Obama 6(...66)

[5mn_Major]

Re: Obama 6(...66)

Spending isn't just spending. If you just spend without an increase of production (much like we having going on now) then you are just inflating the currency.

If you have $10 in an economy and 10 hamburgers its going to cost you $1/hamburger.

If you double the money in the economy to $20 without making more hamburgers all thats going to happen is an increase in the price of hamburgers to $2.

I know this is going over many of our heads...but I'll take a shot at it up there.

The problem with this logic is that there will be incremental services that will be incurred with spending. When a construction project is initiated, there are a series of services and business deals that are created that would not otherwise have been created. IE that business is incremental and therefore does not increase inflation but may actually help defend against deflation...and indeed, thats why the majority of experts on the subject are of the opinion that at this point, inflation is definitely not a risk. The only risk is of a spook to the markets due to a slight increase of the fed rates off of absolute zero.

Arguing that spending today causes deficit spending that will need to be accounted for in the future is valid...but that it causes a risk of inflation to today's economy really no.

 

[Bob Gray]

Re: Obama 6(...66)

I know this is going over many of our heads...but I'll take a shot at it up there.

The problem with this logic is that there will be incremental services that will be incurred with spending. When a construction project is initiated, there are a series of services and business deals that are created that would not otherwise have been created. IE that business is incremental and therefore does not increase inflation but may actually help defend against deflation...and indeed, thats why the majority of experts on the subject are of the opinion that at this point, inflation is definitely not a risk. The only risk is of a spook to the markets due to a slight increase of the fed rates off of absolute zero.

Arguing that spending today causes deficit spending that will need to be accounted for in the future is valid...but that it causes a risk of inflation to today's economy really no.

The main reason we aren't worried about inflation at the moment is that the economy is so weak and there's a lot of slack in it. If/when things start to turn around significantly, inflation will be a major concern, and lot of experts have said so. You read discussions of the Federal Reserve actions over the last year or two, and there's a lot of talk about how they are balancing providing cheap money via a low prime, but that they are keeping a watchful eye out for inflation. It's basic economics that if a government is printing mnoey and pumping it into an economy whilly-nilly, as the feds are, that inflation is a very real concern, if not now, then possibly soon. Lots of other things impact whether inflation becames a major problem, but to argue that it isn't a possible major concern is in error.

 

[ScottM]

Re: Obama 6(...66)

It's basic economics that if a government is printing mnoey and pumping it into an economy whilly-nilly, as the feds are, that inflation is a very real concern, if not now, then possibly soon. Lots of other things impact whether inflation becames a major problem, but to argue that it isn't a possible major concern is in error.

Which explains why gold is trading at over $1040/oz today. At some point, inflation, or worse, and the required increases in interest rates, could become a very real problem.

 

[dropthatpuck]

Re: Obama 6(...66)

Which explains why gold is trading at over $1040/oz today. At some point, inflation, or worse, and the required increases in interest rates, could become a very real problem.

....and China is stockpiling copper and other metals and investing in various mining and raw material operations.

We're about to be told our paper isn't good anymore. Then we'll have lots of it, but it won't be worth anything. It'll be inflation, plus worse.

 

[ScoobyDoo]

Re: Obama 6(...66)

....and China is stockpiling copper and other metals and investing in various mining and raw material operations.

We're about to be told our paper isn't good anymore. Then we'll have lots of it, but it won't be worth anything. It'll be inflation, plus worse.

Wow. The World is about to end then. Things really haven't changed much since last year except the guy in office, but now it's going to happen.

Good call.

 

[Kepler]

Re: Obama 6(...66)

It's basic economics that if a government is printing mnoey and pumping it into an economy whilly-nilly, as the feds are, that inflation is a very real concern, if not now, then possibly soon. Lots of other things impact whether inflation becames a major problem, but to argue that it isn't a possible major concern is in error.

I'd also think inflation could become a problem whenever you are recovering from a recession, since economic activity has "re-normalized" at the lower pace, and then suddenly you are accelerating.

Has the US government ever simply burned currency to diminish the money supply and revalue the remaining currency? Thinking about it, I guess you can't do that unless you have a surplus, since otherwise you'd be printing money to buy the money you're taking out of circulation. I suppose another way would be to sell assets and burn the proceeds. In any case, there has to be better ways (like reducing debt in the first place).

 

[gregg729]

Re: Obama 6(...66)

And as I said, allocating spending toward certain areas can have a more effective long term benefit to the country. But in the short term, any spending is positive, no matter who's doing it, or what it's being spent on. Those contractors can then buy a week's groceries, get their car fixed, buy a new ATV, whatever. That money in turn flows to the checkout girl at the register, and the mechanic, who do the same. So can the nurse at the medical clinic that's able to stay open for another six months, or at the employees at the poverty counseling center, or extending unemployment benefits.

Yeah, let's build another strip mall, so that one can sit vacant like all the rest of them that have been closing down in this economy. Brilliant. Doesn't do a damm bit of good long term if you don't have tenants for it. Right now, there's about a thousand empty Circuit City buildings across this country, and I don't see any companies snapping those up to put businesses into.

And I think there would have been more money advocated for infrastructure, but the Repubs had to have their tax cuts. Likewise for all those employees that state government has laid off to balance their budget, since they didn't get as much direct aid in favor of those same tax cuts. What immediate stimulus does a tax cut have?

You'd be a real whiz on Wall Street. "Yeah sure, I can put your money into a stock that's getting a 20% ROI, but I just decided to help out my uncle's turtle tunnel IPO and buy some of his stock with your money even though it's only getting a 1% ROI. Suck it up, it's for a good cause, and any ROI greater than zero is a good thing, even when you're passing up better opportunities."

A shopping center was the first, textbook example that came to mind. But it does the job to highlight the point I was making. The stimulus bill has hundreds if not thousands of earmarks for irresponsible liberal pet projects like turtle tunnels, money that should have been spent on things that would enhance commerce. You have completely either missed or ignored the point I was making.

Here's another example that fits the marching orders Obama gave you. However much money the stimulus gave to that wonderful group, ACORN? That is an example of getting more bang for the buck than building turtle tunnels. You see, ACORN can now use that extra money to help more people build their own under-18 brothels, increasing enterprise and commerce in their neighborhoods - positive feedback. Get it now? It's all about commerce baby!

Oh, and BTW, my compliments on your "some of my best friends are black" comment earlier. That's nice.

I'm quite sure your misquote of what I said was deliberate. I just wanted you to know where you stand vis a vis me next time you wanna get down and dirty with the mud slinging.

Still 30% above the previous office holder's.

Get back to me when he's sitting in the low 20's, and then try to tell me this says he's got no right to be leading the country where he wants it to go.

This post is so dumb that I am actually sacrificing my dignity by responding to it.

Anyway, you're barking up the wrong tree here, buddy. It's nice to see that as long as that clown's approval is equal to or above the approval ratings of a poor former President that you're obsessed about, you'll remain in unquestioning obedience to his marching orders.

Such high standards of excellence in leadership liberals have!

 

[Kepler]

Re: Obama 6(...66)

Did anyone else have to Google "turtle tunnel"? I miss a lot of really vital issues not listening to talk radio.

 

[5mn_Major]

Re: Obama 6(...66)

The main reason we aren't worried about inflation at the moment is that the economy is so weak and there's a lot of slack in it. If/when things start to turn around significantly, inflation will be a major concern, and lot of experts have said so. You read discussions of the Federal Reserve actions over the last year or two, and there's a lot of talk about how they are balancing providing cheap money via a low prime, but that they are keeping a watchful eye out for inflation.

Unemployment is reaching levels not seen in what nearly 30 years...and still increasing. A lack of spending from the consumer and business is vastly much greater right now than fear of inflation...which could be finally be a concern going into 2011.

From what I see the point made was that spending will likely lead to inflation and that's about it...the actual situation is that the picture is not nearly that simple.

 

[Bob Gray]

Re: Obama 6(...66)

Unemployment is reaching levels not seen in what nearly 30 years...and still increasing. A lack of spending from the consumer and business is vastly much greater right now than fear of inflation...which could be finally be a concern going into 2011.

From what I see the point made was that spending will likely lead to inflation and that's about it...the actual situation is that the picture is not nearly that simple.

That second sentence doesn't even make sense grammatically.

So, because the situation is more complicated than just that oodles of government spending money it doesn't have is inflationary, that somehow that invalidates that economic principal?

I often disagree with you, but in this case I'm struggling to even understand what you are trying to say. Are you simply saying that you don't believe rampant government spending of money it doesn't have presents little or no inflationary concern? If so, you are simply wrong.

 

[Bob Gray]

Re: Obama 6(...66)

I'd also think inflation could become a problem whenever you are recovering from a recession, since economic activity has "re-normalized" at the lower pace, and then suddenly you are accelerating.

Has the US government ever simply burned currency to diminish the money supply and revalue the remaining currency? Thinking about it, I guess you can't do that unless you have a surplus, since otherwise you'd be printing money to buy the money you're taking out of circulation. I suppose another way would be to sell assets and burn the proceeds. In any case, there has to be better ways (like reducing debt in the first place).

I'm not aware that we've ever done that. Since we've been in debt for a long time, probably the opportunity hasn't presented itself, given the lack of a surplus, as you note. And even if such an opportunity ever existed, the politicians would certain spend the money instead of taking it out of circulation.

And I agree with your first point that when the U.S. is recovering, that the slack in the economy would be disappearing, presenting a much greater opportunity for inflation. One of the reasons for lower gasoline, natural gas, and propane prices is that demand has been relatively weak, and even a relatively small drop in demand can impact prices significantly. If the economy gets humming again, look for the prices of those commodities to push upward as the slack supply disappears.

 

[rufus]

Re: Obama 6(...66)

Not that any liberal ever buys this argument when applied to military spending... Well, okay - maybe Zell Miller.

I buy it. Don't always like it how military spending is always good, and off limits from being cut, but it was the only thing that kept the economy chit from hitting the fan much sooner in George Bush's term. That, and Wall Street playing ponzi is what accounted for whatever economic growth we experienced in those years.

 

[rufus]

Re: Obama 6(...66)

Lots of other things impact whether inflation becames a major problem, but to argue that it isn't a possible major concern is in error.

That's like being on the Titanic and worried that your lifeboat seat is gonna be cold.

We'll deal with that problem if and when it arises. Not really a good time to be worrying about theoreticals and might happens.

 

[rufus]

Re: Obama 6(...66)

I'm quite sure your misquote of what I said was deliberate. I just wanted you to know where you stand vis a vis me next time you wanna get down and dirty with the mud slinging.

Oh, I'm well aware of where you stand. You can't be a racist, cause you've got tons of black friends. That's so nice and open-minded of you. You're a true American icon.

And you're Wall Street analogy is apples and oranges. If you want and need a 1% return within the next six months(economic stimulus) and can't wait twenty years for a 20% annual return, then you go with the 1% return.

I suppose you would be quite happy with no stimulus at all, and we can wallow around in the economic dumps for 3 or 4 years until private industry hits rock bottom and decides to start spending and investing again. What do you suppose the unemployment rate would be then?

 

[Bob Gray]

Re: Obama 6(...66)

That's like being on the Titanic and worried that your lifeboat seat is gonna be cold.

We'll deal with that problem if and when it arises. Not really a good time to be worrying about theoreticals and might happens.

Well, at least you leave no doubt that you don't think inflation is an issue to worry about at all.

In the real world though, once inflation started kicking in in a major way, dealing with it is going to be a lot harder and more painful than warming up a lifeboat seat. But, you never fail to spin an issue to your partisan favor, even if you ignore economic fundamentals to do so. If nothing else, you're consistent.

 

[Bob Gray]

Re: Obama 6(...66)

I suppose you would be quite happy with no stimulus at all, and we can wallow around in the economic dumps for 3 or 4 years until private industry hits rock bottom and decides to start spending and investing again. What do you suppose the unemployment rate would be then?

3-4 years? We're well on our way to that already. How is the stimulus going to stop this? Long term it will create an even more awful overhang on the American economy, as it spurs inflation, undermines the dollar, and saps more and more federal spending to fund deficit interest payments. But, hey, as long as we pump the economy this year, who cares about future generations, eh?

 

[moe24]

Re: Obama 6(...66)

That's like being on the Titanic and worried that your lifeboat seat is gonna be cold.

We'll deal with that problem if and when it arises. Not really a good time to be worrying about theoreticals and might happens.

That is quite possibly the worst analogy you could have possibly used. What a frail grasp of reality you have.

And this isn't just theoretical, but a case of our government not learning from the mistakes of the past.

 

[rufus]

Re: Obama 6(...66)

Well, at least you leave no doubt that you don't think inflation is an issue to worry about at all.

In the real world though, once inflation started kicking in in a major way, dealing with it is going to be a lot harder and more painful than warming up a lifeboat seat.

No, I just don't know if it will or won't. And neither do you.

Sure, economic models would indicate that it would be. But 'in the real world' that you're so fond of, economic models don't always accurately predict what will happen. And there's plenty of things the Fed and others can do to stem the growth of inflation before it becomes the serious problem you're wetting your pants over.

 

[rufus]

Re: Obama 6(...66)

That is quite possibly the worst analogy you could have possibly used. What a frail grasp of reality you have.

And this isn't just theoretical, but a case of our government not learning from the mistakes of the past.

Maybe so, but the issue of economic stimulus is that you want to do things that will inject money into the system and encourage growth now, not six months, a year, or two years from now. By then, it's too late, and you might as well have not done anything anyway. And you deal with the problem you're facing now, and not worry about things that may or may not happen as a result.

Since you're the economic genius, what else could the government have done? Lower interest rates? they were already practically zero. Just tell everyone to suck it up and deal with the pain? You say 10% unemployment is too high, would you rather see 12%? Easy to sit back now and play Monday morning quarterback.

Yeah, mistakes of the past. Government spending and stimulus did nothing to help get up out of the Great Depression.

 

[Bob Gray]

Re: Obama 6(...66)

No, I just don't know if it will or won't. And neither do you.

Sure, economic models would indicate that it would be. But 'in the real world' that you're so fond of, economic models don't always accurately predict what will happen. And there's plenty of things the Fed and others can do to stem the growth of inflation before it becomes the serious problem you're wetting your pants over.

Just because we don't know how much inflation there will be, doesn't mean a logical person would endorse your "stick your head in the sand" approach to the economy.