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US Wholesale Prices Fall Sharply

head of joaquin

head of joaquin

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The Labor Department reported that the producer price index fell .7%, the biggest drop in three years. Even food and energy tumbled. Core CPI has risen only 1.7% over the past 12 months.

Still, I expect the market evangelist school of economics (the Austrians, the classic economic theorists, the libertarian Luddite types) will be posting dire OP about hyperinflation being just around the corner. Isn't it time that these model be scrapped in light of the overwhelming fact that their predictions never materialize? Why would anybody listen to people whose predictions predictably prove false?



U.S. wholesale prices fall sharply in April - Economic Report - MarketWatch
 
What makes you so certain that this is not an indication of a drop in aggregate demand? That certainly isn't a promising prospect for Team Obamanomics.
 
Fisher said:
What makes you so certain that this is not an indication of a drop in aggregate demand? That certainly isn't a promising prospect for Team Obamanomics.
Click to expand...

My best guess it IS from a drop in aggregate demand. Just plain ole common sense tells me that when ss taxes increased by 3%, either demand or savings HAS to drop. But for those who don't trust my common sense (and I don't blame you), it is also a mathematical certainty.

While a drop in demand is certainly not a good thing, it's just being offset by lower prices. I still expect that by the end of the year we will have a noticable downward trend in GDP growth due to higher taxes on the worker/consumer class. If the Obama administration was smart, they would use that trend as evidence that increasing taxes on the worker/consumer class is bad for our economy, and will push for true middle class tax cuts late this year (which will be politically easier to do if the federal deficit ends up being as low as the CBO is projecting that it will be). Also, republicans can't really vote against a tax decrease, as voting against a tax decrease would essentially be the same as voting FOR a tax hike, which so many have vowed not to do.

All of this (and more) is why I think that democrats will be unbeatable during the next two elections. I have been saying ever since last November that everything is lining up very well for democrats. The only two ways that democrats could lose popularity is a major scandel, or a significant economic downturn. The economic downturn is looking less and less likely, so the only hope that republicans have is uncovering a scandal - which is about all that we are hearing on the news these days. I think we will have a new mini-scandal every day until the Nov 2014 elections, and unless one of those scandals actually leads to a connection to either Obama or Hillary, it's not going to make a bit of difference in the election, and democrats will have almost total control of our government. I'm not cheering that on, I kind of like the deadlock in many ways, I believe that we need to have a balanced government, but it is just what I think is the most likely scenario.
 
imagep said:
My best guess it IS from a drop in aggregate demand. Just plain ole common sense tells me that when ss taxes increased by 3%, either demand or savings HAS to drop. But for those who don't trust my common sense (and I don't blame you), it is also a mathematical certainty.

While a drop in demand is certainly not a good thing, it's just being offset by lower prices. I still expect that by the end of the year we will have a noticable downward trend in GDP growth due to higher taxes on the worker/consumer class. If the Obama administration was smart, they would use that trend as evidence that increasing taxes on the worker/consumer class is bad for our economy, and will push for true middle class tax cuts late this year (which will be politically easier to do if the federal deficit ends up being as low as the CBO is projecting that it will be). Also, republicans can't really vote against a tax decrease, as voting against a tax decrease would essentially be the same as voting FOR a tax hike, which so many have vowed not to do.

All of this (and more) is why I think that democrats will be unbeatable during the next two elections. I have been saying ever since last November that everything is lining up very well for democrats. The only two ways that democrats could lose popularity is a major scandel, or a significant economic downturn. The economic downturn is looking less and less likely, so the only hope that republicans have is uncovering a scandal - which is about all that we are hearing on the news these days. I think we will have a new mini-scandal every day until the Nov 2014 elections, and unless one of those scandals actually leads to a connection to either Obama or Hillary, it's not going to make a bit of difference in the election, and democrats will have almost total control of our government. I'm not cheering that on, I kind of like the deadlock in many ways, I believe that we need to have a balanced government, but it is just what I think is the most likely scenario.
Click to expand...

Your posts are becoming clearer everyday. Please, don't hold back...
 
imagep said:
My best guess it IS from a drop in aggregate demand. Just plain ole common sense tells me that when ss taxes increased by 3%, either demand or savings HAS to drop. But for those who don't trust my common sense (and I don't blame you), it is also a mathematical certainty.

While a drop in demand is certainly not a good thing, it's just being offset by lower prices. I still expect that by the end of the year we will have a noticable downward trend in GDP growth due to higher taxes on the worker/consumer class. If the Obama administration was smart, they would use that trend as evidence that increasing taxes on the worker/consumer class is bad for our economy, and will push for true middle class tax cuts late this year (which will be politically easier to do if the federal deficit ends up being as low as the CBO is projecting that it will be). Also, republicans can't really vote against a tax decrease, as voting against a tax decrease would essentially be the same as voting FOR a tax hike, which so many have vowed not to do.

All of this (and more) is why I think that democrats will be unbeatable during the next two elections. I have been saying ever since last November that everything is lining up very well for democrats. The only two ways that democrats could lose popularity is a major scandel, or a significant economic downturn. The economic downturn is looking less and less likely, so the only hope that republicans have is uncovering a scandal - which is about all that we are hearing on the news these days. I think we will have a new mini-scandal every day until the Nov 2014 elections, and unless one of those scandals actually leads to a connection to either Obama or Hillary, it's not going to make a bit of difference in the election, and democrats will have almost total control of our government. I'm not cheering that on, I kind of like the deadlock in many ways, I believe that we need to have a balanced government, but it is just what I think is the most likely scenario.
Click to expand...

Keep dreaming. There is zero chance the democrats will flip the House in 2014.

Obama has done some good things for the economy but dems are horrible at selling them because they are not pro-poor/littleguy fiscal policies. You seem to think that Obamacare and guns will not be the issues for 2014. I disagree.
 
AlabamaPaul said:
Your posts are becoming clearer everyday. Please, don't hold back...
Click to expand...

???

I'm not sure if that was a legitimate complement, or if you are implying something else.

I am neither a liberal or a conservative. I don't root for either club, and although I vote at most every election, I stopped voting for major candidates years ago. I do have a huge fear of some ignorant tea party folks taking over our government, and an equal fear of welfare loving socialist taking over. I would prefer deadlock to either scenario. About the only way that I would prefer active legislation is if both houses of congress, plus the POTUS were held by educated independents who weren't on the payrolls of the rich and powerful.

My best hope is that later this year, both clubs will find some room to compromise, on issues that they both know are best for this country - like cutting worker/consumer class taxes.
 
imagep said:
???

I'm not sure if that was a legitimate complement, or if you are implying something else.

I am neither a liberal or a conservative. I don't root for either club, and although I vote at most every election, I stopped voting for major candidates years ago. I do have a huge fear of some ignorant tea party folks taking over our government, and an equal fear of welfare loving socialist taking over. I would prefer deadlock to either scenario. About the only way that I would prefer active legislation is if both houses of congress, plus the POTUS were held by educated independents who weren't on the payrolls of the rich and powerful.

My best hope is that later this year, both clubs will find some room to compromise, on issues that they both know are best for this country - like cutting worker/consumer class taxes.
Click to expand...

What would be your proposals to make up for the lost revenue?
 
head of joaquin said:
The Labor Department reported that the producer price index fell .7%, the biggest drop in three years. Even food and energy tumbled. Core CPI has risen only 1.7% over the past 12 months.

Still, I expect the market evangelist school of economics (the Austrians, the classic economic theorists, the libertarian Luddite types) will be posting dire OP about hyperinflation being just around the corner. Isn't it time that these model be scrapped in light of the overwhelming fact that their predictions never materialize? Why would anybody listen to people whose predictions predictably prove false?



U.S. wholesale prices fall sharply in April - Economic Report - MarketWatch
Click to expand...

at some point interest rates will go up. the fed can't them at zero forever.
 
Fisher said:
Keep dreaming. There is zero chance the democrats will flip the House in 2014.

Obama has done some good things for the economy but dems are horrible at selling them because they are not pro-poor/littleguy fiscal policies. You seem to think that Obamacare and guns will not be the issues for 2014. I disagree.
Click to expand...

You are very observant, I can't really disagree with any of that.

By the time that the 2014 election rolls around, most likely Obamacare will have been proven to be not much of anything. Obamacare will effect less than 2% of our employers, and only something like 15% of our workers. The good and bad will more or less set each other off, but most of the bad has already been factored into the market (lower job growth, higher insurance rates, etc). Basically, Jan 1st 2014 will come and go, and very few people will see any difference. For republicans, part of the problem is that they have so hyped up that "the economy is going to be wrecked" by Obamacare, and when it doesn't get wrecked, they are going to be made out to be fools. Thats not going to make any difference to tea partiers and hard core republicans, but it will shift many of the 30% of our voters who are moderates or swing voters to the left. Now don't get me wrong, I think that Obamacare is largely a step in the wrong direction, I prefer a true free market based solution to our healthcare "crises". I actually met with my congressman, who is a republican, and made a pitch for a totally different solution to healthcare, that didn't involve any additional taxes, and was very much based upon letting free market competition keep health care prices in check.

As far as that "pro-poor" stuff, democrats have never been "pro-poor", yet the poor have been voting for democrats for 70+ years (and of course they are still poor, a lot of good that did them). The fact that our current generation of democrat politicians are just as anti-poor as their parents were will not make a difference to the poor, because the poor also happen to be pretty much stupid (which is of course a big part of the reason that they are poor to begin with).

Where Obama CAN pick up a lot of votes is with the middle class. If he is able to get tax cuts for the middle class, he will come off as a hero to the middle class, regardless of their party affiliation. It should be fairly easy to accomplish because republicans can't vote against it, or else republicans will appear to be the villans. Now naturally republicans will try to steal his thunder, by claiming that they had to fight those "tax and spend" democrats to get the tax cuts passed, but the public is likely to see through this, just like they are apparently seeing through this smokescreen of "scandals" that republicans are trying to bring Obama down with.

So going forward two more years, due to the energy boom, and lower taxes on the consumer class, our economy should be fully recovered from the Great Bush Recession, and Hillary, or some other democrat candidate for POTUS will be virtually unbeatable.
 
AlabamaPaul said:
What would be your proposals to make up for the lost revenue?
Click to expand...

What lost revenue?

Are you suggesting that far right republicans are wrong that tax cuts result in higher revenue?
 
imagep said:
What lost revenue?

Are you suggesting that far right republicans are wrong that tax cuts result in higher revenue?
Click to expand...

Without offsetting policy changes, yes...
 
Or the House just won't take it up so they never have to vote it down.
 
mtm1963 said:
at some point interest rates will go up. the fed can't them at zero forever.
Click to expand...

Why not?


During most of the existance of mankind, there was no such thing as interest. As a matter of fact, the value of whatever it was that we tried to save dwindled. When the hunter burried his excess meat, and returned a year later to dig it up, it had rotted away. When the farmer stored in crop and returned six months later he discovered that it had either spoiled, or had been eaten by vermin.

The concept of interest is relatively new. Many Bible thumpers believe that interest is actually immoral and can point to dozens of passages in the bible to prove it (good think I'm not a Bible thumper because I don't agree with that). Man far right wingers believe that debt is the reason that we had the Great Bush Recession. If borrowing is immoral (not saying that it is), then certainly lending (like having a savings account, or purchasing a bond or CD) also has to be immoral because in order for there to be borrowers, assumable there has to be lenders.

Like I implied, I don't agree with the morality argument, it's bull****. My theory is that lazy people hate low interest rates because they like to imagine that they should just be able to put their cash into a low risk cash-like investment, like a savings account or CD or bond, and return years later to discover that unlike the farmer or the hunter in my example above, their savings has increased in value and through the "magic of compound interest" they have become rich with no risk and no personal effort of personal productivity on their part. I believe that is the lazy mans dream. Of course lazy people don't create wealth, hard workers do - people who personally produce goods and services. Now back to the bible thumpers - isn't "sloth" one of the 7 deadly sins?
 
CanadaJohn said:
I'm confused - how does the Tea Party figure into this?
Click to expand...

They are the worst as far as being ignorant about economics, and propagating lies about the way that our economy works.

Example: Most every tea partyer believes that the fed is owned by the Rothchild family and some rich fellows in Europe, and that it is in cahoots with Dr. Evil in a plan to take over the world.
 
Fisher said:
What makes you so certain that this is not an indication of a drop in aggregate demand? That certainly isn't a promising prospect for Team Obamanomics.
Click to expand...

I suspect there probably has been a drop of aggregate demand due to the Tea Party sequester. This supports Keynes not the market evangelists.

But of course this kind of analysis is totally alien to austrian types -- they keep insisting that aggregate demand doesn't matter and that hyperinflation is just around the corner.

Once again, they have been proved wrong.
 
imagep said:
They are the worst as far as being ignorant about economics, and propagating lies about the way that our economy works.

Example: Most every tea partyer believes that the fed is owned by the Rothchild family and some rich fellows in Europe, and that it is in cahoots with Dr. Evil in a plan to take over the world.
Click to expand...

And how would you describe progressives as to their understanding of our monetary system?
 
AlabamaPaul said:
Without offsetting policy changes, yes...
Click to expand...

Assumably, if we had lower taxes on the middle class, they would spend more money, demand would increase, businesses would hire more workers to keep up with demand, rich people would also make more money, and the entire tax base would grow, creating more government revenue.

But, even if that didn't happen, aren't you aware that conservatives typically claim that the rich pay most of the taxes in this country anyway? So if we cut the tax rates of people who don't pay very much in taxes, it's not going to reduce revenues much. Now taking into account that our deficit is dropping like a rock, a small decrease in revenues isn't going to be particulary harmful, especially if it is accompanied by an increase in demand, more jobs, and fewer people on the public dole.
 
imagep said:
They are the worst as far as being ignorant about economics, and propagating lies about the way that our economy works.

Example: Most every tea partyer believes that the fed is owned by the Rothchild family and some rich fellows in Europe, and that it is in cahoots with Dr. Evil in a plan to take over the world.
Click to expand...

I'm going to need an English translation.
 
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