Inflation. Has its time finally come?

[gristy]

The government has been spending and will continue to spend billions of dollars that they don't have in Iraq every month. They now must spend billions of dollars that they don't have on the disaster in New Orleans. Our oil production and refining capacity in the U.S. has taken a great hit. Something has to give.

[chalky]

1. The high price of gas alone will bring about inflation.

Transportation of food, clothing & other goods will cost a fortune.
And the retailers will happily pass the non-savings on to you.

[yourout]

2. BIG problems on the Horizon.

I will be shocked if we are not thrown into a recession/depression in the next 6-8 months or sooner.

[speedoo]

3. Don't forget the big increase in fuel & energy costs.

That will be an immediate hit on prices.

Greenspan's legacy will be the huge deficit he helped the Coward create, not the "victory over inflation" that proved to be temporary.

[neverforget]

4. I'm sure bush will handle this situation by cutting taxes for the wealthy

and cutting programs for the poor. It's how he operates.:mad: :argh: :grr: :banghead:

[gristy]

7. He most certainly will not and he can not.

The time where that was politically possible is long, long gone. But he may very well choose to not raise taxes for the time being. And inflation will be the result. I think the only question is what degree.

[linazelle]

5. You're joking right? Inflation has BEEN here. It's only going to

get ridiculously worse.

[GoddessOfGuinness]

6. I don't know, but

I'm buying groceries cheap this week and planning to freeze enough to get by for awhile.

[lumberjack_jeff]

8. Short term inflation - yes.

However the longer term is less clear. The value of real estate (especially the exurbs) is fueled (no pun intended) by the affordability of a long commute. If the 1 1/2 hour commute costs $400 now, but goes up to $700 it makes the mc mansion in the country less attractive.

Wages are dropping, (and health care is taking a bigger bite of what remains) so when real estate stops inflating, consumption will stop too. Inflation can't occur in a scenario in which no one but the idle rich can afford to buy stuff.

[the_outsider]

10. I agree - medium to long-term, we're looking at a deflation/recession

High oil prices will bring the demand down and will cause deflation of asset prices. Other prices won't go up as much as the Chinese exporters would take a hit on their margins rather than lose their export momentum. With outsourcing of service jobs and export of manufacturing base, no way jobs and wages can rise enough to sustain inflation. There is not much room for AG to bring rates down (in real-terms, it's still quite close to 0) and "stimulate" economy artificially either. A recession seems more and more likely.

[kenny blankenship]

9. There will be a strong pressure on the Fed to lower rates to zero again

which would pump up the housing bubble more just when Greenspan is trying to let the air out slowly.

[The_Casual_Observer]

11. Housing too?

Education?

Food?


Transportation?


Oh my god we are doomed!