Fed Officials Say Stimulus Needed if U.S. Economy Stays Weak

[Elmore Furth]

Recently the Fed has been ignorning inflation to stave off deflation and the economy going in reverse.

Some feel that the rapid expansion of the money supply over the past 2 years and especially recently may cause inflation including rising commodity prices.

By REUTERS
Published: October 1, 2010

NEW YORK (Reuters) - In the clearest calls yet by Federal Reserve officials to pump more cash into the economy, two Fed policymakers said on Friday that more action would likely be needed unless the outlook improves.

William Dudley, president of the Federal Reserve Bank of New York, described current conditions of high unemployment and low inflation as "unacceptable" while Chicago Federal Reserve Bank President Charles Evans said more easing was "desirable."

After a policy meeting last week, the central bank said it was prepared to do more to boost the recovery and lift inflation if necessary.

It has already cut interest rates to near zero and pumped $1.7 trillion into the financial system through purchases of longer-term Treasury securities and mortgage-related debt.




Fed Officials Say Stimulus Needed if U.S. Stays Weak

There are some who see inflation coming if the Fed prints more money.

Are you ready for rampant inflation? Well, unfortunately it looks like it might be headed our way. The U.S. monetary base has absolutely exploded over the last couple of years, and all that money is starting to filter through into the hands of consumers. Commodity prices are absolutely skyrocketing, and it is inevitable that those price increases will show up in our stores at some point soon.

The U.S. dollar has already been slipping substantially, and now there is every indication that the Fed is hungry to start printing even more money. All of these things are going to cause a rise in inflation. Not that we aren't already seeing inflation in many sectors of the economy. Airline fares for the holiday season are up 20 to 30 percent above last year's rates. Double-digit increases in health insurance premiums are being reported from coast to coast. The price of food has been quietly sneaking up even at places like Wal-Mart. Meanwhile the U.S. government insists that the rate of inflation is close to zero.

Anyone who actually believes the government inflation numbers is living in a fantasy world. The U.S. government has been openly manipulating official inflation numbers for several decades now. But we really haven't seen anything yet. As increasingly larger amounts of paper money are dumped into the economy, we are eventually going to see the worst inflation in American history. The only real question is how far down the road are we going to get before it happens.

Up to this point this dramatic expansion of the U.S. monetary base has not caused that much inflation because U.S. government borrowing has soaked most of it up and U.S. banks have been hoarding cash and have been building up their reserves.

However, this situation will not last forever. Eventually all this cash will make its way through the food chain and into the hands of U.S. consumers.


Rampant Inflation In 2011? The Monetary Base Is Exploding, Commodity Prices Are Skyrocketing And The Fed Wants To Print Lots More Money >

[BzaDem]

1. As for your second post, the idea that we should be worrying about inflation right now is lunacy

Inflation is at record low levels, because everyone is hoarding their money. We need inflation to go higher (say, to 2%, the official target). Rising price levels in our 10% unemployment economy means higher demand, which would reduce unemployment.

[Elmore Furth]

2. Inflation is a hidden tax.

It decreases the value of money people now hold. So if you have a lot of money, you want inflation to be low. If you don't have a lot of money, it doesn't bother you if the fed causes inflation to stimulate the economy.

INFLATION, THE HIDDEN TAX

Ironically, some feel that inflation hits the middle classes more than the wealthy since they have more of their assets in cash and are more likely to see inflated prices before they see inflated wages.

Inflation tax

[RC]

3. Want to stimulate the economy?

Figure out a way to get our Living Wage Jobs back into this country! Get the money back into the hands of the people that spend it!
Stop giving money to the people that already have most of it.

What is so hard about that?