You have to take core into it cause we have to pay for core inflation...nobody is giving you free food or gas correct?...the real inflation rate is twice as high as the govt is saying....why did a recent poll say that 95% of people polled say that they are paying more for food now then they did 1-2 yrs ago...why is my gas still 4.00 a gallon despite oil going down into 80's?...its because it doesnt matter much what crude oil does cause the gas station owners wont lower the gas price unless oil has been crushed for many months cause every nickel adds to their bottomline(I know several gas station owners).
People are paying more for bread and gas than they ever have so how is inflation not high?...esp since our wages havent gone up over the past decade...common sense....dont fall for the govt numbers game.
If you slowly create money and credit, it isnt necessarily bad I will agree, but we have increased our debt by 3T over the past 2-3 yrs!...money supply increase plus added velocity is what is important(true M3)...what epople dont understand is this, when the bond mkt wakes up they wake up with a fury and inflation can increase very rapidly very quickly...like all bubbles inclduing the stock mkt in late 99' and eventually gold, things can go up and DOWN quickly depending on social mood and etc...when things let go they let go hard and fast...it is a vicious cycle.
If the bond vigilantes demand more yield cause our debt keeps going up and up...its a catch 22 situation cause the amount of money to service our debt will increase rapidly as interest rates go up and also in an environment where baby boomers will be using more medicare and SS, the debt and inflation can spiral out of control quickly.
Originally Posted by pman10
Agree with you on everything but the last part. The inflation has not really been borne out, as yet. Our inflation has been staggeringly low over the last 3 years. And no, I refuse to factor in non-core items like oil. As you can see, oil has plummeted in the last few weeks, due to dollar appreciation and decreases in supply risks, among other things. We've already discussed this in past threads, but I've explained to you already why money supply expansion does not necessarily equal inflation.
However, it does concern me that we're expanding the money supply. Why? Because who knows when we hit that tipping point, and inflation takes off? The Fed is really treading on new territory, by expanding the money supply so aggressively. In the past, it wasn't such a large issue; but if this trend continues, and it works and the economy starts to grow, we COULD theoretically end up in a hyperinflationary situation, which would stifle all growth.