PDA

View Full Version : Which is a bigger concern: recession or inflation?


cdcox
03-18-2008, 10:21 PM
Considering your personal situation, which concerns you more?

pikesome
03-18-2008, 10:21 PM
Considering your personal situation, which concerns you more?

Hillary Clinton.

xbarretx
03-18-2008, 10:24 PM
Considering your personal situation, which concerns you more?

inflation

even if you have a job but cant afford to put food on the table whats the point?

pikesome
03-18-2008, 10:26 PM
Seriously, inflation is always worse IMHO.

cdcox
03-18-2008, 10:29 PM
inflation

even if you have a job but cant afford to put food on the table whats the point?

I have to agree. I have very little chance of losing my job and very little chance of getting raises that will even come close to keeping up with rising energy/food costs.

xbarretx
03-18-2008, 10:31 PM
I have to agree. I have very little chance of losing my job and very little chance of getting raises that will even come close to keeping up with rising energy/food costs.

which is exactily the reason i used my analogy. :huh: raise...WTF is a raise?? havent seen a "real" one of those in 7 years.....all the while the FED says..lets shrink the greenback into worhtless ness. cheap money yey.....when no one wants to barrow and if they do no one wants to lend it b/c all the negative emotion. :shake:

REP btw CD

Logical
03-18-2008, 10:33 PM
We are going to end up with both.

xbarretx
03-18-2008, 10:37 PM
We are going to end up with both.

lets all have a "STAG-flation" party

http://www.marketoracle.co.uk/images/MAM559-bernake.jpg

Bens bringing the beer in his whitehouse shaped cooler! :clap:

FD
03-19-2008, 10:01 AM
In the long run inflation is the larger concern, because it can be controlled whereas there will always be recessions. In the short term view of the current economic situation I agree with the Fed's actions which clearly view the financial crisis and recession risks to outweigh those of inflation. Because so much of the current inflation is coming through in commodities which have extremely high demand, a prolonged downturn could be expected to curtail rises in the price level without Fed action, especially because the wage-price spiral is not a component of the current inflation as reflected in core numbers.

The drastic rate-cutting being undertaken now will come through in the middle-term interest rates, but nobody is seriously worried that this will spark a runaway boom. The risks are entirely on the other side. Also, by managing a one-time increase in the price level the bank insolvency problem is lessened without additional risk undertaken and nominal house price values wont have to fall as far to hit bottom.

In any other context, managing inflation is the priority, but in this environment the recession takes precedence.

xbarretx
03-19-2008, 10:16 AM
In any other context, managing inflation is the priority, but in this environment the recession takes precedence.

i agree for the most part but were not having cases of regular inflation. Stagflation caused by a weakening dollar and speculation is whatís dunking the US econ in the recession pool. Donít you think that the constant frivolous attempts by the FED to increase liquidity are the wrong course of action considering the problem is an emotional one? i keep seeing them tossing billions from the Bernake helicopter into the market and i keep thinking "wow the economy sucks...i wonder why the FED cares more about a recession instead of STAGFLATION?" the constant injections into the economy are bad b/c #1 people are scared #2 no one wants to barrow given the bad taste in there mouths the last go around (housing market) #3 people donít want to lend b/c they have fears regarding who can repay what (credit crunch)

i find it very funny that prices are continuing to rise at unhealthy rates while GDP stalls or drops and whatís needed in all of this is confidence but the lenders of credit who can offer that confidence by realistic interest rates continue to raise them....I.E. 20%+ CC rates.....8 - 10% + student loan rates....

Toss the oil "bubble" thatís no longer fueled by market fundamentals and were continuing to be lead into much harder times by the fed with a carrot covered in worthless greenbacks.

FD
03-19-2008, 10:29 AM
i agree for the most part but were not having cases of regular inflation. Stagflation caused by a weakening dollar and speculation is whatís dunking the US econ in the recession pool. Donít you think that the constant frivolous attempts by the FED to increase liquidity are the wrong course of action considering the problem is an emotional one? i keep seeing them tossing billions from the Bernake helicopter into the market and i keep thinking "wow the economy sucks...i wonder why the FED cares more about a recession instead of STAGFLATION?" the constant injections into the economy are bad b/c #1 people are scared #2 no one wants to barrow given the bad taste in there mouths the last go around (housing market) #3 people donít want to lend b/c they have fears regarding who can repay what (credit crunch)

i find it very funny that prices are continuing to rise at unhealthy rates while GDP stalls or drops and whatís needed in all of this is confidence but the lenders of credit who can offer that confidence by realistic interest rates continue to raise them....I.E. 20%+ CC rates.....8 - 10% + student loan rates....

Toss the oil "bubble" thatís no longer fueled by market fundamentals and were continuing to be lead into much harder times by the fed with a carrot covered in worthless greenbacks.

I think that the problem you identify in #3 is the main one, and its largely a liquidity problem. Banks are concerned that they will suffer the fate Bear Stearns did, simply running out of the cash on hand they need to conduct their necessary trades. Everyone is worried about who might go down and isn't lending because they want to hoard capital. This is precisely what a liquidity problem is, and I approve of the steps the Fed has undertaken.

Like I said, medium term price pressures are not really something to worry about given the effect the expected downturn should have on global commodity demand, and the likelihood of a runaway boom from this monetary stimulus is next to none.

xbarretx
03-19-2008, 10:43 AM
I think that the problem you identify in #3 is the main one, and its largely a liquidity problem. Banks are concerned that they will suffer the fate Bear Stearns did, simply running out of the cash on hand they need to conduct their necessary trades. Everyone is worried about who might go down and isn't lending because they want to hoard capital. This is precisely what a liquidity problem is, and I approve of the steps the Fed has undertaken.

Like I said, medium term price pressures are not really something to worry about given the effect the expected downturn should have on global commodity demand, and the likelihood of a runaway boom from this monetary stimulus is next to none.

i hear ya, thanks

p.s. so what happens when gas becomes 5 bucks a gallon and were still stuck in stagflation? (thats a serious question and no im not being a smart @$$ :) )

BucEyedPea
03-19-2008, 03:28 PM
Inflation