tag:blogger.com,1999:blog-6616959642391988608.post3727605395166874975..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: The Fed can't resist allowing the economy to dictate policyScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-6616959642391988608.post-83970960700940848412010-03-18T09:54:27.062-07:002010-03-18T09:54:27.062-07:00I agree with Scott here, i wish the process worked...I agree with Scott here, i wish the process worked in the real world as septizoniom theorized. In Turkey, we've been living with high-inflation for many years and yet to see deflation. Once the inflationary expectations sets in it's really really hard to change the direction. Inflation distorts almost every part of the economy, both financial sector and the real economy. It leads to lowerBurak Thttps://www.blogger.com/profile/04398510763175116109noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-34065181533960875092010-03-15T16:28:31.074-07:002010-03-15T16:28:31.074-07:00It's true that wages tend to lag other prices ...It's true that wages tend to lag other prices in a high inflation environment. But this does not lead to deflation. It merely results in a declining standard of living--your income buys less and less. I experienced this exact process while living in Argentina from 1975-79. This process can go on indefinitely. Deflation can only occur if monetary policy becomes extremely tight.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-82976190838864760782010-03-15T16:15:29.797-07:002010-03-15T16:15:29.797-07:00Inflation puts some goods and services out of
reac...Inflation puts some goods and services out of<br />reach for consumers. Rarely do wages increase the same rate as inflation,<br />so consumers have less money to spend. As the gap between income and<br />expenses closes, so does spending. That situation could eventually lead to<br />deflation.septizoniomhttps://www.blogger.com/profile/14253705209662419429noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-57677565688868355142010-03-15T16:09:58.912-07:002010-03-15T16:09:58.912-07:00How can inflation lead to deflation?How can inflation lead to deflation?Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-87424105064947203882010-03-15T15:56:13.031-07:002010-03-15T15:56:13.031-07:00you discount continuously the deflation fears. in ...you discount continuously the deflation fears. in fact inflation ultimately will lead to deflation, so maybe the market is not so wrong.septizoniomhttps://www.blogger.com/profile/14253705209662419429noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-72561495178834025152010-03-15T15:20:31.814-07:002010-03-15T15:20:31.814-07:00I just don't see commodities predicting inflat...I just don't see commodities predicting inflation anymore. Too much speculation in those markets, and gold is strictly for the the tin-foil hat crowd.<br />Right now, unit-labor costs are going down, not up. Rents for all types of commercial space are very soft. All manufactured goods get cheaper all the time (except for military hardware, which always get more expensive all the time).<br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-22258565102862833922010-03-15T14:50:28.335-07:002010-03-15T14:50:28.335-07:00Lots of possibilities here. Rising 3-mo. T-bill yi...Lots of possibilities here. Rising 3-mo. T-bill yields; rising commodity prices, rising breakeven spreads on TIPS (especially the 5-yr, 5-yr forward rate, currently 2.6%), housing construction and housing prices, core inflation, unemployment rate. Most of these are already moving in a direction which increases the Fed's discomfort level (by making hawks more nervous). Nothing is imminent, butScott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-32086113972891560532010-03-15T14:39:46.117-07:002010-03-15T14:39:46.117-07:00So, what set of data will force FED to tighten ear...So, what set of data will force FED to tighten earlier in your opinion? (btw, typical inflation hedge i.e. gold stocks are lagging the current rally)Family Manhttps://www.blogger.com/profile/10304538166086313103noreply@blogger.com