What should fed policy on inflation (in general) be?

[OohPooPahDoo]

Poll pending....

My answer - 1% - 4%

Because hyperinflation makes it hard to get loans, which is bad for the economy

Because deflation makes it hard to pay off loans, which is bad for the economy

and because a small amount of inflation makes it easier for folks to pay off their home or business loans over time.

 

[westwall]

You need to work on your definitions. Hyperinflation is defined as "ruinously high increase (50% or more per month) in prices due to the near total collapse of a country's monetary system, rendering its currency almost worthless as a medium of exchange."

I think Germany still holds the record at 322 percent per month for 15 months. Though Zimbabwe might be catching up.

 

[Charles_Main]

I personally think the Fed should not be in the business of trying to Manage The Economy. seems they tend to just do damage anyways.

 

[Baruch Menachem]

Record for inflation rate was in Hungary after WWII.

Still, the goal is to keep inflation at a minimum while not strangling normal economic growth.

 

[Fyght]

Mild deflation, but that scares economists. Sure, loans will be harder to pay off, but people's labor will only appreciate rather than depreciate.

 

[eflatminor]

Show me where price controls have worked. You can't because they never do. Why then do you support the price of money being controlled by unelected central planners? End the fucking Fed.

 

[kyzr]

The Fed can't work miracles when the DC whores don't balance the Budget. With Medicare going insolvent in 2017, you'd think that would make an MSM headline or two?!

 

[zonly1]

I believe bolstering/increasing the purchasing power of the dollar and holding on to the global currency status is more importantand should be a high priority issue, but in the current state of cheap money printing press; inflation is inevitable. Cheap money trickles down to our goods and services we consume/purchase. Bernanke is making a big mistake with lower interest rates which kills our existing purchasing power of the dollar.

 

[editec]

The national money supply ought to inflate or deflate depending on the aggregate amount of goods and services a nation produces.

Good luck trying to make that work, of course.

 

[OohPooPahDoo]

I personally think the Fed should not be in the business of trying to Manage The Economy. seems they tend to just do damage anyways.

So they should just set an interest rate and stick to it?

What should the rate be?

What if significant deflation hits - or hyperinflation - they should just sit and do nothing?

THEY CONTROL THE MONETARY BASE

 

[OohPooPahDoo]

You need to work on your definitions. Hyperinflation is defined as "ruinously high increase (50% or more per month) in prices due to the near total collapse of a country's monetary system, rendering its currency almost worthless as a medium of exchange."

I think Germany still holds the record at 322 percent per month for 15 months. Though Zimbabwe might be catching up.

Its also defined as:

"a cumulative inflation rate over three years approaching 100% (26% per annum compounded for three years in a row)"


Seems its definition isn't hard and fast.

I've made it clear what its definition is for the purposes of this poll.

 

[OohPooPahDoo]

Mild deflation, but that scares economists. Sure, loans will be harder to pay off, but people's labor will only appreciate rather than depreciate.

Uhh, no, actually, their labor will be worth just the same because under deflation, wages and salaries go down with prices.

Their debts will be worth more though.

 

[OohPooPahDoo]

Show me where price controls have worked. You can't because they never do. Why then do you support the price of money being controlled by unelected central planners? End the fucking Fed.

And replace it with what exactly?

 

[OohPooPahDoo]

I believe bolstering/increasing the purchasing power of the dollar and holding on to the global currency status is more importantand should be a high priority issue, but in the current state of cheap money printing press; inflation is inevitable. Cheap money trickles down to our goods and services we consume/purchase. Bernanke is making a big mistake with lower interest rates which kills our existing purchasing power of the dollar.

Deflation kills:

homeowners

businesses

cities

states

landlords

 

[OohPooPahDoo]

The national money supply ought to inflate or deflate depending on the aggregate amount of goods and services a nation produces.

Why?

 

[editec]

The national money supply ought to inflate or deflate depending on the aggregate amount of goods and services a nation produces.

Why?

That theory assumes that one wants stability in pricing.

Inflation is when more money chases the same amount of of goods and services or less.

Deflation is when less money chases the same amount of goods and services or more.

 

[eflatminor]

Show me where price controls have worked. You can't because they never do. Why then do you support the price of money being controlled by unelected central planners? End the fucking Fed.

And replace it with what exactly?

We need not have a central bank at all. Congress has the power to print the money; any printing press can do that. More important is the Fed's role is determining the price of money, the interest rate. That, like all prices, should be determined by market demand, not a few privileged central planners.

Perhaps most importantly, the Fed has become the means by which politicians "pay" for their wars and entitlement programs. Of course, they're not really paying for anything, just dumping the burden on to those yet to be born. We're feeling the pinch right now from past generations doing just that. A $14.6 trillion dollar pinch or $131,000 per taxpayer. How will you be paying your share???

Imagine if politicians wanted to start a war or enact an entitlement program that they would first HAVE to pay for it buy either borrowing the money (selling T bills) or by raising money through a tax. I guarantee you we'd have far fewer wars and unconstitutional programs if that were the case.

Then there's the case of forced inflation, the worst tax and the most regressive tax of them all. For the first 100 or so years of our country, the average price of goods was pretty much unchanged - some inflated, some deflated, all according to supply and demand. The last 100 years or so, during the reign of the Fed, we've had nothing but inflation. What cost a few hundred dollars in 1913 now costs thousands. That's YOUR money the Fed as stolen. Personally, I'm pissed about that.

 

[OohPooPahDoo]

The national money supply ought to inflate or deflate depending on the aggregate amount of goods and services a nation produces.

Why?

That theory assumes that one wants stability in pricing.

Inflation is when more money chases the same amount of of goods and services or less.

Deflation is when less money chases the same amount of goods and services or more.

Inflation is when prices go up, deflation is when they go down, that's it. You've listed causes of inflation and deflation both of which can be possible causes - but factors other than the money supply vs. goods and services supply play into it. The velocity of money is important as well.

 

[OohPooPahDoo]

We need not have a central bank at all.

And have what instead?

Imagine if politicians wanted to start a war or enact an entitlement program that they would first HAVE to pay for it buy either borrowing the money (selling T bills) or by raising money through a tax. '

That's actually exactly what they do.

Then there's the case of forced inflation, the worst tax and the most regressive tax of them all.For the first 100 or so years of our country, the average price of goods was pretty much unchanged - some inflated, some deflated, all according to supply and demand.

That's actually not true. The price of goods was quite volatile at some times.
Consumer Price Index (Estimate) 1800-2008 | The Federal Reserve Bank of Minneapolis

1802 -14%
1813 +13%
1815 -13%
1823 -10%
1862 +11%
1863 +23%
1864 +27%

The last 100 years or so, during the reign of the Fed, we've had nothing but inflation.

That's not true either. There was deflation in 1921, 1922, 1927, 1928, and there was no inflation in 1924, 1929, 1930, 1931, 1932, 1933, 1938, 1939, 1949, 1955, and 2009.
Historical Inflation Rates: 1914-2011, Annual and Monthly Tables - US Inflation Calculator
get your facts straight.

What cost a few hundred dollars in 1913 now costs thousands. That's YOUR money the Fed as stolen. Personally, I'm pissed about that.

I wasn't around in 1913. I doubt you were either. I don't think you know how money works.

 

[eflatminor]

We need not have a central bank at all.

And have what instead?

Imagine if politicians wanted to start a war or enact an entitlement program that they would first HAVE to pay for it buy either borrowing the money (selling T bills) or by raising money through a tax. '

That's actually exactly what they do.



That's actually not true. The price of goods was quite volatile at some times.
Consumer Price Index (Estimate) 1800-2008 | The Federal Reserve Bank of Minneapolis

1802 -14%
1813 +13%
1815 -13%
1823 -10%
1862 +11%
1863 +23%
1864 +27%

The last 100 years or so, during the reign of the Fed, we've had nothing but inflation.

That's not true either. There was deflation in 1921, 1922, 1927, 1928, and there was no inflation in 1924, 1929, 1930, 1931, 1932, 1933, 1938, 1939, 1949, 1955, and 2009.
Historical Inflation Rates: 1914-2011, Annual and Monthly Tables - US Inflation Calculator
get your facts straight.

What cost a few hundred dollars in 1913 now costs thousands. That's YOUR money the Fed as stolen. Personally, I'm pissed about that.

I wasn't around in 1913. I doubt you were either. I don't think you know how money works.

The country, and others, have existed just fine with NO central bank. No substitute is necessary. You are dead wrong about how politicians raise money. Sure they sell T bills (debt) and levy taxes but when they need money they can't get through either of those means, their buddies at the Fed create it out of thin air for them. This devalues the dollar and causes even more inflation.

Prices are SUPPOSED to be volatile. That's what happens when supply and demand determine prices. That's my point and that's a good thing. That fact remains that what cost $100 in early 1800s cost about the same by the end of the century. That is certainly NOT the case for the 20th century. Of course there were years of little to no inflation but overall, the Fed caused huge amounts of inflation that a free market certainly would not have. Again, what cost $100 in 1913 sure as HELL doesn't cost about that today. That is the Fed's fault.

You clearly do not know how money works pal. If you really want to make the case for a centrally planned price of money, why not milk? How about toilet paper? Hell, let's have the government set the price of everything. Why not?