and if I am elected God, I will pass the nickel a quarter act and it will stay in place until you elect a congress that will repeal it. But way before that happens, the democrats will complain, "A nickel a quarter is just not enough in these tough economic times when we are living paycheck to paycheck and have to choose between rent and food (even though they are obese and on foodstamps) we need more like a dime. And so it goes. If the Americ some people bitch that energy and food are not considered in inflation stats what about S&P share prices? what about taxes? what about gold?
Jaimine, I'm afraid you've missed the major reason why significant deflation in a society with substantial public and private debt is to be avoided. Deflation raises the real interest rate on debt! (Real Interest rate= nominal interest rate - inflation rate, or alternatively Real Interest rate = nominal interest rate + deflation rate.) Assuming you have some personal debt, which should you prefer, inflation or deflation? A mild amount of deflation as experienced alternately with mild inflation , was not particularly harmful in the U.S. during the 19th century when the country's currency had a relatively stable value and debt levels were lower. Today however even mild deflation is potentially dangerous as it increase the possibility of the country suffering both public and private, as Richard Koo puts it, "debt trauma!"
no kidding, for us it is just a hobby to debate, but if you owe 18 trillion, a couple of basis points means a lot. And everybody knows there will be hell to pay if interest rates were ever to normalize before (or if) we start growing again.
that's why I say the safest least disruptive way to introduce inflation is to start at the bottom with the min wage.
Some would say lighting a fire under a mule is poor animal husbandry, but it can be an effective tool to combat stubborness.
Yes because it looks good from a social aspect. Unfortunately if they're at the same time reducing jobs and hours then it's not costing them a damn thing (while of course continually costing the little guy).
gotcha! Totally agree. So the idea is to live your life in such a way that you never become a "little guy."
I think we need to improve the standard quality of life for the little guy or we forever descend into jungle mentality where those at the top have a ton and those at the bottom have extremely little. The way it's been going has definitely been heading toward the latter. Trickle down is idiotic - it does not work with inherently greedy structures in place. Trickle UP works a lot better - the only problem is the rich are just not as rich. As far as I'm concerned that's not a problem worth caring about. Increase the overall baseline and distribution of income to more people and we'll have more net happiness. On top of that people WILL actually spend money if they have more money. Having an economically enslaved middle class only helps the rich and the renters and as far as I can tell they're not exactly crying into their champagne glasses over the hardships of others. The fed thinks they're doing trickle up via jacked down rates except they're not considering that lowered interest rates only go so far - particularly towards entire classes of people who arent even exposed to te benefit of these low rates. On top of that the exposure they do have via credit cards, etc. doesn't necessarily result in them even seeing these lower rates. People living paycheck to paycheck are not checking the latest mortgage rates not are they out shopping for new cars or student loans. It's very simple: collectively spread more of the money around or you'll kill all the plants in the garden.