Inflation was 6.3% in 2007, Highest in 26 Years

[$cirisme]

Wholesale inflation last year shot up by the largest amount in 26 years while retailers suffered their worst December shopping season in five years as mounting economic woes caused consumers to put away their wallets.

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

Meanwhile, retail sales fell by 0.4 percent in December, the worst showing in six months, the Commerce Department reported. Consumer confidence has plunged, reflecting the worsening housing slump and a lingering credit crisis.

Whole Prices Soared Last Year (http://ap.google.com/article/ALeqM5jsanM66tszKz1zFq0LOG4XvWS7zAD8U6CQQ80)

Ouch.

[Timothy Leary]

Yeah, gotta love that worthless, unbacked money of ours...

[Ryokan]

Stagflation. But if we pegged our money to gold we'd have even nastier deflation.

[Philosophickle]

Stagflation. But if we pegged our money to gold we'd have even nastier deflation.

Yeah, I don't know if I follow the libertarians on that one. But almost anything would be better than our "I need money, so I'll print some more" policy.

[Philosophickle]

(Ryokan, I know you are into economics, so I was wondering what you thought of this paper (http://www.imf.org/external/pubs/ft/wp/2008/wp0807.pdf). It includes a report of the Russian flat-tax experiment, and it apparently worked very well. WUC, sorry for the sidetracking.)

[Ryokan]

(Ryokan, I know you are into economics, so I was wondering what you thought of this paper (http://www.imf.org/external/pubs/ft/wp/2008/wp0807.pdf). It includes a report of the Russian flat-tax experiment, and it apparently worked very well. WUC, sorry for the sidetracking.)

I will try to read it more carefully in a bit. My immediate thought is that if the primary "laffer effect" stemmed from better compliance then it may not work here as compliance is already much better than Russia's. I never really thought about the compliance end though. Like everyone else (well obviosuly not EVERYONE, but everyone who isn't smarter than me) I focused on the labor. I am curious now.

[nickcopernicus]

Ouch.

Nick:
....All the while GW is in the mid east trying to form a fued that's been going on for thousands of years (Israel vs Pal..). I've got to admit that I'm not impressed with this administration's policy with government spending (note: and congress too)

Cheers,

Nick

[historic salve]

Nick:
....All the while GW is in the mid east trying to form a fued that's been going on for thousands of years (Israel vs Pal..). I've got to admit that I'm not impressed with this administration's policy with government spending (note: and congress too)

Cheers,

Nick
Given the huge projected increase in the Palestinian birth rate later this century, the conflict is more pressing than ever. That said, Bush has gotten us into a mess of economic trouble.

[Tickle Me Mercury]

Stagflation. But if we pegged our money to gold we'd have even nastier deflation.

Well, if we did it outright we would.

[nickcopernicus]

Given the huge projected increase in the Palestinian birth rate later this century, the conflict is more pressing than ever. That said, Bush has gotten us into a mess of economic trouble.
Nick:
No real dissagreement here; I'm just noting that it's ridiculous to give charity when your children are starving.

cheers,

Nick

[Jimmy Higgins]

Stagflation. But if we pegged our money to gold we'd have even nastier deflation.Very true. Isn't the value of gold right now under one half it would be worth in the 80s, pegged at current dollars?

This inflation was pretty bad, in relative terms. Especially seeing growth was at half that rate. Luckily, I'm not as susceptible to inflation with gasoline prices, however, everything else has gotten a bit more expensive because of gasoline prices, so I'm definitely susceptible to that.

So much for that booming economy everyone was talking about. And we need to pass a large tax cut for the very wealthy, including the heads of Citigroup that are helping very much in driving our stock market down.

[Ryokan]

Very true. Isn't the value of gold right now under one half it would be worth in the 80s, pegged at current dollars?

This inflation was pretty bad, in relative terms. Especially seeing growth was at half that rate. Luckily, I'm not as susceptible to inflation with gasoline prices, however, everything else has gotten a bit more expensive because of gasoline prices, so I'm definitely susceptible to that.

So much for that booming economy everyone was talking about. And we need to pass a large tax cut for the very wealthy, including the heads of Citigroup that are helping very much in driving our stock market down.

I am bvery uncomfortable with all these stimulus packages. If we really are in a stagflation type situation then stimulus will make things works, be it tax cut or spending increase. And then we'll have to have 20% interest rates again to right things.

[Ryokan]

Nick:
....All the while GW is in the mid east trying to form a fued that's been going on for thousands of years (Israel vs Pal..). I've got to admit that I'm not impressed with this administration's policy with government spending (note: and congress too)

Cheers,

Nick

Actually the Israeli Palestinian conflict has gone on for about 40 years, and the Israeli Arab problem for about 60. The Jews kinda stopped being a factor in Palestine for 1800 years until, oh, 200 years ago.
I am not impressed el busho's spending either though.

[nickcopernicus]

Nick:
My bad. I stand corrected.


In any case, apparently Washington says it wants to jump-start economy (http://www.marketwatch.com/news/story/legislators-debate-tax-cuts-rebates/story.aspx?guid=%7BAB8D0330-3604-4FBF-9E76-2753A2A90D5E%7D).

Im not a economist, but their proposals seem quite absurd.



At a hearing on Capitol Hill, New York Sen. Charles Schumer said "real economic stimulus measures, enacted quickly, could be the last thing between us and a deep or protracted recession."
Schumer is recommending a temporary package that would combine tax cuts aimed at average Americans, business tax cuts and increased spending on existing programs.

I thought that some of the main reasons for inflation were

1) The national debt
2) the government creating more money because they spend more then they have.

It seems like they are trying to give the economy a shot of morphine instead of setting the broken arm in the cast.

From what I understandm, one of the reasons the economy is not doing very well is that inflation, mostly the gas prices that bring up the cost of everything else that has to be transported, has had a tremendous effect on Americans. Perhaps when many of these people bought these houses, they could afford them, but gas prices going up 300% in the last 10 years may have been a factor.

In any case, suggestions like the one below seem ridiculous


Rep. John Boehner, Republican leader for the House, called on his fellow legislators to extend Bush's 2001 and 2003 tax reductions.
"Now, as we face an economic downturn, let's hope that we've learned from history and will work in a bipartisan way to make this tax relief permanent," he said in an opinion piece in the newspaper The Hill.
Bush is expected to outline his economic package during his State of the Union address Jan. 28. He may be considering temporary tax rebates for individuals, a repeat of his 2001 program, business investment-incentive proposals and corporate tax plans.

Nick:
And not a word about cutting spending. Next year, inflation will probably be higher and the dollar will be worth even less.

Our country is run by idiots,

Nick

[Jimmy Higgins]

I believe the problem they are trying to solve is consumer confidence. They want to make it look to consumers that there is nothing to fear, SPEND SPEND SPEND!!!

Seeing how debt ridden our nation is already, it may just be time for a contraction.

[Ryokan]

I believe the problem they are trying to solve is consumer confidence. They want to make it look to consumers that there is nothing to fear, SPEND SPEND SPEND!!!

Seeing how debt ridden our nation is already, it may just be time for a contraction.

The goofy thing is nobody seems to be putting together a coherent approach.. We have Republicans who want to cut taxes and spending as a stimulus package, which is useless becasue it does not increase the money in the system. The Democrats want to do one several times to small to be effective. And personally I don't think if inflation is growing so fast stimulus is the answer. We ought to do nothing and increase interest rates now so we don't get stagflation later.