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« ErrrrWe need more stuff to make »
This is a sub-selection from Greece!


Z80A
Premium
join:2009-11-23

1 edit
reply to cw30000

Re: Greece!

said by cw30000:

Last I check my check, my food cost more, my energy cost more and other necessities cost more too. So, how is this not inflation?
That is because the gov't conveniently leaves out food and energy from 'core inflation' statistics. It is easy to have low inflation when you ignore in-demand items subject to inflation such as food and energy. And for others like CPI, they're manipulated through "seasonal adjustments" and weighting.

Deflation is bad because it feeds itself. Deflation is bad for producers, thus they have to control costs by firing people leading to lower demand, lower prices and more firings; lower demand, lower prices and more firings...etc.

A far more likely short term scenario is stagflation...high inflation with little to no economic growth.
--
"Our goal (was to make) a billion phones Flash-enabled by 2010...We're actually going to get 1 billion Flash-enabled phones by 2009." -Adobe Chief Technology Officer Kevin Lynch in Nov 2008.

wierdo

join:2001-02-16
Tulsa, OK
said by Z80A:

A far more likely short term scenario is stagflation...high inflation with little to no economic growth.
That, I can agree with.

However, it's plain to see that energy and food prices are well off from their highs.

As far as certain items being excluded from the core inflation number, energy prices are so volatile, that it makes sense to exclude it from core inflation. Added back in to the long term trend, it makes more sense, but when comparing month to month or quarter to quarter, energy and food just muddy the waters.

In any event, however you calculate it, inflation is extremely low at the moment and yields on government debt is extremely low. The low inflation combined with the low federal funds rate tells us that deflation is a reasonable possibility. The low yield on government debt tells us that those buying the debt don't think hyperinflation is a likely scenario.

Interestingly, if you look at corporate balance sheets, you'll notice most companies are hoarding cash like mad right now. If that reverses, it might be time to consider tightening the money supply.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.