The Fed is looking to drive us further into stagflation

[MadHound]

As if QE 1 and 2 weren't enough, it looks as though the Fed has another plan out there to print more money in order to buy more bonds, Operation Twist.
<http://www.npr.org/blogs/money/2011/09/21/140643696/operation-twist-explained-in-4-easy-steps?ft=1&f=3>

The problem with this plan is the fact that interest rates are at record lows already, and reducing them to such levels has done nothing to stimulate the economy. But printing all that money in order to purchase these bonds has driven up inflation, and Operation Twist will drive it up even further.

This coming to fly in the face of the sad economic reality for most Americans, that we can't afford more inflation. If you are unemployed or underemployed, you've probably watched as your income level has dropped. In fact the median household income for all Americans has dropped over the past couple of years. But now we're going to have to pay even more for goods that we need.

This is insanity, and the only people it truly benefits are the banks and the rich, who don't need help. For the rest of us, it is going to be another burden, one that could break our backs.

Bernanke needs to go.

[L0oniX]

1. The only solution is to tax the hell out of out sourcing and give tax breaks to those that dont.

Abandon trade agreements that take away our jobs.

[MadHound]

2. I agree,

And a true, WPA style job creation program would go a long way towards helping as well. But that's not going to happen either.

[JDPriestly]

9. Right.

Obama has yet to show the evidence that trade agreements actually increase employment in the US. Frankly, I don't think that kind of evidence exists.

We need to go back to tariffs.

[pampango]

21. Our trade balance is better with FTA countries than with the rest of the world.

What kind of evidence are you looking for?

Should we go back to the high republican tariffs of the 1920's (Emergency Tariff of 1921, Fordney-McCumber Tariff Act of 1922, and Smoot-Hawley Tariff Act of 1930)?

Or should we continue in the tradition of Democratic presidents like Woodrow Wilson, FDR and Truman with their efforts to lower tariffs (Underwood Tariff Act of 1913, Reciprocal Tariff Act of 1934 and General Agreement on Tariffs and Trade in 1947)?

[JDPriestly]

22. I would love to go back to the economic position we were in at the

time of Woodrow Wilson, FDR and Truman. Back then we were the leading exporter and major manufacturing power in the world. We no longer are.

Our trade imbalance is horrible with all countries. Better than something awful is still unacceptable.

The Free Trade Agreements have resulted in increased outsourcing and importing, and that is bad for the US.

Further, every time we sign a trade agreement, we give up some of our sovereignty. We Americans thereby relinquish some of our rights including our right to govern ourselves at the local level with regard to things like environmental issues, labor laws, etc.

We cannot afford more trade agreements -- not until we rebuild our manufacturing and our infrastructure. That will take sacrifice on all levels, but the rich should not be able to export the environmental damage that things like making plastics and computers mean. We should produce these things here -- with clean, safe technology.

[L0oniX]

23. What a bunch of bull shit. We have 330 million people here now!

[banned from Kos]

3. spoken like a Ron Paul follower and GOPer

Inflation is dead. CPI is 1% and 10yr Treasuries yield only 2%. Home prices and wages prove it.

The Fed needs to pour the stimulus on - Krugman was pushing for $4 trillion of QE (which does not go to banks, btw).

[MadHound]

4. Gotta link to current CPI?

I do. It is currently running at 3.8% and rising.
<http://www.bls.gov/news.release/cpi.nr0.htm>

Yes, ten year treasuries yield only 1.95%, but this move by the Fed won't lower those yields by much, if any. The costs of borrowing money is already cheap, and it can't get much, if any cheaper.

And yes, banks do take advantage of low interest rates, by borrowing and investing the money, not loaning it out. That's why banks and other corporations have four trillion dollars in capital just sloshing around, why spend it or loan it out when they can make so much more investing it? What the hell do you think is keeping the stock markets so high?

Now I see why you were banned for Kos and elsewhere. You don't engage in civil discourse, instead you attack anybody who dare disagree with you with insults and smears. Why not just state your points and leave the insults at home?

[banned from Kos]

7. core inflation is 2% (per your link) as your number includes the spring oil spike

which has been erased now. I included the 10yr to show that inflation expectations are subdued.

Nevertheless, we need stimulus right now and the GOPers won't allow fiscal action so all we have is the Fed. The Fed "twist" will aid long term borrowers.

Anyway, you are taking the GOP on this argument - that is not an "attack" or insult.

[MadHound]

8. No, I'm taking on reality

And the fact that you're now going with "core" instead of overall inflation tells me that you're suddenly switching positions and backpedaling.

The Fed has shot all of its stimulus arrows. Interests rates are the lowest they've been in decades, if not in history. Adding more money to the system will drive up inflation, at a time when incomes are declining. How is that a stimulus. It simply puts more money into the pockets of banks and other such organizations, who will continue to do as they've been doing for the past few years, invest the money in the markets rather than loaning it out.

[Selatius]

26. Inflation is roughly 7% if we use 1990 BLS methodology.

However, if we use BLS methodology in use at the end of the Carter Administration (1980), inflation is at a somewhat high 11%:

?hl=ad&t=

[jaxx]

5. GOP Leaders Urge Fed Not to Act

September 20, 2011

GOP Leaders Urge Fed Not to Act
Top Republican lawmakers, "in a rare effort to directly influence Federal Reserve policy, expressed reservations about the central bank taking additional steps to spur the recovery, saying further action could harm the economy," the Wall Street Journal reports.

http://politicalwire.com/archives/2011/09/20/gop_leaders_urge_fed_not_to_act.html

Stalling the economy by not wanting anything done.

[MadHound]

6. Yet buying up Treasuries isn't going to do anything,

If it did, it would have already worked by now. All this latest round of bond buying is going to do is drive up inflation even further.

What is needed is a true jobs creation program, which we probably won't get. But the Fed has run out of tricks and tactics to help the economy, and all it can do now is make matters worse with increased inflation.

[jaxx]

10. It may very well do something.

Granted, it should have been done earlier, but better late than never. I don't think inflation is much of a problem right now. And if the repubs don't want it done, you have to ask why. They do not want anything to help the economy. The fed is never entirely out of tricks....they have the printing press.

[MadHound]

11. The printing press in not the solution

Using the printing press drives inflation, that basic Econ 101. To use it when incomes are dropping spells disaster for most people.

And yes, the Fed is out of solutions. Looking to the Fed to get us out of this mess is wishful thinking at best, you need solid legislative solutions, which are scarce on the ground.

[bemildred]

12. I've lived through stagflation, in hte 1970s, this is not like stagflation.

There is no chance of anything like stagflation without a robust jobs recovery. What we are headed into is a depression, and we have to get out of that depression before inflation can be an issue. To have inflation you MUST have rising demand.

[MadHound]

13. I lived through it as well, and it sure seems like stagflation to me

High unemployment, rising inflation, little economic hope in sight. And yes, you can have inflation without rising demand, simply let the printing presses run, which is what the Fed has done, and is looking to do again.

[bemildred]

19. But very little, if any, wage inflation, especially at the bottom.

And very low interest rates, both of which (wage inflation and high interest rates) were present in spades in the 1970s and early 80s.

[Nye Bevan]

14. It's worth risking a little inflation to kick-start the economy.

Despite Rick Perry believing this to be "treasonous".

[MadHound]

16. And yet letting the printing presses roll won't kick start the economy,

If it did, we would already see the effects of QE 1 and 2. But despite adding trillions of dollars to the money supply, the economy is still sliding.

You need legislative solution to bring us out of this hole, not monetary ones.

[Nye Bevan]

20. QE 1 arguably helped end the recession.

Perhaps QE 3 will help avert a double- dip.

[Selatius]

25. In name only. Unemployment is still running as if the recession never ended.

And in that practical sense, it never did for working America and the poor.

[Bandit]

15. How can you say we have almost zero interest rates and then say inflation is a worry?

Inflation has been at the lowest in decades... Money into circulation does not necessarily create inflation.. sometimes it just spurs the economy

[MadHound]

17. The CPI is on the rise,

That's how I can say that inflation is a worry. Currently inflation is running at 3.8% rate for the past year. If you annualize the rate of inflation from just the first half of 2011, it is running at five percent.

Yes, letting the printing presses roll equals higher inflation rate. This is simple Econ 101. And frankly, if letting the presses roll did spur the economy, the first two rounds of quantitative easing would have already spurred it. But instead we're sinking in deeper.

You need legislative solutions, not monetary ones.

[dionysus]

18. you agree with the GOP on this issue. congrats.

:rofl:

[YellowRubberDuckie]

24. Or, how about this?

Obama, grow a pair and tell them to freaking stop what they are doing as they are just making shit worse.
Duckie