Those who believe in an inflationary outcome are 'nutters'

[AC3]

....according to Adam Posen of the UK's monetary policy committee, anyhow.

A speech full of the usual self-serving central bank rhetoric, and very little mention of the true cause of the crisis.

http://www.bankofengland.co.uk/publi.../speech408.pdf

........i

f the Bank could create inflation easily under such circumstances, and if the majority of market participants and households believed that – not just the nutters – then we would be more than halfway home. If only it were that easy. People are rational, and they realize that we cannot do that.5 Long historical experience in the UK and elsewhere, supported by research showing that what seems true in the data in this case is true, bears this out even for normal times, let alone for times when the financial sector is so troubled and there is downward pressure on wage growth and prices.

[due_indigence]

Re: Those who believe in an inflationary outcome are 'nutters'

This seems to fly in the face of Bernanke's ultimate vehicular prescription, the helicopter. What he's ascribing to nutters is a pretty mainstream view is it not? Namely that central bank monetary policy has a bearing on inflation. Though he does emphasize by way of italics the special case "in response to a deflationary financial crisis"

Thank you for this.

[BlackVoid]

Re: Those who believe in an inflationary outcome are 'nutters'

This confirms, that "those who believe in an inflationary outcome" must be right on track.

[due_indigence]

Re: Those who believe in an inflationary outcome are 'nutters'

This is the crux of the debate though isn't it? There are keen minds in both the deflationist and inflationist camps. One could call the hyperinflationists a third camp altogether. Can deflationary powers be so overwhelming in an economy (e.g. the effective cessation of industrial production) that no power on earth can reflate that economy? The breadth of opinion on this supposed Econ 101 phenomenon tells me how far Economics is from being a science. If you see black and I see white, then it ain't an empirically derived observation, is it? It's a rorschach test.

[xtronics]

Re: Those who believe in an inflationary outcome are 'nutters'

From Latest Shadowstats:

Since the near-term trough seen in the August 12th period, the monetary base has been growing at an annualized pace of 96.6%. The Fed appears to be panicking again, acting as though it has a worsening systemic problem.

Hmm -- if you don't think that is inflationary - not sure what to say.


,.,.
There seems to be an endemic problem with people here understanding the difference between 'inflation and expansion' and 'deflation and contraction'. There is no reason we can't have a contraction with inflation - In fact, That is what we have right now -

See http://www.shadowstats.com/alternate_data

[Starving Steve]

Re: Those who believe in an inflationary outcome are 'nutters'

From Latest Shadowstats:

Since the near-term trough seen in the August 12th period, the monetary base has been growing at an annualized pace of 96.6%. The Fed appears to be panicking again, acting as though it has a worsening systemic problem.

Hmm -- if you don't think that is inflationary - not sure what to say.


,.,.
There seems to be an endemic problem with people here understanding the difference between 'inflation and expansion' and 'deflation and contraction'. There is no reason we can't have a contraction with inflation - In fact, That is what we have right now -

See http://www.shadowstats.com/alternate_data

The Putz from Princeton won't raise interest rates and meanwhile, a slow grinding inflation eats away at the dollar's principal in any investment. This means the dollar tends to fall over the long-run.

As the dollar falls, money flees the US, so the economy stagnates. The Putz from Princeton then tries to ease more by rigging treasury bond auctions. This further aggravates the dollar problem, but the Putz from Princeton views a weak dollar as helpful to economic recovery.

As the world economy grows, the U.S. becomes less important. This further drives money out of America and drives the dollar lower. Slowly, costs go up in the U.S. as energy and commodity costs become bid-up in dollar terms. This causes total stagflation and decay. So The Putz eases further with helicopter drops of money, and this drives more money out of America and further strengthens the recovery abroad.

A whole generation or two of Americans are left to starve because of these Federal Reserve Board policies. America's decaying cities turn into shooting galleries for drug gangsters. Add-in mis-guided dreams of cheap and abundant energy coming from windmills and solar panels, and we have a good description of where America is now: at a dead-stop, in deep recession, and in decay.

The last chapter of this stagflation story either is devaluation and consequent panic, or it is hyper-inflation and consequent panic. The script is already written because of failed monetary policy at the Fed.

[goadam1]

Re: Those who believe in an inflationary outcome are 'nutters'

The Putz from Princeton won't raise interest rates and meanwhile, a slow grinding inflation eats away at the dollar's principal in any investment. This means the dollar tends to fall over the long-run.

As the dollar falls, money flees the US, so the economy stagnates. The Putz from Princeton then tries to ease more by rigging treasury bond auctions. This further aggravates the dollar problem, but the Putz from Princeton views a weak dollar as helpful to economic recovery.

As the world economy grows, the U.S. becomes less important. This further drives money out of America and drives the dollar lower. Slowly, costs go up in the U.S. as energy and commodity costs become bid-up in dollar terms. This causes total stagflation and decay. So The Putz eases further with helicopter drops of money, and this drives more money out of America and further strengthens the recovery abroad.

A whole generation or two of Americans are left to starve because of these Federal Reserve Board policies. America's decaying cities turn into shooting galleries for drug gangsters. Add-in mis-guided dreams of cheap and abundant energy coming from windmills and solar panels, and we have a good description of where America is now: at a dead-stop, in deep recession, and in decay.

Is it raining in your heart? It's raining in mine. It was fun while it lasted.

[doom&gloom]

Re: Those who believe in an inflationary outcome are 'nutters'

and of course the Putz from Princeton has no interest in anyone looking
behind his curtain or they would see the same fraud as the Wizard of Oz.

[MulaMan]

Re: Those who believe in an inflationary outcome are 'nutters'

I am a complete nutter - trying to covert all my assets into hard assets, bit by bit, inside and outside America.

I don't want any assets in the hands of wall-street criminals or the US government or in electronic form when the clock strikes twelve.

[GRG55]

Re: Those who believe in an inflationary outcome are 'nutters'

....according to Adam Posen of the UK's monetary policy committee, anyhow.

A speech full of the usual self-serving central bank rhetoric, and very little mention of the true cause of the crisis.

http://www.bankofengland.co.uk/publi.../speech408.pdf



[/left]

This is the "official" line of Central Bankers everywhere, isn't it?

Are many you aware that Adam Posen is from the USA? He arrived at the Bank of England via a number of other Central Banks including the US Fed...:p

Adam S. Posen is senior fellow at the Peterson Institute for International Economics (PIIE), where he has been working since 1997. He is also currently a member of the Monetary Policy Committee of the Bank of England, by appointment of the UK Chancellor of the Exchequer, until September 2012. His research focuses on macroeconomic policy and performance, European and Japanese political economy, central banking issues, and the resolution of financial crises.

A widely cited expert on monetary policy, he was previously a visiting scholar at central banks worldwide, including on multiple occasions at the Federal Reserve Board, the European Central Bank, and the Deutsche Bundesbank. He has also been a consultant to several US government agencies (including the Departments of State and Treasury, the Council of Economic Advisors, and the National Intelligence Council), the European Commission, the Japanese Ministry of Economy, Trade, and Industry, the UK Cabinet Office, and to the International Monetary Fund on a variety of economic and foreign policy issues. He is in his second two-year term as a member of the Panel of Economic Advisers to the US Congressional Budget Office, until summer 2011...

It shouldn't be a surprise if he sounds just like Ben. After all:

...Dr. Posen is the author of the book Restoring Japan's Economic Growth (Institute for International Economics, 1998; Japanese translation, 1999), the coauthor with Ben Bernanke et al. of Inflation Targeting: Lessons from the International Experience (Princeton University Press, 1999)...

...From 1994 to 1997, he was an economist at the Federal Reserve Bank of New York, where he advised senior management on monetary strategies, the G-7 economic outlook, and European monetary unification...;)

[ST]

Re: Those who believe in an inflationary outcome are 'nutters'

....according to Adam Posen of the UK's monetary policy committee, anyhow.

A speech full of the usual self-serving central bank rhetoric, and very little mention of the true cause of the crisis.

http://www.bankofengland.co.uk/publi.../speech408.pdf



[/left]

I picked up some Starburst candy yesterday - I was freaking shocked at the reduction in size of the pieces. Oh yeah, same price alright just a whole lot less candy. I guess I am a nutter for thinking this is stealth inflation.

England is such a disaster that the real shocker is that anyone attributes credibility to anything that comes out of the BOE.

[mickeyc21]

Re: Those who believe in an inflationary outcome are 'nutters'

From Latest Shadowstats:

Since the near-term trough seen in the August 12th period, the monetary base has been growing at an annualized pace of 96.6%. The Fed appears to be panicking again, acting as though it has a worsening systemic problem.

Hmm -- if you don't think that is inflationary - not sure what to say.


,.,.
There seems to be an endemic problem with people here understanding the difference between 'inflation and expansion' and 'deflation and contraction'. There is no reason we can't have a contraction with inflation - In fact, That is what we have right now -

See http://www.shadowstats.com/alternate_data

Debt is not being repaid. New money only matters if the quantity of existing money being destroyed is smaller.
If you believe the economy is going to take off again and everything will be fine inflation will go off the charts. If this does not occur and we have a slow, grinding slog or further deterioration the extra money is not inflationary.
Inflation is simply not occurring at present. As someone who has money to protect I get richer every week by leaving it in the bank at 0%. Every week I can purchase more goods and services with the same amount of $$$. This is the very definition of deflation.

[mickeyc21]

Re: Those who believe in an inflationary outcome are 'nutters'

I picked up some Starburst candy yesterday - I was freaking shocked at the reduction in size of the pieces. Oh yeah, same price alright just a whole lot less candy. I guess I am a nutter for thinking this is stealth inflation.

England is such a disaster that the real shocker is that anyone attributes credibility to anything that comes out of the BOE.

This is why people are calling those claiming cost inflation is happening to retail prices "nutters". The whole grocery store is on sale - as is every product/service in the country - and your candy company has raised the price of an impulse purchase therefore we have inflation?!

[allenjs]

Re: Those who believe in an inflationary outcome are 'nutters'

I picked up some Starburst candy yesterday - I was freaking shocked at the reduction in size of the pieces. Oh yeah, same price alright just a whole lot less candy. I guess I am a nutter for thinking this is stealth inflation.

England is such a disaster that the real shocker is that anyone attributes credibility to anything that comes out of the BOE.

I was going to comment about the shocking reduction in quality of service just about everywhere as these places are all short-staffed now: auto mechanics, hotels, amusement parks. And the reduced selection in many stores, and lower product quality.

But now I'm just going to run out and start hoarding Starburst.

[halcyon]

Re: Those who believe in an inflationary outcome are 'nutters'

....according to Adam Posen of the UK's monetary policy committee, anyhow.
[/left]

I don't think he said anything like that at all.

I think he said:

Governments do not have an automatic inflation machine that guarantees inflation with 100% success, while not totally and 100% sure killing the currency and the whole economy in the process. I believe this is true as well.

Further, he was referring to a group of nutters who believe government can do this. Why nutters? Perhaps because he thinks they are not looking at the same data he is, and drawing overly simplistic conclusions? Hard to know.