[Kaiminani]

One sign of insanity is attacking the wrong target...tire goes flat, kick the cat, etc.

By that definition every school-yard bully is insane.
That's just impotent rage, not insanity.

[tony soprano]

Originally Posted by LIS123

I don't know about the COLA changes, but negative inflation is the last thing we have to worry about. Helicopter Ben (Bernanke) has increased the money supply significantly. Many people (myself included, though I'm not an Economist) define inflation as an increase in the supply of money (without respect to prices).

Ben is a money printer. He is definitely NOT providing us with 'negative inflation.;

I don't disagree with your definition of inflation but the threat of a deflationary spiral was very real. Housing prices are off 30-60% from their peak in many markets. Rents are down. Gasoline is off ~35% from its peak. Natural gas has fallen ~55%. Oil is still off 40-45% from it's peak. That is deflation or "negative inflation".

My intent is not to defend the lack of a SS COLA increase but it would be difficult to make a strong case for inflation over the last year. That's not to say things can't and won't change going forward. The trick Bernanke is faced with is withdrawing stimulus before inflation rears its ugly head, without tipping the economy into the frequently mentioned double-dip recession.

[LIS123]

Originally Posted by tony soprano

I don't disagree with your definition of inflation but the threat of a deflationary spiral was very real. Housing prices are off 30-60% from their peak in many markets. Rents are down. Gasoline is off ~35% from its peak. Natural gas has fallen ~55%. Oil is still off 40-45% from it's peak. That is deflation or "negative inflation".

My intent is not to defend the lack of a SS COLA increase but it would be difficult to make a strong case for inflation over the last year. That's not to say things can't and won't change going forward. The trick Bernanke is faced with is withdrawing stimulus before inflation rears its ugly head, without tipping the economy into the frequently mentioned double-dip recession.

I disagree with the real threat of a deflationary spiral. If inflation is a rise in the money supply, then deflation would be a contraction in the money supply. Thanks to Uncle Ben, there has been no contraction in the money supply or deflation.

Home prices fell b/c they were bid up to artificially high levals thanks to cheap interest rates, speculators, easy money, predatory lending and other reasons. I also think oil prices were artificially high, so wouldn't take their decline as a sign of deflation.

Bernanke needs to withdraw the stimulus as soon as possible. This is going to lead to a weakening in the Economy, which we need b/c of the Economic mistakes made in the past. If Bernanke tried to cover up this recession by printing money, he is just going to cause much larger problems down the road.

[tony soprano]

Originally Posted by LIS123

I disagree with the real threat of a deflationary spiral. If inflation is a rise in the money supply, then deflation would be a contraction in the money supply. Thanks to Uncle Ben, there has been no contraction in the money supply or deflation.

Home prices fell b/c they were bid up to artificially high levals thanks to cheap interest rates, speculators, easy money, predatory lending and other reasons. I also think oil prices were artificially high, so wouldn't take their decline as a sign of deflation.

Bernanke needs to withdraw the stimulus as soon as possible. This is going to lead to a weakening in the Economy, which we need b/c of the Economic mistakes made in the past. If Bernanke tried to cover up this recession by printing money, he is just going to cause much larger problems down the road.

It doesn't matter why prices went down, the fact is they went down. It should be pretty obvious that you aren't experiencing inflation when prices are in a freefall. The increase in money supply was in part to stem deflation, or more cynically, to re-flate prices. An increase in money supply is inflationary but it doesn't occur in a vacuum.

If you destroy demand more rapidly than you print money, the net effect can still be deflation. Nationally, we have the highest unemployment rate we've seen in decades. That's demand destruction. By some estimates the housing bubble bust and equity markets have vaporized $11 Trillion in net worth. That's more demand destruction. In short, regardless of the increase in money supply we have not experienced any meaningful YoY price inflation.