Whats Obama's Plan to Deal with Inflation?

[LAGC]

I know we are supposedly currently in a deflationary cycle right now, with the economy contracting and wages and prices along with it, but what's going to happen when all these dollars being pumped into the economy, let alone all the foreign debt in the form of U.S. Dollars being held by the Chinese for instance, comes barreling back into the American economy? Surely, inflation will be a major issue when the amount of currency out-strips real economic activity. I just don't want to see the specter of inflation (let alone stagflation) to be haunting us come 2012 like it did with Jimmy Carter's re-election bid in 1980.

[Liberty Lover]

1. At the moment it seems to be to print more money

He seems to be spending more and more money, that the Federal Reserve has to print, with little concern for the devaluation of the dollar.

[27inCali]

6. Liberty Lover? Really?

Tell me, do you watch a lot of History Channel?

[Catshrink]

17. Maybe a lover of tea and pizza.

[PBS Poll-435]

14. Welcome to DU!

:rofl:

[CreekDog]

19. that's what you do in a recession

i mean unless i'm going to listen to a dude with 6 posts over what most respected economists say.

[Odin2005]

22. Oh, look, a Libertarian Paul-turd!

[Skink]

2. He hired this guy named Vol something

his best choice for an advisor. Hopefully Summers learns something.

[elleng]

3. He's not paying much attention to Volcker.

Let the Fed do it, as under whats-his-name.

[Yavin4]

4. There Is Little Or No Inflation Risk

This is much hyped Ron Paul B.S. Where will inflation come from wages? Energy? Prices are falling and will continue to fall with UE going up every day. During Christmas, retailers will have to cut prices like crazy just to get people to walk into their stores.

If Obama and the Fed didn't inject stimulus into this economy, we would be in the throes of a deflationary death spiral.

[Sparkly]

8. That's what I was going to say.

It's not a time to worry about that right now.

[safeinOhio]

9. What was the inflation rate for last year?

minus 1 point something?
Might be something to worry about when we hit 4% unemployment and that'd be way in the future.

[customerserviceguy]

11. Ever hear of stagflation?

In an economy where prices go up, yet the general level of economic activity is flat, with no job growth, you have the worst of all possible worlds.

It happened in the 1970's, it could happen again.

[Yavin4]

23. "In an economy where prices go up"

Any producer that dares to raise prices in this economy is doomed to failure. Doomed.

Stagflation happened in the 1970s for two reasons: (1) we had huge spikes in energy prices and (2) a large percentage of the American workforce had union contracts with cost of living increases. Today, energy prices are stable or falling because global demand for goods is falling and the majority of the American workforce has no ability to raise their wages because they're no longer unionized.

[customerserviceguy]

25. It depends on what that producer produces

In the case of energy prices, it could happen again, especially if cap and trade or other environmental policies push up the costs of obtaining energy. Foreign suppliers of oil are going to demand more dollars for a barrel of that liquid, as they see the value of those dollars going down from inflation of the currency. Any slight resurgence in demand for oil caused by even the beginnings of a recovery is just going to add pressure to energy prices.

The very best thing that the President can do about this is anticipate the resurgence in energy prices, and plan for alternative energy generation. I believe that is a sizable part of the President's stimulus plan. However, there may be a time lag between the rise of energy prices, and the ability of alternative technologies to be able to fill the gap. If oil prices go from $70 a barrel to $125 a barrel, and an alternative technology is only feasible at $110 a barrel, there's quite a bit of room for energy price inflation before the alternative technology becomes economically viable on its own, without government subsidy.

We may not have COLAs for a large part of the workforce (as we did in the 1970's, relatively speaking), but your premise presupposes that those COLAs were part of the driving force of stagflation. I reject that contention, and instead blame government spending policies, including paying for the war in Vietnam for the stagflation. We are going to be paying dearly for two wars in the coming years, there's a parallel that I can see that is much more relevant than the presence or absence of union contracts.

[customerserviceguy]

10. They cut prices last year

because there was inventory produced in mid-2008 like there wasn't a recession coming. I don't think that's the case this year.

Stores aren't going to stock up on mass quantities of frivolous consumer goods to pawn off this holiday season. For starters, there are less stores out there to sell crap to.

[HamdenRice]

27. Yeah the Ron Paul types don't seem to realize all this money replaced private money

so there wasn't, as they like to scream, a huge increase in the money supply. Hence there is little risk of inflation.

As the private money comes back, the govt money is withdrawn, as has already happened in the commercial paper/money market sector.

[Oregone]

5. Bah.

When I see him commit enough to even mitigate the effects of deficient demand, and thereby, fight deflation, then we can get to thinking about. Thus far, that pitiful ass stimulus was like throwing a pebble into a pond

[Aramchek]

29. I predict you never hold Public Office in your life.

Therefore, you will never get to lead us into the Utopia that would blossom from your way of doing things.
Such a shame...

[Oregone]

32. You are probably wrong

Im well-read with a fine educational backing, I have remarkable leadership qualities, I am great with public speeches, and I am incredibly good looking. Incredibly.

I just don't have any money, though pictures of my childhood would only bolster my bid with the common folk.

The toughest part would be inspiring people with bullshit when I cannot even inspire myself. I wonder, even if I have methods to save the masses....do they deserve it? Otherwise, is it entertaining enough to waste my time? Bah, Ill stay home and bitch instead

[Aramchek]

33. I knew that you could!

[Arkana]

7. It's a secret.

--Josh Lyman

[Lyric]

16. Ha! You beat me to it.

:rofl:

[Arkana]

20. "I gotta say, Josh, telling a reporter their question is stupid--that's not like a page out of

Dale Carnegie or anything."

[fugop]

26. Poor Josh

"Are you telling me that not only did you invent a secret plan to fight inflation, but now you don't support it?" - President Bartlett

Best. Show. Ever.

[Thrill]

12. Didn't he hire Volker to head a committee working on that and tax reform??

[jeanpalmer]

13. I don't think he cares about inflation

The concern of policymakers is deflation. They can afford some inflation, noderate inflation, but can't afford deflation. They're going all out to avoid deflation. If deflation occurs, all those debts that have piled up that are unserviceable get bigger in real terms. That will deflate assets prices including housing and stocks. The policymakers just can't afford to have housing prices continue to decline, because that's where most of people's wealth and debt is located. That's why they're going all out to inflate and print money. So far though, they have not been that successful. Housing prices continue to bounce along the bottom and all the money they're printing is going into creating new bubbles in stocks and commodities, especially oil. They're trying to prop up a failed system, and it's not going to work -- for Obama or Bernanke.

[Zynx]

15. Inflation would be a blessing compared to this.

Inflation would help solve the debt deflation problem, which is harder to solve than most inflation derived problems.

With capacity utilization where it is and with the transmission mechanisms (i.e. the financial institutions) for money supply so broken, it is hard to see how we get much inflation.

[CreekDog]

18. not increasing the deficit any further

allowing some of the Bush tax cuts to expire

those are standard methods to deal with potential inflation and they are part of Obama's plans.

however you should realize that fighting inflation is not compatible with fighting recession. so you fight recession when it is happening and then you fight inflation when the recession goes away. you can't do both at the same time because you will end up not stimulating the economy and you will not be fighting inflation.

fighting inflation requires you to fight demand on the spending side and fighting recession requires you to stimulate demand on the spending side. one or the other --can't do both.

[Odin2005]

21. There is no inflation risk.

Unless you are a Libertarian nut that thinks ANY inflation is a government conspiracy. The Libertarian nuts ALWAYS think hyperflation is just around the corner. That's why they shill gold.

[trackfan]

24. There won't be inflation any time soon.

That's not necessarily good. Very broadly speaking, everybody's in debt; inflation would destroy that debt, to the benefit of those in debt, and to the great detriment of the creditors.

[quaker bill]

28. A little inflation can be good

My major expense like many folks, is a fixed interest mortgage on yesterday's dollars. With a bit of inflation, I can pay this off with cheaper dollars.

Say what you will about the Carter Admin, but it was the only time in my work life where 10 to 15 percent raises were the norm. Recent years have had raises running from 3 to 0 percent, if you don't get laid off. I am however fortunate to still be employed. The only way we get from here to an inflation risk is if some of "all this money" ends up in the hands of consumers. I would be good with that, within some limits, say 5 to 7 percent.

[natrat]

30. this thread=a collection of idiots with blind faith in the US government

good luck with that-your standard of living has steadily declined since the 1970s--how many incomes do you need to support your family now ?

[Dreamer Tatum]

31. Inflation will be abated so long as unemployment is high

But when things start to heat up, inflation is a major concern. Look at the bright side: the nominal value of the debt to China will plummet to nothing. We'll be repaying them in worthless greenbacks. Not too shabby!