There is no doubt that a lot of these discretionary consumer items such as you mention like christmas gifts are much cheaper to obtain today than they were before the recession. However this doesn't illustrate an accurate picture of the inflation rate despite the FED wanting you to believe that we are in a low inflation environment. As others have posted the CPI number deliberately leaves out items that are considered (volatile) such as food prices and fuel prices. These are some of the biggest every day reoccurring items for consumers that are NOT DISCRETIONARY. Personally my cost of living goes up year after year. Gas up here in Canada is now never any lower than a buck/litre for regular which converted for us gallons would be roughly 2.64 per gallon. My municipal property tax bill goes up a minimum of 2.5% per year. I can support your argument that food prices are not going up because food suppliers seem to always have sales on and keep discounting items for weekly flyers. I havn't noticed much price inflation in my grocery bills the last few years. However another area where I feel price inflation is hitting people hard is in various specialized labor costs. For example various trades people that homeowners need to call on for home repairs, auto mechanics, etc. This goes back to your statement that cars are cheaper and free to finance (which isn't true, financing anything has a cost). I can accept that cars are actually cheaper today than they were before the recession, however the maintenance costs appear to go higher and higher all the time. Everything from vehicle registration, gas, mechanics, parking, insurance, all has gone up for me year after year. It NEVER gets cheaper only more expensive. I have to guess that in the US some of the biggest inflationary costs down the road will be healthcare insurance premiums since the baby boomers will soon all be sick and in hospitals, after that there won't be a big fat squishy money base for the insurace parasites to keep tapping for those premiums and everyone who is younger will already be broke or won't be able to afford the higher premiums due to the lack of healthy people to pay for them. Healthcare is socialist and evil anyway so hopefully the insurance parasites will be able to suck what's left of America's middle class life force before the patient can be thrown off to the side of the road and left for the government to clean up.
That's precisely what it was for...to encourage inflation. Any other speculation about what it was about is like watching a guy open up an umbrella in the rain....he tells you he did it to keep himself dry. But all these conspiracy theorists claim 'he opened that umbrella to signal to the mother ship that it's time to prepare for war'. Maybe he is signaling to the mother ship but I'm more inclined to accept his explanation. We can't deny that is was raining, and he didn't create the rain.
what is the other alternative? Euro- u ve already seen the mess they are in pound- is that even an option? Yuan- that's tied to us$ gold- trades in us$ just another way of getting yr $$ barter- for what? Yen- same mess as us US still is the biggest open economy and whatever you wanna say no one is going to trust commie Chinese.
Nonsense. If I could buy and sell yuan freely, I would convert much of my currency holdings into it. As would many, many others.
I think you got that backward. The Federal Reserve, which circulates money supply, buys government bonds and other financial assets with the money they print. In theory, Bernanke & Co. cannot spend more than what they have in terms of the above listed assets. Or so I'm told. On that basis, the real question should be Can Uncle Sam default on its loans? To that, I say Yes.
1 US Gallon equals 3.78 litres. We are paying over $4 a gallon for gas in Canada. Americans pay less than us, for our gasoline, want to know how its gets even better, Imperial Oil is 70% owned by Exxon, so 70 cents of every dollar profit Imperial makes selling our gas to us goes to the good ole US.
I keep seeing people refer to the CPI to determine inflation/deflation. I don't know why anyone would use the CPI as gospel. It has been changed so many times over the last few decades that it no longer measures inflation, but rather the "adjusted cost of living". There is a HUGE difference between measuring inflation and the cost of living. Unfortunately the Fed would have us believe they are the same. Here is a good essay on CPI and other government data. http://marketpreview.blogspot.com/2008/01/governments-modest-proposal.html I believe too many investors and talking heads look at the market going up and believe that translates to a robust recovery. The market and domestic economic conditions can be devoid of any relation. Regardless of deflation/inflation the U.S. government has a bigger problem, that is funding the current budget deficit and paying down interest on the current debt. QE is "fixing" the treasury auction by setting "price" and acting as the "clean up hitter" at price. The government can not afford the current budget deficit and debt (hence the debate on raising the debt ceiling). The Fed HAS to buy Treasuries, because if we relied strictly on the open market, the rates would increase as foreign central bank parcipants would DEMAND higher rates on holding "devalue" risk. It is NOT Default risk we should be worried about, it is DEVALUE risk. Certainly the Fed will not go bankrupt, they can just print more. The question is what does that do for the dollar. We incorrectly judge the credit risk of treasuries based on default risk. Hence the Fed can print money to avoid default the paper gets AAA rated. What they should be measuring is devalue risk. Based on devalue risk, our treasuries are close to junk status is we are to measure the inflationary value against a broad commodity basket (we can't measure against another currency since they are FIAT currencies as well). China, Russia, and Brazil voiced and saber rattled for new reserve currencies. They also put their money where their mouth is and started buying long-term IMF and other "risk free" debt instruments. If you look at the rolls in treasuries, China and others are investing less in long-term paper and rolling down to short-term paper. They obviously do NOT want to hold the devalue risk, they have said as much and their actions reflect as much. Think about it. We are asking (begging) China to un-peg their currency. We ALL know what that means - the YUAN would increase against the dollar (some suspect between 15-40%). They have already allowed their currency to increase in value (but in their controlled way). The math is easy, holding long-term treasuries at very low rates, while full-well knowing your currency is going to appreciate against the dollar, is a loosing and very stupid bet. Hence their calling for a new reserve currency, investing into other debt instruments, and rolling down into short-term paper. China has been doing math long before our founding fathers were a sperm in their father's sack. It is NOT BANKRUPTCY we should be worried about, it is DEVALUATION. China is concerned as others are. The difference - China is doing something about it (which also includes unloading U.S. dollars into hard assets and commodities as fast as they can - to a level of hording). As Voltaire said: "Paper money eventually returns to its intrinsic value --- zero." http://marketpreview.blogspot.com/2008/01/paper-money.html No nation in the history of civilization has devalued themselves to prosperity. Inflation comes in many forms, price inflation, monetary inflation, wage inflation, etc. In all cases you lose buying power. The dollar has and will lose buying power. It is a FACT that ALL fiat currencies have inflation built into them, it is inherent to FIAT currencies and the creation of wealth. The greatest trade ever was when the U.S. government said to the people of this country, "We'll keep the gold and you keep the dollars". Hence the never ending decrease in buying power.
It is just a print and pump job. Jam up everyone's balance sheets ..that way we're all "rich" and "liquid" again ....even if its only on paper. ..we gotta get back to break even.. somehow. QE2 is the first double down... just the beginning to keep the trade alive. You think the Fed's gunna puk'em? To Whom? Jus' buy'em..thats the only option, except... there's always: buy more. We dont need no stinkin mark to market .... or margin calls It all a confidence game Next... they'll out law selling. One way market.