into the market to control inflation, which could lead investors to create new bubbles and destabilize the economy.You agree with both positions. Both positions reside in opposite ends of the economic universe. If long term interest rate expectations remain low, that means long term inflation expectations will remain low. Interest rates are derived from inflation expectations.
If you don't like Wikipedia then find another source. Either way, you will still be wrong about interest rates as key to stagflation.I don't like wikipedia as a research tool because of the wiki vandalism... however here is the first sentence in the wiki link you provided "In economics, stagflation is the situation when both the inflation rate and the unemployment rate are high."
What you fail to consistantly understand is that people who need to resort to petty fallacious ad hominem attacks and insults seldom have the facts, logic or reason to back up their argument. And so far that is all you have proven. So if you want to discuss the topic then I suggest you grow up. Otherwise I could care less what you have to say.This seems to highlight an important concept that you don't seem to understand:Interest rates are directly related to the rate of inflation.
Seriously, how do you profess to understand anything about economics and not understand the simple correlation between interest rates and inflation? In your world, how are interest rates set?
The goal is to provide a positive slope on the yield curve and making sure long term debt has higher premiums than short term debt. They wish to keep the slope of the yield low, so they will buy the US T-bills, keeping the coupon rate low.
Is there ever a position where there is never a winner and loser? If the price goes up on the bond, there is also a loser, right? Once you buy the bond, the government does not win or lose on the market flucuations of the price of that bond.
What you fail to consistantly understand is that people who need to resort to petty fallacious ad hominem attacks and insults seldom have the facts, logic or reason to back up their argument.
STRAWMANIt kinda does look like stagflation, with incomes remaining low and unemployment remaining high
That was never the point. Straw-man.Either way, you will still be wrong about interest rates as key to stagflation.
I don't agree or disagree, I was just stating what the Feds said, that low interest rates would be for an extended period.
Make up your mind, please. Were you not supporting inflation a few weeks ago? When I questioned you on this you replied with:The expectation of higher inflation is projected by the Feds injecting liquidity into the market to control inflation, which could lead investors to create new bubbles and destabilize the economy.
...And yet, almost all economists agree that a small rise in inflation may be the only way out of this recession.
Here's a wikipedia citation you may find interesting: "...citation of Wikipedia in research papers may not be considered acceptable, because Wikipedia is not considered a credible source."If you don't like Wikipedia then find another source.
As the economy picks up treasury yields will continue to increase. This is because better returns will be realized in other investment such as stocks. Also the move is still small and still lower than this time last year.I noticed that the yield on the 30-year Treasury has risen about 60 basis points recently. That' s significant, and, it seems to me, undermines the Fed's intent.
I'm not sure about this. You may be right about them trying to get banks out of short term treasuries, but typically the money tied up is not a substitute for lending, rather it is collateral for lending as banks can borrow against their assets.My understanding is the Fed is trying to get banks out of longer-dated Treasuries so they'll lend.
I agree with you. The part that may be confusing is historically short term rates should be lower than long term rates. An inverted yield curve is when long term rates are lower than short term rates. This invert usually predicts a down turn in the economy. If more short term bonds are purchased than long term this keeps the more traditional healthy curve. Maybe this is the point of contention?I'm just trying to figure out how buying mostly shorter-dated Treasury notes will do that. As it is, banks can borrow at the Fed funds rate of .20% and take that money and buy a "safe," non-callable 30-year Treasury bond yielding over 4%.
RRP's and RP's are not my forte. An important thing to consider is that the fed can make itself whole, so there really is no risk to the fed. I am not sure how that tid bit effects your paradigm.OK, but if I understand this correctly, when the Fed starts trying to remove some of the reserves it is adding to the system, it will use reverse repos in order to limit its risk. Presumably, if interest rates rise, the value of the Fed's bond holdings will drop--unless it gets the original sellers of the bonds to buy them back at a price that makes the fed whole, or, at least, close to whole. But if the Fed is limiting its risk, then it's shifting the risk to the banks who originally sold the Fed the bonds. That can't be good for banks, can it?
You are unbelievable. I gave my opinion about the OP article. I wasn't even debating at that point, let alone resorting to a strawman. LOLIf you dislike fallacy arguments such as ad hominem then why do you resort to straw-man arguments? What does the above mean when applied to you?
I looked up stagflation before I mentioned it in my comment to the OP, so I kinda knew before you came along that when high inflation and high unemployment occurred simultaneously it was stagflation. I said it "looked" like stagflation, I didn't say it was. The reason I said it "looked" like stagflation was because of the high unemployment, low wages, and the stagnating economic growth over the last three years. But note that the Feds aren't raising interest rates in order to increase inflation, instead they are increasing the money supply . Some think that in doing so could lead to hyper inflation. Now here is what you said....STRAWMAN
You forgot the most important part of stagflation. I called it interest rates, you decided to do a little research to "prove" I was wrong, but instead open a straw-man argument by quoting that stagflation is elevated inflation and high unemployment rates book definition.
You can't have a situation of high inflation and low interest rates, it doesn't work that way. Or very rarely in high economic growth and strict monetary policy low projections of inflation and high interest rates.
But I don't think I was wrong, so why would I admit it? Inflation rate and interest rates are not the same thing, so why do think they are?Instead of admitting that you were clearly wrong by missing 50% of what makes stagflation, stagflation, you decide to argue the chosen words inflation vs interest rates... as if that actually changes anything.
Well, obviously I'm missing your point, so what was it?Even now you write: That was never the point. Straw-man.
Sorry but I think price levels are the leading indicator of inflation, and not interest rates. Are you sure it's not you who doesn't understand? Read....This highlights that you don't understand the connection of interest rates, inflation, and the economy. If you did understand them, then you would know interest rates are a leading indicator of projected inflation.
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.[2][3] A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.[4]
Source:
1.^ See:
Wyplosz & Burda 1997 (Glossary);
Blanchard 2000 (Glossary)
Barro 1997 (Glossary)
Abel & Bernanke 1995 (Glossary)
2.^ Why price stability?, Central Bank of Iceland, Accessed on September 11, 2008.
3.^ Paul H. Walgenbach, Norman E. Dittrich and Ernest I. Hanson, (1973), Financial Accounting, New York: Harcourt Brace Javonovich, Inc. Page 429. “The Measuring Unit principle: The unit of measure in accounting shall be the base money unit of the most relevant currency. This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements.”
4.^ Mankiw 2002, pp. 22–32
IMO, it looks rather noncommittal as opposed to biased. Is that a problem for you?If you were stating what they said, and you held no bias, then why did you write this: It kinda does look like stagflation, with incomes remaining low and unemployment remaining high and economic growth below 3% of GDP and all the money in the hands of few who refuse to spend it.... I kinda figured they would since the Feds want people to spend instead of save. It will also probably help the government pay down the trade deficit. But I don't see it...
http://www.debatepolitics.com/economics/85078-text-fed-statement-re-qe2.html#post1059081319
Well, I still do think most economist agree that a small rise in inflation is better than deflation. Unfortunately, I can't prove it without spending days researching to find enough economist to make it worth while, so I had to admit it was a fallacious argument and I did just exactly that, weeks ago. So what is your problem? You are not exactly the brightest bulb, let alone an expert in economics to be accusing me or anyone else of not understanding economics. First of all, I never claimed to be an expert, but I have a interest in the subject and enjoy learning and discussing the topic with like minded people. But I refuse to be abused or someone's doormat because they can't handle opposing views or think someone is beneath contempt to even try to discuss economics. And you come across that way, imo.Make up your mind, please. Were you not supporting inflation a few weeks ago? When I questioned you on this you replied with:
Originally Posted by Moot: ...And yet, almost all economists agree that a small rise in inflation may be the only way out of this recession.
I know and thats what I like about Wiki because it does give a starting point for further research and it contains pretty good sources, too. So if you dispute something Wiki says you can go to their source or find another. But as far as a current event encyclopedia, you really can't beat it because it does a damn good job keeping up with events as they occur and condensing what would take me hours to find. It's much better than a blog or an OP ED. Anyway, I think you're depriving yourself a very convenient and reliable source simply because Wiki pronounced Rush Limbaugh dead and now conservatives hate Wiki. LOL JK.Here's a wikipedia citation you may find interesting: "...citation of Wikipedia in research papers may not be considered acceptable, because Wikipedia is not considered a credible source."
Wikipedia:Academic use - Wikipedia, the free encyclopedia
Alright, I'll give it another look. But you better start being a nice guy or I'm through with you.PS if you go back and read the post that I put over an hour into researching, you will find that there are plenty of non wiki links. I don't use them for the above reasons, and I would expect anyone with a valid point would not use wikipedia either.
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