So I've been having this heated debate with my friend about how Obama is going to fix the inflationary problem. Now I'm not an economist but I did read up a tad bit on our monetary system and I tried to learn as much as I could about basic economics because of all the criticism about the 700 billion bailout plan. It's hard for me to trust the media so I try to look at other sources but the problem is a lot of them aren't as credible as these mainstream sources. I don't know if I'm reading truth or fiction at this point so I wanted your guys opinion on this statement my friend said and let me know if it actually stands true. If it does could you please send me some sort of credible link that could prove that he is either wrong or right?

"his bail out plan is financed through taxes, equity, and debt - not through "thin air" i'm not sure where this idea of hyperinflation is coming from, inflation rates have remained steady for the past 25 years and is actually one of the least pressing concerns of the economic crisis.
the frontrunner for obama's treasury secretary position has a PhD in economics and has worked in the field for the past 40 years, i trust that he will know how to handle the position better than you or I."

He's a really smart dude so I'm going to assume he's been keeping up with the current issues but this statement sounds like he has no idea what he's talking about yet at the same time I don't want to make an ass out of myself. So please Totseans.....help a brother out?

Well the last part is true: the guy who seems to be in the running for Treasury Secretary does have a PhD, has been Treasury Secretary before and is considered as responsible for stopping the large inflation that was taking place in the past.


As for inflation itself, it'sa problem. It's not the biggest it's been in U.S. history, but inflation is pretty much always a problem. The fact that the rate is constant, assuming what your friend said is true for the sake of argument, doesn't really tell is much.


If the rate os 1,000,000% (an exaggeration to make the point), and remains liek that for decades, we could still say the same thing your friend said (i.e. "inflation rates have remained steady for the past 25 years ") even though a 1,000,000% inflation rate would be devastating. So the problem is no so much if the rate of increase has remained constant, it's what that figure actually is.

He's not smart he's just another damned crackhead off the streets you just dont want to believe it because you are a pig. Makin political speeches and doing pre-paid interviews is just like rappin for him he's off the streets but instead of rappin a bunch of nonsense his whore of a mother gave him a dictionary and he does it like speeches and talkin and shit. Just another way of "flowin" for him, without a teleprompter or rehearsal hes a dumbass.

Absolutely wrong. The way people like Bernanke or Paulson even get to where they are at is through credentials such as PhD's or master degrees. How do you obtain them....you study your ass off and become incredibly intelligent in the field of economics. These guys are economic genius's but they are commonly thought of as idiots because of their unsound economic policies. Unsound doesn't necessarily mean their plans won't generate money, but rather it will generate money to benefit them in the long run and short change everyone else. They're are smart because they've managed to convince a large number of people through actual mathematical calculations that their plan will benefit everyone. It will benefit the economy....just not the people. So you see it's not a matter of we need new economists because they don't know what they are doing but rather we need economists because the really smart ones we already have working for us are producing bad economics that only benefits a few.

Absolutely wrong. The way people like Bernanke or Paulson even get to where they are at is through credentials such as PhD's or master degrees. How do you obtain them....you study your ass off and become incredibly intelligent in the field of economics.

or affirmative action

And did your research show that the "inflation index" is adjusted from the old ways that it used to be calculated? So that it makes the rate look lower.

Using the older method: the rate is actually much higher than is reported. Though, I guess with shoppers switching to Walmart? The theory that inflation is lower because as prices go up, consumers shield themselves by switching to less expensive choices. If you think that that counts? Eg: they switch from steak to hamburger. From name brands to generic ones.

Thus: they still buy. Just not the things that they prefer. Goverment Phd's don't care what the hoi polloi want, so there isn't the need to bother with such details.

Inflation isn't the problem right now.

Exactly!

While it's true that goods baskets change over time and the CPI needs to account for that, since the early 90s the US government has basically fudged figures through what you just said. If it's the cost of a *declining* standard of living it isn't the CPI. Substitutions due to preferences/technology should be included, but intentionally trying to catch substitutions due to rising prices is defeating the whole point of the CPI.

CPI isn't the best measure of inflation anyway though since it isn't including investment goods.

I took a quick look at implicit price deflator figures
(U.S. Department of Commerce: Bureau of Economic Analysis)
They're totally full of shit. Supposedly jan 06 to jan 07 inflation by that measure was like 3%
Figures for other periods are even crazier.
It doesn't make sense... it goes against all reason.
Waging two wars, massive government deficits, during an asset bubble caused by expansionary monetary policy, high oil prices.... inflation can't be at levels like that.
It has to be higher.

The fed isn't even publishing M3 measures anymore.
God knows that they are.

if you want some alternate measures that may or may not be accurate
http://www.shadowstats.com/
http://www.shadowstats.com/alternate_data

I imagine that like Obama's acceptance speech or all those financial experts of the last few months who've been saying that the "worst is over, now it's time for the economy & the stock market to rise again"? They are not just being disingenuous, but instead being worried that by giving an honest expression of bad news they will create a negative feedback loop that will make things worse. The same for true inflation & unemployment figures. Best not to discourage people. A bad attitude will hold you back. Better to believe your chances are good & find out for yourself whether they are or not.

Perhaps it is better to let people find out for themselves if things are bad. There are always plenty of people who have jobs or whose companies are doing well who will voice up & say that they don't see any negativity & they are OK. Why depress those people? Let those who're actually being personally hit by hard times be the negative ones.

I notice that the Detroit automakers have waited until after the Election to bring out more of their bad news. To raise their loan request to the government from $25 to $50 billion. I guess that that is only proper. Why let extra bad news distract people & influence the electorate. I imagine that as per usual, more of the true situation as regards the Economy in the US will come out now.

Best to keep things "shiny/happy" before November 4th in hopes that the incumbent party will win.

There are still voices saying "the worst is over". I imagine they hope that their boosterism will cause their own stock portfolio to rise. :) Good luck to them!

UMMM, ombamy was a bad fuckin choice, perhaps?!?
this only 4 days after win. just wait until six months from now, stupid ass omabay backers.
http://www.youtube.com/watch?v=g91bcKEZMaQ

lol, yeas we can....everything is okay now that obmama is president YYIIIEEAAAHHH!

The Federal Reserve monetizes the debt of the federal government when it needs to. In other words, even though a huge stimulus package would technically be backed by debt that should be paid back by higher taxes in the future, the debt will most likely be monetized instead, creating inflation.

Either that or we'll face higher interest rates and taxes which are just as bad (if not worse) than inflation.

With the collapse of the housing market, and all of the associated collateral damage, trillions of dollars have been lost. This is inherently deflationary...then when you factor in the contracting economy (demand destruction)...you get even more deflation. Look at the prices of stocks, houses, oil, commodities, and metals...they all have been falling. Eventually the supply of all of these things will shrink to meet the demand, but for the moment there is a surplus and thus we have deflation.