What is Inflation?

[zyzzyva57]

Do we have the type of Inflation the FED is fighting?

"Wal-Mart" has no choice but to raise prices with energy prices so high, so what the FED is doing, it would seem to me, hurt the economy and accomplish nothing, because B.R.I.C. (the resources sponge from hell) is not going away

How can what the FED is doing force "Wal-Mart" to lower prices?

I am confused

Am I just putting what Master Cramer is saying about why the stock market is dying, but in the terms of "Inflation for Dummies"?

[Dreamer]

I think we are having "stagflation" right now, slower growth along with rising prices! Not good... The Fed was raising rates to lower growth, but it seems that the falling dollar and rising commodity prices is already taking care of lowering our growth rate in the US. Since commodities are priced in dollars, a rising dollar would lower commodity prices. I think the Fed needs to work on bolstering the price of the greenback.

Don't think I really answered your question, but this is my take on what is happening now. We obviously need to do something about our oil consumption as BRIC and the rest of the world increases their consumption. Various alternative energy sources are now viable because of higher prices, but it's going to take some time to ramp up production to the point where it can make a difference.

Right now, those high prices are hurting the average joe. The governor of my state, Massachusetts (who has his eye on the Presidency) is not willing to lower state taxes on gasoline, saying that that would only increase consumption, which he does not think is a good idea! Yeah, we all have to get rid of our SUV's (suddenly useless vehicles) and move to hybrids, but that is going to take some time. Why was the government subsidising the sale of these vehicles in the first place? That was extremely shortsighted! Probably to make Detroit more competitive as we never learned our lesson from the 70's when gas was rationed and everyone was buying Toyotas!

Enough of my rant!

[zyzzyva57]

I have what is best an ineffable feeling, because something is bad wrong in Amnesia. This November ALL politicians best have another day job lined up, and I would not advise that job being a lobbyist. I cannot understand what the FED is doing. I applaud them when it fights the Jimmy Carter type inflation, but this inflation is not like that. What is a retailer/wholeseller/manufacturer to do, but raise prices?! The problem with dropping gas taxes is it would bring gas prices back to around $2 and Amnesians will easily forget high gas prices. Unfortunately, for way too many, the core issue other than energy costs is "American Idol." Look at the illegal allien issue: the beloved social security system is about to take an almost unimaginable hit. If the FED is wanting to kill the economy, then why not do it in one fell hit and raise the interest rate to 6.5% in June--If that is so good, why not just go for 10%?! There is something else: if I was a politician, I would want Amnesia to win period, because I will win and all elections are local in the end. In sum: it is freightening what is happening and you feel the politicians are not listening.

[sportsmadness80]

We are in a time where public panic is the hot ticket for news media. Our government seems to lathargic with any solutions to anything. I know for sure the Republican governor Murkowski (former senator) is an idiot and a liar. He is lucky the people of this state have not torched his house. One thing is for sure the damn ludicrous bridge Senator Stevens wants will never happen. Its a joke just like what you guys been talking about concerning inflation. The government has no damn clue what to do about it. Why because the dinosaur fossil fuel money thieving oil dependency. I dont give a damn what party wants to move forward, lets just get some damn common sense here. Lets stop displacing the trouble at home with the mirage that another country needs our military for protection. Lets get cookin with technology that gives americans value. Yes value not some damn gas eating dinosaur.

[zyzzyva57]

I have never seen so many politicians of ALL stripes simply not get it. Can the voters tear themselves from "American Idol"? The politicians are counting big they cannot.

[sportsmadness80]

Once again I say you posted a good debate on the issue .... keep them coming your on a roll.

[zyzzyva57]

Thank you

Donald Trump, this morning on MSNBC on "Imus" had a good term for the present inflation--Automatic Inflation, that is, if energy prices go up, you get inflation, dah...

On CNBC this morning someone pointed out another dah that apparently for the big shots is not a dahhhh: the time lag. As the F.E.D. raise rates (as when it lowers them) there is a time lag before it shows up at Box Store, USA. Logic would dictate in a sane world the F.E.D. go neutral and see how its present rates are work through the system. With the hurricane season coming in June, the present way the F.E.D. views interest rates, this time next year the rates will be 10%+!

Gawd help us all at the first tropical depression off the coast of West Africa! Energy prices will go through the roof and ditto the interest rates...

[optimus25]

Inflation certainly has become a "conundrum"

[zyzzyva57]

As I see it: energy goes up, costs go up, F.E.D. raises the interest rate, then back to the beginning of this--This just seems like an endless loop or a self-fullfiling prediction...

Positively weird!

What am I missing?!

[optimus25]

I wondered the same thing. Energy costs rising isn't something the Fed can stop. Global demand is way too strong. With emerging markets building their infrastructure, increasing wealth, and buying more cars, Its difficult for me to see energy going down anytime soon. Technically, energy has been bullish the past three years so a correction in commodities is not unwarranted...nothin wrong with profit taking. My question is: How does the fed stop global energy demand?

I totally agree with the Fed though. Our economy has been propped up long enough from the "wealth affect" of astronomical real estate prices. Real estate bulls are gonna be in the "house of pain". If and when housing does drop because of the rising rates, will the economy still hold up.