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View Diary: Why what Ben Bernanke said yesterday should make you angry (102 comments)

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  •  Amazing (8+ / 0-)

    It amazes me on a progressive website the number of people who advocate firing up the printing presses and jacking up the inflation target as if it is good policy.

    Doing so is a wildly regressive tax increase that disproportionately harms the poor and most vulnerable in our society.

    Opening the inflation genie as a matter of policy is the most short sited thing that can be done to the economy. Once the cat is out of hte bag, it is tough to really "control" as many people seem to think is possible.

    Higher than normal Inflation is a mortal enemy of fiat currencies, and has largely taken out every empire in history.

    If Helicopter Ben came out and announced another huge QE program we would see the prices of everything rise except wages (that sounds great doesn't it). It could also expose once and for all that "the emperor has no clothes" as far as the FED and its ability to really do much to turn things around.

    •  It's the lesser of 2 evils. austerity is worse (7+ / 0-)

      Yes, many workers will have their purchasing power depreciated, but they'll have a job, and others who don't have a job, will finally get one.

      The time to pay down this debt, is when the economy is recovering, and it MUST be done.  If we don't go after that debt during the recovery, we are truly toast, but if we don't try and reflate now, we are toast now.

      •  both evils (0+ / 0-)

        do we want to die by water or fire.  Thats our choice really.  Neither is that different, both choices suck.

        Bad is never good until worse happens

        by dark daze on Fri Jun 08, 2012 at 06:23:56 AM PDT

        [ Parent ]

      •  ...than Stagflation? (0+ / 0-)

        I seriously doubt that.

        •  Um, yes. (8+ / 0-)

          I'll take the Carter economy over the Hoover economy any day. And for the record inflation has always been considered well by progressives because it benefits debtors, who are more likely to be poor, and hurts creditors, who are more likely to be wealthy. It redistributes away from those sitting on huge piles of undeployed cash in favor of those earning income from economic activity.

          "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

          by randomfacts on Fri Jun 08, 2012 at 10:01:38 AM PDT

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          •  I agree, and to make an example I use this: (3+ / 0-)
            Recommended by:
            citydem, randomfacts, OkieLawyer

            If a person makes 1000 a month and has 500 in debt service, it's half their income. If deflation occurs and makes their income drop to 500, they have nothing left and they're toast. If inflation occurs and makes their income rise to 1500, then the 500 in debt becomes a smaller part of their total monthly expenditures. This is how Inflation can help the average person.

            This is also how I explain why I'm against getting rid of the Minimum Wage. With no MW, a company can reduce wages and that can mean you get a loss similar to deflation (which can result in actual deflation in the larger economy).

            Of course, some people want deflation... it makes the Gold Standard more do-able.

            -We need Healthcare Reform... but i'm selfish, I Need Healthcare reform-

            by JPax on Fri Jun 08, 2012 at 11:32:12 AM PDT

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            •  the problem is income isn't rising with inflation (0+ / 0-)

              so in your scenario, you still have 1000 to work with but all your expenses have gone up because of inflation.

              in some cases, many actually, their 1000 has gone down while inflation went up.  not good.

              -You want to change the system, run for office.

              by Deep Texan on Fri Jun 08, 2012 at 12:19:08 PM PDT

              [ Parent ]

            •  Do you have examples (1+ / 0-)
              Recommended by:
              greengemini

              in the last 12 years of where workers have seen their wages jump because of inflation? Inflation is there once one looks pass the BS CPI. How are public unions doing, what's left of them?

              How about retired people who planned to live off of savings. Kind of hard now with the long bond yield at 3.5%. They weren't looking for much. An extra $7G a year to supplement social security on a 100G or so in their IRAs they are too afraid to put in the stock market. Maybe an Extra 4G on the average 63G that are in all IRAs.

              Do you actually think that record Corporate debt wouldn't be paid down by the record cash on hand that they borrowed if interest rates went up? The only companies that would benefit are those with unencumbered free cash and they would definitely like to see interest rates go as would any saver of money.

              If interest rates were at 7% as they were in 2000, Apple alone would earn 10 Billion a year just on their cash hoard alone, allowing them to pay dividends without endangering cash.

              Other than Apple, Cash was damn hard to get in 2009 which is why companies show much cash in 2012. It's amazing how much this is repeated here without mentioning the corresponding debt that has been incurred to raise  cash to pay dividends, not to mention not knowing what percentage of it is off shore.

              Borrowing below 1% (is even better than selling stock) would be damn hard to get again if interest on debt hurt the manufactured earnings we see in the financial sector which has been falsifying financials with impunity since March of 2009.

      •  Political Toast (0+ / 0-)

        Monetarily, that bread is burnt hardened and broken.

    •  We are in deflationary times (9+ / 0-)

      Your argument doesn't fit the reality of today's economy. Inflation is below target, and we could sustain small amounts of additional inflation. Even just allowing inflation to rise to the Fed's existing target would be beneficial.

      It's not the 1980s anymore. We need solutions for this decade. Worrying about problems that existed during Ronald Reagan's presidency isn't going to help us.

      You know who loves deflation the most right now? Banks. With just a tiny bit of inflation, every dollar a bank lends you is worth less by the time you repay them. Allowing inflation to go up just a bit would relieve the cost of debt servicing by consumers.

    •  Good analysis John (0+ / 0-)

      N/T

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