Bad Inflation

[JoS]

The US should stop complaining about its finacial woes. Zimbabwe has inflation rates of 231,000,000%. Now that is a real fucking problem.

[JackPhantasm]

Money doesn't actually exist.

[Musician]

I disagree with that logic. Just because someone else has it worse off doesn't mean that we don't have our own problems.

[poxpower]

Now that's an instance where going back to some material standard is a good idea.

I suggest bags of dirt. Or maybe pebbles.

[n64kid]

Moderate (and I use that term loosely) inflation is signs of a healthy economy, and as long as inflation is near expectations, even when they are high, and there's real growth, we're not doomed. A side note to this is that since more people are losing their jobs, the negative might help counteract inflation as shown by simple and more complex and modern views of the phillips curve.

[ThePretenders]

At 10/10/08 12:43 AM, poxpower wrote: Now that's an instance where going back to some material standard is a good idea.

I suggest bags of dirt. Or maybe pebbles.

The Gold Standard doesn't work. There's not enough gold mined in the world to support the U.S. economy, let alone in the world and gold prices will soar drastically.

[SadisticMonkey]

At 10/10/08 05:57 AM, ThePretenders wrote: The Gold Standard doesn't work. There's not enough gold mined in the world to support the U.S. economy, let alone in the world and gold prices will soar drastically.

I think he meant Zimbabwe

[ThePretenders]

At 10/10/08 06:01 AM, SadisticMonkey wrote:

At 10/10/08 05:57 AM, ThePretenders wrote: The Gold Standard doesn't work. There's not enough gold mined in the world to support the U.S. economy, let alone in the world and gold prices will soar drastically.

I think he meant Zimbabwe

I only read the first bit and pebbles and dirt are equally as worthless as Zimbabwean dollars, lol.

[JoS]

At 10/10/08 12:45 AM, n64kid wrote: Moderate (and I use that term loosely) inflation is signs of a healthy economy, and as long as inflation is near expectations, even when they are high, and there's real growth, we're not doomed. A

Did you even read my post? Inflation in the millions is not moderate inflation. This is higher than Bolivia's inflation in the 1980's or Poland's attempt at shocking the system and restarting it in the early 90's.

[JackPhantasm]

Is it possible to just reset the economy?

Like world wide?

real question

[n64kid]

At 10/10/08 11:27 AM, JoS wrote:

Did you even read my post? Inflation in the millions is not moderate inflation. This is higher than Bolivia's inflation in the 1980's or Poland's attempt at shocking the system and restarting it in the early 90's.

No no no.
I was talking about America with the moderate inflation =P
-I was agreeing with you that although we're suffering, relative to other countries of the world, we're in a much better state.

But even in Zimbabwe, if inflation is expected to be 231 million percent, and if nominal growth, wages, etc exceed inflation, then it's not the end of the world, just pricy because of the constant price changing. Of course, this number was not anticipated and wages aren't nearly keeping up with inflation at all.

[Der-Lowe]

And this is when currencies are pegged to each other.

[marchohare]

At 10/10/08 01:22 PM, JackPhantasm wrote: Is it possible to just reset the economy?

Yes. That's what is happening now.

You won't like the new, more realistic figures however.

[JoS]

At 10/10/08 01:22 PM, JackPhantasm wrote: Is it possible to just reset the economy?

Like world wide?

Do you knwo what happens when you "reset" an economy? Your life savings are wiped out. Hyper inflation makes your savings and investments worthless because the didn't grow nearly as quickly as prices rose. Yeah, you have the same amount of money you started with, but now everything costs hudnreds of times more to buy. Your month subscription to WoW now costs $15000 a month, so your $100 bucks in the bank doesn't quite cover it anymore.

So resetting the economy may sound okay on paper, in reality, it blows hardcore chunks, especially in economies with large amounts of savings (retirement plans, education funds etc). The idea is start again from scratch.

[marchohare]

At 10/10/08 11:24 PM, JoS wrote: ...The idea is start again from scratch.

Well, not quite. You adjust. But be sure to figure in the relative cost of Chinese, (East) Indian, and (illegal) Mexican labor.

Supply and demand.

[TheMason]

At 10/10/08 12:11 AM, JoS wrote: The US should stop complaining about its finacial woes. Zimbabwe has inflation rates of 231,000,000%. Now that is a real fucking problem.

I am wondering, are you trying to say that we Americans are whinning about something that could be much worse?

If that is the case, I agree (now that I myself have calmed down).

Unemployment is at 6.1%...which means 94% still has a job. Full-employment is when there are jobs for everyone looking for a job. Now there is debate on what full-employment is, but economists (depending upon the economic paradigm they ascribe to) place full-employment at between 2-7% (many put it at 5%). So if we are not at full-employment (some economists would claim we are), we are pretty close.

Gas prices are going down. It is now about $72-75 and I've seen gas prices drop from about $3.90 to $2.89. The lowest in my state (MO) is $2.66. This should be a good sign for the economy dropping by more than a $1/gallon.

Mortgages, about 0.2% (that's 2 tenths of 1%) of homes are being foreclosed.

Inflation is about 9%. This is about twice as what is normal, and that is disconcerting. However, with gas dropping this could be the magic bullet that cuts inflation.

If this is strictly about Zimbabwe, then one of the major differences is the Zimbabwe economy could possibly be reset more easily than the US economy.

1) The Zimbabwe economy does not have the effect on other economies that the US economy has. There is a saying: the US sneezes and the whole world gets the flu. Just look at the G7 meeting in Washington this week. Our SECTREAS (Secretary of the Treasury) calls a meeting and the Financial Ministers of the countries with the top 7 economies hops on an airplane.

2) If you reset an economy...people lose their savings. However, in a case of hyperinflation (expected to reach into the trillions) in an already impoverished system...there is not much to worry about in terms of savings. So I think this may be an option for Zimbabwe.

[ForkRobotik]

Zimbabwe doesn't really count, because western countries are playing with their money, much like they did to weimar germany in the 1920's. Punishment for their democratically elected government. The US deserves such a fate, VOTE MCCAIN!!!

[Prinzy2]

So why don't they just consolidate their currency?

[Der-Lowe]

At 10/12/08 01:28 AM, TheMason wrote: If that is the case, I agree (now that I myself have calmed down).

Unemployment is at 6.1%...which means 94% still has a job. Full-employment is when there are jobs for everyone looking for a job. Now there is debate on what full-employment is, but economists (depending upon the economic paradigm they ascribe to) place full-employment at between 2-7% (many put it at 5%). So if we are not at full-employment (some economists would claim we are), we are pretty close.

Frictional unemployment is considered to be 2-3%; although I agree the US has enjoyed a relatively low rate of unemployment (compare to Europe's two-digit), mainly due to its more dynamic labor market.

Gas prices are going down. It is now about $72-75 and I've seen gas prices drop from about $3.90 to $2.89. The lowest in my state (MO) is $2.66. This should be a good sign for the economy dropping by more than a $1/gallon.

Mortgages, about 0.2% (that's 2 tenths of 1%) of homes are being foreclosed.

Inflation is about 9%.

Really? Wow. I though you were at 5%.

1) The Zimbabwe economy does not have the effect on other economies that the US economy has. There is a saying: the US sneezes and the whole world gets the flu. Just look at the G7 meeting in Washington this week. Our SECTREAS (Secretary of the Treasury) calls a meeting and the Financial Ministers of the countries with the top 7 economies hops on an airplane.

Well, everyone is pretty much in panic.

2) If you reset an economy...people lose their savings. However, in a case of hyperinflation (expected to reach into the trillions) in an already impoverished system...there is not much to worry about in terms of savings. So I think this may be an option for Zimbabwe.

Not necessarily, hyperinflationary societies stop trading in its own currency.

[Der-Lowe]

At 10/12/08 02:07 AM, Prinzy2 wrote: So why don't they just consolidate their currency?

They will eventually; they're quite in a political struggle, I hear.

[Idiot-Finder]

At 10/12/08 01:33 AM, ForkRobotik wrote: Zimbabwe doesn't really count, because western countries are playing with their money, much like they did to weimar germany in the 1920's. Punishment for their democratically elected government. The US deserves such a fate, VOTE MCCAIN!!!

Your country's economy will get hit as well if the U.S. economy falls you know.

Fail

[Baalphegor]

At 10/10/08 12:43 AM, poxpower wrote: Now that's an instance where going back to some material standard is a good idea.

I suggest bags of dirt. Or maybe pebbles.

Why material? Set the standard of currency to electricity. Soon you'll see power plants and energy conservation acts everywhere. Who knows :)

[Jonno1975]

Inflation? I think it's just a load of hot air...

[JoS]

They were printing for a short time billion dollar notes.

[n64kid]

At 10/12/08 01:28 AM, TheMason wrote:

Unemployment is at 6.1%...which means 94% still has a job. Full-employment is when there are jobs for everyone looking for a job. Now there is debate on what full-employment is, but economists (depending upon the economic paradigm they ascribe to) place full-employment at between 2-7% (many put it at 5%). So if we are not at full-employment (some economists would claim we are), we are pretty close.

Unemployment can be broken down into 3 types, cyclical, structural and frictional.
http://www.bls.gov/news.release/empsit.t 01.htm
6.1% seems to be the average, when seasonally adjusted. My sources for cyclical unemployment only go up to Jan 2008, so I don't know how much of unemployment is due to the economy.

However, there seems to be a lot of hidden unemployment as the employment/population ratio seems a little off from the previous two years.
http://data.bls.gov/PDQ/servlet/SurveyOu tputServlet

Gas prices are going down. It is now about $72-75 and I've seen gas prices drop from about $3.90 to $2.89. The lowest in my state (MO) is $2.66. This should be a good sign for the economy dropping by more than a $1/gallon.

It's a positive effect of something negative. Less demand for oil=less production, less traveling=bad economic outlook.

Mortgages, about 0.2% (that's 2 tenths of 1%) of homes are being foreclosed.

My stats have 65% of all homes in America holding mortgages, with a national average 2.02% of those mortgaged homes either in or going into foreclosure. (2007 data)

Inflation is about 9%. This is about twice as what is normal, and that is disconcerting. However, with gas dropping this could be the magic bullet that cuts inflation.

For September, I'm seeing some early reports of 5.11%, meaning if infaltion stayed at that rate for the other 11 months, inflation for the year would be that.
http://inflationdata.com/inflation/Infla tion_Rate/CurrentInflation.asp
July 2008 has the highest rate of inflation at 5.6%, far off of 9%. Where'd you get that?

[Der-Lowe]

At 10/12/08 04:33 PM, n64kid wrote:

At 10/12/08 01:28 AM, TheMason wrote:

Inflation is about 9%. This is about twice as what is normal, and that is disconcerting. However, with gas dropping this could be the magic bullet that cuts inflation.

For September, I'm seeing some early reports of 5.11%, meaning if infaltion stayed at that rate for the other 11 months, inflation for the year would be that.
http://inflationdata.com/inflation/Infla tion_Rate/CurrentInflation.asp
July 2008 has the highest rate of inflation at 5.6%, far off of 9%. Where'd you get that?

*phew*
My intuition was incorrect.

Unemployment can be broken down into 3 types, cyclical, structural and frictional.
http://www.bls.gov/news.release/empsit.t 01.htm
6.1% seems to be the average, when seasonally adjusted. My sources for cyclical unemployment only go up to Jan 2008, so I don't know how much of unemployment is due to the economy.

We once had 2.7% Unemployment rate. That was before the oil crisis.

However, there seems to be a lot of hidden unemployment as the employment/population ratio seems a little off from the previous two years.
http://data.bls.gov/PDQ/servlet/SurveyOu tputServlet

Linky does not work =(

Also, a little off-topic (okay, kind of a lot) I found a correlation with unemployment and the homicide rate in Argentina! Go me!!!!!!! :D

Conclusion: unemployment is bad.

[TheMason]

At 10/12/08 04:33 PM, n64kid wrote:

At 10/12/08 01:28 AM, TheMason wrote:

I think we may be looking at two different things. I'm looking at something more general while you're looking at something specifically. But my point was that overall unemployment is not that bad even at 6.1. We are far from the 25% unemployment we had in the Great Depression.

However, there seems to be a lot of hidden unemployment as the employment/population ratio seems a little off from the previous two years.
http://data.bls.gov/PDQ/servlet/SurveyOu tputServlet

Could this (in part) be due to the issue of illegal (and thus undocumented) workers?

Gas prices are going down. It is now about $72-75 and I've seen gas prices drop from about $3.90 to $2.89. The lowest in my state (MO) is $2.66. This should be a good sign for the economy dropping by more than a $1/gallon.

It's a positive effect of something negative. Less demand for oil=less production, less traveling=bad economic outlook.

I'm not sure throttling back on gas usage is a negative. We need to learn to use less (hopefully through fuel efficiency). We did this in the late 1970s when Carter was Pres. Unfortunately, the 1990s hit and we thought it would be a good idea to buy SUVs...

Inflation is about 9%. This is about twice as what is normal, and that is disconcerting. However, with gas dropping this could be the magic bullet that cuts inflation.

For September, I'm seeing some early reports of 5.11%, meaning if infaltion stayed at that rate for the other 11 months, inflation for the year would be that.
http://inflationdata.com/inflation/Infla tion_Rate/CurrentInflation.asp
July 2008 has the highest rate of inflation at 5.6%, far off of 9%. Where'd you get that?ier

Earlier this summer we were hitting 9% so I was using dated stats. I hadn't seen September's (or August)...

[SmilezRoyale]

At 10/10/08 05:57 AM, ThePretenders wrote:

it doesn't HAVE to be gold per say. Just something that will keep the exchange rate from oscillating riddiculously.

[n64kid]

At 10/12/08 09:32 PM, TheMason wrote:

I think we may be looking at two different things. I'm looking at something more general while you're looking at something specifically. But my point was that overall unemployment is not that bad even at 6.1. We are far from the 25% unemployment we had in the Great Depression.

I have a knack of giving background information and assuming people know where I am going with it. I need to work on it.

What I was saying was that although unemployment is high given the rates from the past few years, it is still relatively low, and indeed, nowhere near levels of the depression.

Cyclical unemployment is the only unemployment that really matters in which the economy is to blame. Comparing this to numbers during previous recessions and depressions should be good data for really judging how good/bad the state of the economy. However, I don't have the latest data for cyclical unemployment and cannot do this.

With that said, hidden unemployment might exist. This just means that the unemployment rate could be much lower than it should be since people expect that the economy is bad, they might not look for work because they could think they wouldn't get hired if they wanted a job. These people would not be considered in the labor force and would not be counted as unemployed.

I consider full employment to be 3.5-5% and I agree with you that 6.1% is not bad at all. However, my point is that 6.1 is a simple number that may or may not accurately represent the state of the economy since the number is inherently imperfect.

Could this (in part) be due to the issue of illegal (and thus undocumented) workers?

I wouldn't know. I try to deal with facts but if the information isn't present, I use whatever resources I can find. I don't know the exact number of undocumented persons living here, I don't know how many hold jobs here, nor do I know what jobs they would take away from documented citizens.

But I see two other players in why this is.

1) There is a self-fulfilling prophecy.
Because the media has ingrained how terrible the economy is and how the world will end and how the dow will hit 3000 and since it's because we are funding a war and all that hoo haw, that people don't think they can get jobs if they apply. Therefore, to avoid rejection, they don't even look for work. Hidden unemployment.

2) Generation
Unemployment among 16-24 year olds is the highest rate there is. Since the offspring of the Baby Boomer generation are in this bracket, this could add weight to the population without adding as much weight to unemployment.

I'm not sure throttling back on gas usage is a negative. We need to learn to use less (hopefully through fuel efficiency). We did this in the late 1970s when Carter was Pres. Unfortunately, the 1990s hit and we thought it would be a good idea to buy SUVs...

What looks good is bad and what looks bad is good. If you know what's going on, you're not an expert. The markets are fickle and I went by a market analysis of what lower oil/gas prices mean. Now oil dropping 10 dollars a barrel is a terrible thing and futures go way down. How hillarious. Either way oil goes, it's all over for America. (I try to avoid CNBC but it's so funny to listen to)

Earlier this summer we were hitting 9% so I was using dated stats. I hadn't seen September's (or August)...

I think I know what you're talking about. It was some 1 week period where if inflation kept up at the same rate for 12 months, inflation would be 9% for the year. Of course, inflation didn't stay at that pace for the remainder of the month (I believe it was July) so the inflation for the month was set to 5.6% meaning if inflation stayed at that rate for the other 11 months, inflation would be 5.6%. It has since dropped and is continuing to drop because an increase in unemployment leads to a decrease in inflation. That and oil dropped meaning theres deflation trickling down to counter some inflation and in that case, the lower inflation can mean signs of a poor economy. I love how both healthy and terrible economies can have low inflation. Either way is good for holders of cash though.

So many ways to interpret this, so little data. =D

[n64kid]

At 10/12/08 07:03 PM, Der-Lowe wrote:

We once had 2.7% Unemployment rate. That was before the oil crisis.

I'm wary of unemployment being below 3.5% as I see there aren't enough people in the labor pool to accommodate growth, and it might deter producers who would otherwise be willing to establish business there.

However, there seems to be a lot of hidden unemployment as the employment/population ratio seems a little off from the previous two years.
http://data.bls.gov/PDQ/servlet/SurveyOu tputServlet

Linky does not work =(

http://www.bls.gov/
Try to find unemplyoment statistics and find the employment/population ratio for the last 10 years.

Also, a little off-topic (okay, kind of a lot) I found a correlation with unemployment and the homicide rate in Argentina! Go me!!!!!!! :D

Lol <3