The Fed

[pike]

Seems pretty dumb to me.

"Hey, let's print off this money out of thin air and then earn interest on it by buying Treasury bonds!!!"

"And...we can buy our TB's through Goldman Sachs! That way all of our ass hole friends get rich too! IT's just the tax payers money that we're creating and using!!!"

"And...and then if we ever eff up...we can lie to all the sheeple and have them bail us out!!! After all, I don't want to lose my billions of dollars and private jets and two dozen vacation homes!"

But then again, it's ran by the ruling elite who just want to line there pockets with gold and rape the rest of the world of their wealth.

Now, were stuck with some pretty fun inflation and wages can't keep up. All while the taxpayers will be stuck paying off the fake TB's the Fed bought and paying off interest, on compounded interest for the rest of our lives...


Lovely system we have on our hands, folks.

[Kat Kid]

Seems pretty dumb to me.

"Hey, let's print off this money out of thin air and then earn interest on it by buying Treasury bonds!!!"

"And...we can buy our TB's through Goldman Sachs! That way all of our ass hole friends get rich too! IT's just the tax payers money that we're creating and using!!!"

"And...and then if we ever eff up...we can lie to all the sheeple and have them bail us out!!! After all, I don't want to lose my billions of dollars and private jets and two dozen vacation homes!"

But then again, it's ran by the ruling elite who just want to line there pockets with gold and rape the rest of the world of their wealth.

Now, were stuck with some pretty fun inflation and wages can't keep up. All while the taxpayers will be stuck paying off the fake TB's the Fed bought and paying off interest, on compounded interest for the rest of our lives...


Lovely system we have on our hands, folks.

You realize inflation is incredibly low right now, right?

[pike]

Seems pretty dumb to me.

"Hey, let's print off this money out of thin air and then earn interest on it by buying Treasury bonds!!!"

"And...we can buy our TB's through Goldman Sachs! That way all of our ass hole friends get rich too! IT's just the tax payers money that we're creating and using!!!"

"And...and then if we ever eff up...we can lie to all the sheeple and have them bail us out!!! After all, I don't want to lose my billions of dollars and private jets and two dozen vacation homes!"

But then again, it's ran by the ruling elite who just want to line there pockets with gold and rape the rest of the world of their wealth.

Now, were stuck with some pretty fun inflation and wages can't keep up. All while the taxpayers will be stuck paying off the fake TB's the Fed bought and paying off interest, on compounded interest for the rest of our lives...


Lovely system we have on our hands, folks.

You realize inflation is incredibly low right now, right?

Gone up every month this year. You don't go to the grocery store or buy gasoline?

[jtksu]

Costs of living are the same as inflation?  I'm way out of my league with you guys.

[Dirty Sanchez]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

[pike]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

The same potato salad that keeps going up in price 

[06wildcat]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

The government does calculate food and gas prices into the inflation numbers, it's called headline inflation and is a really, really dumb tool to use when making projections. Those two items are left out to determine core inflation. Headline inflation is only important when it starts to leak into core inflation. Sustained high energy prices did this in the fall of 2008 just before the collapse of the financial markets. The high prices were pushing up the costs of goods used to compute core inflation.

Food and energy are both commodities and subject to wild variations which make them terrible for judging month-to-month inflation. You're just one Russian drought/OPEC country going apeshit from having another inflation measure that's pretty much worthless to the average American.

Headline inflation is in blue, core is in red.



Headline inflation could possibly hit 4 percent some time this year if the dollar reverses its current climb and completely goes in the tank (unlikely with the Euro facing major distress). Core inflation will probably clock in between 2-3 percent, right around the Fed's target of 2 percent, and that target should probably be a bit higher.

Even with all the money that has been printed, there's less "wealth" in the U.S. than before the financial markets collapsed. The net wealth of the country was about $66 trillion in late 2007 early 2008. About $13 trillion of that evaporated in the Great Recession (stocks, home values etc). It's back to about $57-59 trillion right now.

The real challenge for the Fed, and this is a big challenge, is to pull the trigger on raising rates when GDP growth hits 4-5 percent and unload all barrels if it gets above that. Most of the money that's been printed isn't circulating, so it's as if it never existed. If banks start to lend again, things can quickly go south with double-digit inflation.

[jtksu]

So, if banks start lending again we should expect to see ghost money force inflation through the roof?

[06wildcat]

So, if banks start lending again we should expect to see ghost money force inflation through the roof?

That's the fear. The Fed can raise interest rates to make the money more expensive to banks. The challenge is timing it so that inflation doesn't get out of hand but also don't make money so expensive that people quit borrowing and the economy goes back into recession.

One of the big reasons people are worried about inflation right now is because money is so cheap. You can get a $100k mortgage for about $500 per month right now. A historical average would put that closer to $750. The thing keeping inflation in check right now is banks are reluctant to lend money to all but the most creditworthy borrowers. At the height of the housing market, you could take out a liar loan for 100 percent of the cost of a home. This meant virtually anyone who wanted to borrow any amount of money could buy a home without proving they could even begin to pay it back. And, similar to the Fed, when a bank makes a loan, it increases money supply, which in the case of the middle of the last decade fueled inflation because it was being circulated through the economy.

[Dirty Sanchez]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

The government does calculate food and gas prices into the inflation numbers, it's called headline inflation and is a really, really dumb tool to use when making projections. Those two items are left out to determine core inflation. Headline inflation is only important when it starts to leak into core inflation. Sustained high energy prices did this in the fall of 2008 just before the collapse of the financial markets. The high prices were pushing up the costs of goods used to compute core inflation.

Food and energy are both commodities and subject to wild variations which make them terrible for judging month-to-month inflation. You're just one Russian drought/OPEC country going apeshit from having another inflation measure that's pretty much worthless to the average American.

Headline inflation is in blue, core is in red.



Headline inflation could possibly hit 4 percent some time this year if the dollar reverses its current climb and completely goes in the tank (unlikely with the Euro facing major distress). Core inflation will probably clock in between 2-3 percent, right around the Fed's target of 2 percent, and that target should probably be a bit higher.

Even with all the money that has been printed, there's less "wealth" in the U.S. than before the financial markets collapsed. The net wealth of the country was about $66 trillion in late 2007 early 2008. About $13 trillion of that evaporated in the Great Recession (stocks, home values etc). It's back to about $57-59 trillion right now.

The real challenge for the Fed, and this is a big challenge, is to pull the trigger on raising rates when GDP growth hits 4-5 percent and unload all barrels if it gets above that. Most of the money that's been printed isn't circulating, so it's as if it never existed. If banks start to lend again, things can quickly go south with double-digit inflation.

Because its some theoretical "headline inflation" instead of some other theoretical "core inflation" it doesn't count.  Convenient.

Tell that to the single mom paying twice as much out of her budget as she did a couple months ago for gas to get to work.

[Saulbadguy]

It sounds like 06wildcat knows what he is talking about, and everyone else does not.   

[Rage Against the McKee]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

The government does calculate food and gas prices into the inflation numbers, it's called headline inflation and is a really, really dumb tool to use when making projections. Those two items are left out to determine core inflation. Headline inflation is only important when it starts to leak into core inflation. Sustained high energy prices did this in the fall of 2008 just before the collapse of the financial markets. The high prices were pushing up the costs of goods used to compute core inflation.

Food and energy are both commodities and subject to wild variations which make them terrible for judging month-to-month inflation. You're just one Russian drought/OPEC country going apeshit from having another inflation measure that's pretty much worthless to the average American.

Headline inflation is in blue, core is in red.



Headline inflation could possibly hit 4 percent some time this year if the dollar reverses its current climb and completely goes in the tank (unlikely with the Euro facing major distress). Core inflation will probably clock in between 2-3 percent, right around the Fed's target of 2 percent, and that target should probably be a bit higher.

Even with all the money that has been printed, there's less "wealth" in the U.S. than before the financial markets collapsed. The net wealth of the country was about $66 trillion in late 2007 early 2008. About $13 trillion of that evaporated in the Great Recession (stocks, home values etc). It's back to about $57-59 trillion right now.

The real challenge for the Fed, and this is a big challenge, is to pull the trigger on raising rates when GDP growth hits 4-5 percent and unload all barrels if it gets above that. Most of the money that's been printed isn't circulating, so it's as if it never existed. If banks start to lend again, things can quickly go south with double-digit inflation.

Because its some theoretical "headline inflation" instead of some other theoretical "core inflation" it doesn't count.  Convenient.

Tell that to the single mom paying twice as much out of her budget as she did a couple months ago for gas to get to work.

Yeah, if we want to consider factors that go into the cost of living that have absolutely nothing to do with interest rates or printing money, we could include the cost of food and gasoline. I'm not sure why the fed would do that, though.

[06wildcat]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

The government does calculate food and gas prices into the inflation numbers, it's called headline inflation and is a really, really dumb tool to use when making projections. Those two items are left out to determine core inflation. Headline inflation is only important when it starts to leak into core inflation. Sustained high energy prices did this in the fall of 2008 just before the collapse of the financial markets. The high prices were pushing up the costs of goods used to compute core inflation.

Food and energy are both commodities and subject to wild variations which make them terrible for judging month-to-month inflation. You're just one Russian drought/OPEC country going apeshit from having another inflation measure that's pretty much worthless to the average American.

Headline inflation is in blue, core is in red.



Headline inflation could possibly hit 4 percent some time this year if the dollar reverses its current climb and completely goes in the tank (unlikely with the Euro facing major distress). Core inflation will probably clock in between 2-3 percent, right around the Fed's target of 2 percent, and that target should probably be a bit higher.

Even with all the money that has been printed, there's less "wealth" in the U.S. than before the financial markets collapsed. The net wealth of the country was about $66 trillion in late 2007 early 2008. About $13 trillion of that evaporated in the Great Recession (stocks, home values etc). It's back to about $57-59 trillion right now.

The real challenge for the Fed, and this is a big challenge, is to pull the trigger on raising rates when GDP growth hits 4-5 percent and unload all barrels if it gets above that. Most of the money that's been printed isn't circulating, so it's as if it never existed. If banks start to lend again, things can quickly go south with double-digit inflation.

Because its some theoretical "headline inflation" instead of some other theoretical "core inflation" it doesn't count.  Convenient.

Tell that to the single mom paying twice as much out of her budget as she did a couple months ago for gas to get to work.

The government reports both. It doesn't care about headline inflation until it persists enough to start affecting core inflation. Where does this single mother live that gas has doubled in two months?

[06wildcat]

Here's an article on it: http://www.economist.com/blogs/freeexchange/2011/03/inflation_1

[Dirty Sanchez]

Inflation as the government calculates it conveniently doesn't include gas or food in its calculations.  Considering those are the two things that are really skyrocketing for the average citizen right now, the government calculations are pretty much worthless to the average American.

Its like telling a leper their finger didn't just fall off, despite the fact that it just fell into the potato salad.

The government does calculate food and gas prices into the inflation numbers, it's called headline inflation and is a really, really dumb tool to use when making projections. Those two items are left out to determine core inflation. Headline inflation is only important when it starts to leak into core inflation. Sustained high energy prices did this in the fall of 2008 just before the collapse of the financial markets. The high prices were pushing up the costs of goods used to compute core inflation.

Food and energy are both commodities and subject to wild variations which make them terrible for judging month-to-month inflation. You're just one Russian drought/OPEC country going apeshit from having another inflation measure that's pretty much worthless to the average American.

Headline inflation is in blue, core is in red.



Headline inflation could possibly hit 4 percent some time this year if the dollar reverses its current climb and completely goes in the tank (unlikely with the Euro facing major distress). Core inflation will probably clock in between 2-3 percent, right around the Fed's target of 2 percent, and that target should probably be a bit higher.

Even with all the money that has been printed, there's less "wealth" in the U.S. than before the financial markets collapsed. The net wealth of the country was about $66 trillion in late 2007 early 2008. About $13 trillion of that evaporated in the Great Recession (stocks, home values etc). It's back to about $57-59 trillion right now.

The real challenge for the Fed, and this is a big challenge, is to pull the trigger on raising rates when GDP growth hits 4-5 percent and unload all barrels if it gets above that. Most of the money that's been printed isn't circulating, so it's as if it never existed. If banks start to lend again, things can quickly go south with double-digit inflation.

Because its some theoretical "headline inflation" instead of some other theoretical "core inflation" it doesn't count.  Convenient.

Tell that to the single mom paying twice as much out of her budget as she did a couple months ago for gas to get to work.

The government reports both. It doesn't care about headline inflation until it persists enough to start affecting core inflation. Where does this single mother live that gas has doubled in two months?

You know what I mean.  Don't be a ben.

[06wildcat]

Don't know what you mean DS, I guess you're advocating that interest rates should be set based on the buying power of single mothers?

[sonofdaxjones]

All none Policy Wonks rejoice . . . "core inflation" is under control!!
 

[Dirty Sanchez]

Don't know what you mean DS, I guess you're advocating that interest rates should be set based on the buying power of single mothers?

If you don't know, you choose not to know.

Consumer confidence, probably more important than any theoretical statistic, gets wrecked when people stress about buying day to day items like food and fuel.  They could give two shits about fed policy or whatever numbers have been cooked into the books to make them sound better.  Do you trust the bureaucracy that much? Are you the anti-dax?

[06wildcat]

No, I don't trust the bureaucracy much at all. However I do understand how it works, which I'm sure you do as well but you are apparently playing dumb on the matter to score political points for single moms.

Might as well include pumpkins into inflation too, the price of those rises dramatically in October every year.

[Rage Against the McKee]

OMG, we're about to get deflation!

http://money.cnn.com/2011/03/03/news/economy/gas_prices_fall/index.htm

[Dirty Sanchez]

No, I don't trust the bureaucracy much at all. However I do understand how it works, which I'm sure you do as well but you are apparently playing dumb on the matter to score political points for single moms.

Might as well include pumpkins into inflation too, the price of those rises dramatically in October every year.

pumpkins and oranges

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

You're all wrong.  The Fed favored inflation metric is the ever antiquated PPI.   


Seriously though,

We need the Fed to blow air into asset bubbles and then, when the bubbles burst, to blow some more air to create artificial asset floors.  Everyone in the US is too big of a glutton/pussy to have it any other way.

- The Fed is also in charge of monitoring the safety and soundness of Bank Holding Companies and Financial Holding Companies  <--- huge LOL
- Since the Fed did such a good job with that, the Dodd-Frank has placed the Fed in charge of identifying entities creating too much systemic risk and coordinating the orderly liquidation of such entities prior to creation of economic collapse <--- more huger LOL and total fed govt retardation

In sum, placing a bunch of bureaucrats in charge of something as complex as the economy is about as stupid and self deprecating as it gets.  History supports this fact to the "n"th degree.

/class dismissed