4 ms·

The only real problem is that wages are sticky, there is significant resistance to reducing wages, which means the cost of labor is going up relative to everyth

The only real problem is that wages are sticky, there is significant resistance to reducing wages, which means the cost of labor is going up relative to everything else - which in turn means lay-offs; which will be a major problem now, since unemployment is already high from the recession.

gte910h 16y ago
You don't think everyone spending less money on everything is a real problem? You don't think people buying fewer cars, computers, software, video games, ipods, houses and groceries is a bad thing for the economy? When just holding your money makes it more valuable, people do that like crazy.
- grandalf 16y ago
  Do you believe the converse, that inflation is good for the economy (people buying things now bc the price will double in a year)? Unless you're willing to prescribe a specific policy remedy, I suggest you clarify your thoughts before making the argument you're making.
  - gte910h 16y ago
    Large amounts of inflation is bad as well. Small-moderate tends to be good, as it causes investment, and stops us from accidental deflation. I'm arguing to keep the current "small amounts of intentional inflation" doctrine that's currently the goal.
    - grandalf 16y ago
      The Fed shows no signs of stopping its approach. With quantitative easing, etc., the Fed has actually created negative real interest rates. If anything I'd be worried that there are powerful interests lobbying for targeted booms. The housing/building sector has been a huge beneficiary of transfers of wealth from taxpayers and users of currency as a store of value, and probably has its sights on another Fed-fueled building/housing boom. Right now lots of Americans make payments on credit cards which are useless bc the limit has been reduced, etc. There is also pressure on the Fed from banks who know that there could be waves of new defaults in consumer credit cards. So on balance I think the fear is an over-reaction by the Fed rather than an under-reaction. There is also an interesting meme coming into focus in which credit is viewed as a right just like healthcare.

gte910h 16y ago

You don't think everyone spending less money on everything is a real problem? You don't think people buying fewer cars, computers, software, video games, ipods, houses and groceries is a bad thing for the economy? When just holding your money makes it more valuable, people do that like crazy.

grandalf 16y ago
Do you believe the converse, that inflation is good for the economy (people buying things now bc the price will double in a year)? Unless you're willing to prescribe a specific policy remedy, I suggest you clarify your thoughts before making the argument you're making.
- gte910h 16y ago
  Large amounts of inflation is bad as well. Small-moderate tends to be good, as it causes investment, and stops us from accidental deflation. I'm arguing to keep the current "small amounts of intentional inflation" doctrine that's currently the goal.
  - grandalf 16y ago
    The Fed shows no signs of stopping its approach. With quantitative easing, etc., the Fed has actually created negative real interest rates. If anything I'd be worried that there are powerful interests lobbying for targeted booms. The housing/building sector has been a huge beneficiary of transfers of wealth from taxpayers and users of currency as a store of value, and probably has its sights on another Fed-fueled building/housing boom. Right now lots of Americans make payments on credit cards which are useless bc the limit has been reduced, etc. There is also pressure on the Fed from banks who know that there could be waves of new defaults in consumer credit cards. So on balance I think the fear is an over-reaction by the Fed rather than an under-reaction. There is also an interesting meme coming into focus in which credit is viewed as a right just like healthcare.