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Post by jeffolie on Apr 17, 2008 16:58:36 GMT -6
Fed hawks Lacker, Fisher warn on inflation Two top Federal Reserve officials warned on Thursday against the risks of inflation, in remarks that underscored the existence of a hard wing of policy-makers who oppose further interest rate cuts. Both Richmond Federal Reserve President Jeffrey Lacker and Richard Fisher, president of the Dallas Fed, in separate speeches cited the dangers of delaying moves to rein in inflation. "I am particularly concerned about recent movements in measures of expected inflation," he said. "A deterioration of inflation psychology is a major concern because it is very difficult to unwind." The Fed expects inflation will moderate thanks to growing slack in the slowing U.S. economy, but he was not so sure. "I am uncertain about the extent to which it will moderate. I think there is a chance it will. I think there is a chance it won't," he said. news.yahoo.com/s/nm/20080417/bs_nm/usa_fed_dc;_ylt=AkWFM7k1S0FOad8PJtQ2Xeqs0NUE
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Post by jeffolie on Apr 17, 2008 17:47:25 GMT -6
Fight inflation in everything but paper or fight deflation in bank balance sheets and the financial system; you can’t do both at the same time. The financial and banking systems face an” inflate or die” imperative so this is what can be expected. Corporate incomes are collapsing and cost push inflation threatens margins in the near future. Year over year inflation in the Producer Price Index is over 6.9% and RISING. In this week’s Barons, Alan Abelson outlines that over $4 trillion dollars of OPTION Arms (adjustable rate mortgages) are sitting on the balance sheets of small and regional banks. Option ARM’s are also known as EXPLODING arms and they are going to go off like firecrackers in the hands and BALANCE SHEETS of LENDERS and BORROWERS, further requiring lots of new FIAT CURRENCY and CREDIT CREATION to rescue them and their depositors. Reconstructed M3, the broadest measure of money and credit creation, is clocking in at over 17% growth; using the rule of 72, the United States is doubling the money in circulation every 4.23 YEARS just as a banana republic would do, and it is set to INCREASE. Does anybody suspect this may be inflationary? Biofuels are causing FOOD shortages and riots throughout the world and consequently RUNAWAY food inflation. Rising incomes throughout the world are creating teacup-size incremental demand for grains, meats, raw materials and energy in millions of households across the globe. Sensible energy development has been OUTLAWED in the G7 sacrificed on the alter of environmentalism and concerns about GLOBAL WARMING. Expect the bailouts of the banks, brokers and homeowners. It signals only one thing: More FIAT CURRENCY and CREDIT creation to rescue irresponsible people. www.financialsense.com/fsu/editorials/andros/2008/0417.htmlInflation with collapsing real estate assets is Stagflation.
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Post by unlawflcombatnt on Apr 17, 2008 21:38:50 GMT -6
If food prices and energy prices keep rising, it will continue reducing the money consumers have to spend on "core" items. With employment falling, and credit tightening, there'll be less total money to spend on all items. If spending rises on non-core food and energy, it will cause an even greater reduction in consumer demand for "core" items. Prices for those items will have to fall eventually, or far fewer people will be able to purchase them.
Dumping money into the banking system does little to help consumer spending. And it does nothing banks and investment brokers simply use the money to cover their losses.
What appears to be happening, however, is that a lot of retailers have already reduced their orders for merchandise, which could easily keep prices artificially high by creating a false scarcity of those items.
CVS Pharmacies is a prime example of a retailer that is doing this already. They simply aren't restocking many items they've run out of, and are filling spaces with their oversupply of unsellable items to make their shelves look full.
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