Why no inflation?

Discussion in 'Economics' started by Britheron, Jan 13, 2011.

  1. I hear high inflation in emerging markets and china. But how come I don't see any inflation in the United States. Yes, food and gas prices are higher than a year ago, but I don't see any riots or police patrols occuring in the states unlike other countries., shouldn't we at least see +4% inflation rate?
  2. 1) The lack of bank lending is "restraining" inflation for the time being. :cool:
    2) Excessive taxation is more likely to bring on the riots. :(
  3. The "official" US inflation rate is tied to the concept of a "wage and price spiral"... nothing else matters.

    That's why "inflation is not a problem in the US". Food and energy prices can escalate 40%, but, "that's not inflation"....

    Considering the pool of excess labor in the US + competition vs. Asian and Latin manufacturers... the "official" measure of inflation in the US has a HUGE buffer. That is, "we'll be PAYING OUT THE ASS FOR EVERYTHING, but the official inflation rate will be low".

    America, what a country!
  4. so.. as long as banks restrain from lending, there is no threat of inflation?
  5. 2.) Isn't far off then.
  6. The official inflation rate must be low so that the cost of living adjustments on pensions can be paid for. They need the real inflation rate to be substantially higher than the reported rate so that the stealth default can proceed as scheduled.
  7. Why would America plan to destroy its economy?
  8. LeeD


  9. yes, banks expand the money supply when they extend loans.Every time a loan is made, the principle of that loan is new money.

    Also, when loans are paid or defaulted. the money supply contracts. by that amount.

    Regardless what you here on tv from junk economist. the vast majority of our money is created by banks as loans.

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  10. Stagnant incomes. Spend more money on A, means spend less money on B. Inflation on essentials, deflation on extras.
    #10     Jan 16, 2011