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Thread: Engle Joins Krugman Suggesting Higher Inflation for U.S.

  1. #1
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    Engle Joins Krugman Suggesting Higher Inflation for U.S.

    [URL="http://www.bloomberg.com/news/2012-05-01/engle-joins-krugman-suggesting-higher-inflation-for-u-s-.html"]http://www.bloomberg.com/news/2012-05-01/engle-joins-krugman-suggesting-higher-inflation-for-u-s-.html[/URL]

    [QUOTE]


    New York University professor Robert Engle said policy makers should consider allowing slightly higher inflation as a way to spur the U.S. economy, joining fellow Nobel Prize winner Paul Krugman who says it could reduce unemployment.

    “A little bit of inflation would do a whole lot of good for the U.S. economy, would certainly do a lot of good for the housing market,” Engle, who won the Nobel Prize in economics in 2003, said at the Bloomberg Washington Summit hosted by Bloomberg Link today. “If we had just a little bit of inflation and house prices went up, all the sudden they’d be above the mortgages.”

    Krugman’s suggestion that the Federal Reserve tolerate inflation of 3 percent to 4 percent to boost the economy has been rejected by Fed Chairman Ben S. Bernanke, who said such a policy would be “reckless.”

    The Bernanke-Krugman debate started with Krugman’s April 24 article in the New York Times Magazine, titled “Earth to Bernanke.” In it, Krugman, who won the Nobel Prize in 2008, argued that allowing a more rapid increase in consumer prices would align with Bernanke’s comment in 2000 that the Bank of Japan should pursue faster inflation to escape deflation.

    While recognizing its potential cost, Engle said slightly higher inflation may be the easiest way to help the U.S. economy as other proposals meet resistance from polarized political parties.

    Housing Remains Depressed

    An improving labor market and mortgage rates near historic lows are helping to stabilize housing. At the same time, the industry remains depressed by foreclosures, which are hurting property values, and stricter lending rules.

    The problem with faster inflation, which some governments have historically used alongside other measures to reduce large debt loans, is that it’s an “opaque tax” that policy makers tend to “overdo,” said Vincent Reinhart, chief U.S. economist at Morgan Stanley, who also spoke on the panel, along with Daniel Yergin, chairman of IHS Cambridge Energy Research Associates.

    “It worked in the 50s and 60s because there was a little bit of inflation, it didn’t work in the 70s because if it’s too much then you wind up eroding the controls and making everything worse,” Reinhart, who was the Fed’s director of monetary affairs from 2001 to 2007, said at the summit.

    Engle, a professor of management at NYU’s Stern School of Business, said higher inflation would also help Europe, where some countries such as Spain face recession while implementing austerity policies to stem a sovereign debt crisis.

    “We as a global society may need to rethink our hatred of inflation,” he said. “Our notion of what these inflation targets are should be revised.”

    The Fed in January set a 2 percent inflation goal, joining at least 12 other central banks in specifying a target and concluding years of debate that Bernanke advanced after becoming chairman in 2006.
    [/QUOTE]

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    would the threat of inflation get those Americans sitting on cash to invest and spend and thus jolt the economy forward?

  3. #3
    [QUOTE=Buster;4456904]would the threat of inflation get those Americans sitting on cash to invest and spend and thus jolt the economy forward?[/QUOTE]

    The threat of inflation is already sky high. When you owe 17 trillion and have no end in sight to deficits hyper inflation is virtually a certainty. Not the good healthy 1950's type of inflation either. The Carter style 1970's inflation is on the horizon.

    I've been planning for it in my investments. Buying some gold and TIPS.

  4. #4
    Blah, blah, blah, hyperinflation was the big threat in 2008, strangely the same time the new President was just being sworn in? Interesting?

    [QUOTE=chiefst2000;4457006]The threat of inflation is already sky high. When you owe 17 trillion and have no end in sight to deficits hyper inflation is virtually a certainty. Not the good healthy 1950's type of inflation either. The Carter style 1970's inflation is on the horizon.

    I've been planning for it in my investments. Buying some gold and TIPS.[/QUOTE]

  5. #5
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    [QUOTE=chiefst2000;4457006]The threat of inflation is already sky high. When you owe 17 trillion and have no end in sight to deficits hyper inflation is virtually a certainty. Not the good healthy 1950's type of inflation either. The Carter style 1970's inflation is on the horizon.

    I've been planning for it in my investments. Buying some gold and TIPS.[/QUOTE]

    It's obvious there at least a couple of things the dummies don't understand:

    1) The bailout money inflation was curbed by realized and unrealized losses in the housing market

    2) Even without those factors, inflation from the creation of that money wouldn't have been felt by the average consumer for years. It doesn't happen the next day, the money has to distribute throughout the economy and markets need time to adjust.

    Coupled with our deificit, heavy inflation is now around the corner. There's no need to manipulate further, that train is coming already. We're at about 3% now and most expect it to continue rising. Spend your savings now, they're going to be worth a lot less soon.

  6. #6
    [QUOTE=cr726;4457018]Blah, blah, blah, hyperinflation was the big threat in 2008, strangely the same time the new President was just being sworn in? Interesting?[/QUOTE]

    You sound like Barney Frank and Chuck Schumer when the Bush administration was warning in 2001 and 2003 that the easy money policies at Fannie and Freddie had the potential to lead to a massive financial meltdown. Democrats like you panned them and said that raising eligibility and increasing down payment requirements was racist.

  7. #7
    [QUOTE=chiefst2000;4457115]You sound like Barney Frank and Chuck Schumer when the Bush administration was warning in 2001 and 2003 that the easy money policies at Fannie and Freddie had the potential to lead to a massive financial meltdown. Democrats like you panned them and said that raising eligibility and increasing down payment requirements was racist.[/QUOTE]

    LOL, yet the Bush Administration kept spending and cut taxes during the wars.

  8. #8
    [QUOTE=cr726;4457138]LOL, yet the Bush Administration kept spending and cut taxes during the wars.[/QUOTE]

    The deficits were historically very low until the Dems took over the House and Senate and the housing bubble (as predicted by the Bush admin) began to burst. Look it up.

  9. #9
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    [QUOTE=chiefst2000;4457142]The deficits were historically very low until the Dems took over the House and Senate and the housing bubble (as predicted by the Bush admin) began to burst. Look it up.[/QUOTE]

    You bring up the housing crisis and he is ranting about the Bush deficit. Why bother even continuing?

  10. #10
    [QUOTE=chiefst2000;4457142]The deficits were historically very low until the Dems took over the House and Senate and the housing bubble (as predicted by the Bush admin) began to burst. Look it up.[/QUOTE]

    Um, the wars were not put on the books until 2008. The Bush Admin warned about a housing bubble? Really?

    [QUOTE]"We can put light where there's darkness, and hope where there's despondency in this country. And part of it is working together as a nation to encourage folks to own their own home."

    - President George W. Bush, Oct. 15, 2002[/QUOTE]

    [QUOTE]"There is no question we did not recognize the severity of the problems," said Al Hubbard, Bush's former chief economic adviser, who left the White House in December 2007. "Had we, we would have attacked them."[/QUOTE]

  11. #11
    [QUOTE=JetPotato;4457144]You bring up the housing crisis and he is ranting about the Bush deficit. Why bother even continuing?[/QUOTE]

    Great post! You're the bestest poster ever, you sit on the sideline and complain, great poster!!!! Sit on the bleachers and pretend you know all.

  12. #12
    [QUOTE=JetPotato;4457144]You bring up the housing crisis and he is ranting about the Bush deficit. Why bother even continuing?[/QUOTE]

    I was trying to bait him in to denying that the Bush admin went before congress warning about the excesses at Fannie and Freddie and the systemic risks associated with their policies as early as 2001. Would have been a great excuse to post the youtube footage of the testimony by Bush himself. Then I would have posted the youtube footage of Barney Frank saying that everything is cool.

  13. #13
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    [QUOTE=chiefst2000;4457169]I was trying to bait him in to denying that the Bush admin went before congress warning about the excesses at Fannie and Freddie and the systemic risks associated with their policies as early as 2001. Would have been a great excuse to post the youtube footage of the testimony by Bush himself. Then I would have posted the youtube footage of Barney Frank saying that everything is cool.[/QUOTE]

    Do it anyway. Not that it will make a difference.

  14. #14
    [QUOTE=JetPotato;4457178]Do it anyway. Not that it will make a difference.[/QUOTE]

    :zzz:

    [QUOTE]Lawrence Lindsay, Bush's first chief economic adviser, said there was little impetus to raise alarms about the proliferation of easy credit that was helping Bush meet housing goals.

    [B]"No one wanted to stop that bubble," Lindsay said. "It would have conflicted with the president's own policies."[/B][/QUOTE]

  15. #15
    10 year rates are almost a full point below the stated inflation rate of 2.7%and probably closer to 2 or 3 points below real inflation. The Fed is decidedly pushing growth and employment mandate well ahead of their mandate to control inflation.

    The working middle class and savers are being punished right now for holding onto money.

  16. #16
    [QUOTE=JetPotato;4457178]Do it anyway. Not that it will make a difference.[/QUOTE]

    [URL="http://www.youtube.com/watch?v=cMnSp4qEXNM"]http://www.youtube.com/watch?v=cMnSp4qEXNM[/URL]

  17. #17
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    [QUOTE=Buster;4456904]would the threat of inflation get those Americans sitting on cash to invest and spend and thus jolt the economy forward?[/QUOTE]

    no but getting paid what your worth and your education you have will help people to spend.............I would love to spend problem is don't have the money to spend............a great big circle jerk this economy is. I prob could have saved myself thousands in college loans had I done better research.:steamin::steamin::steamin:

  18. #18
    [URL="http://www.youtube.com/watch?v=kNqQx7sjoS8"]http://www.youtube.com/watch?v=kNqQx7sjoS8[/URL]

  19. #19
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    [QUOTE=chiefst2000;4457199][URL="http://www.youtube.com/watch?v=cMnSp4qEXNM"]http://www.youtube.com/watch?v=cMnSp4qEXNM[/URL][/QUOTE]

    Hey lets blame the financial crises on just Democrats...

  20. #20
    [QUOTE=SafetyBlitz;4457212]Hey lets blame the financial crises on just Democrats...[/QUOTE]

    I saw video footage of the Bush administration warning about the excesses of Fannie and Freddie as early as 2001. I saw video footage of Dems defending the GSA's. I heard a report that McCain put forward legislation to regulate the GSA's with democrats voting party line to oppose.

    I also have footage of virtually every Democrat in office today blaming the crisis on the Bush administration. I also have footage of Obama repeatedly stating that Republican policies "got us into this mess in the first place". I have speeches by Obama stating that republican policies led directly to the housing crash.

    Even worse we have Democrats using the crash to justify their economic ideas of higher taxation and redulation alongside higher government spending as the cure to the country economic ills. They claim we tried lower taxes and regulation and that's "what got us in to this mess".

    So they (inadvertantly) cause the crash with their social engineering policies and then they blame Republicans for it so they can move their harmful agenda forward.

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