[Kokomoxcvcv]

What the **** is your problem, dude? Inflation continues to be low or negative. Why do you think that higher interest rates are necessary?

[huerta]

"Inflation continues to be low or negative"

It's true that CPI was reported as 0.8%.

However, there are many who have doubts about the accuracy or meaningfulness of this figure (example, the abuse of the hedonic deflator).

1. If you define 'inflation' as primarily a monetary rather than asset phenomenon then the apparently low rate is just a artifact of banks continued unwillingness to lend for the time being and the fact that bank reserves don't cause asset inflation. Arguably, they should be considered part of the money supply and thus part of monetary inflation.

2. I assume that banks are still actually in the moneylending business and not yet completely government operated (i.e. Royal Bank of Scotland situation). Therefore all that newly created money they are not loaning into circulation must inevitably come into circulation. Monetary inflation eventually leads to asset inflation.

3. The obviousness of the fact that no country in history has succeeded in depreciating its way to prosperity. Weak currencies are a sign of eventual inflation. Even the Asian economies needed productive enterprises and industry, not just weak currencies. A 0% effective rate inevitably produces monetary inflation. Asset inflation and monetary inflation may not always co -relate over the short term, but they do over the long term.

Unless you are trying to argue that there is only such a thing as asset inflation (increase in prices), in which case there's no point in continuing this.

[mikaelluioy]

In answer to the OP in relation to the US, it will be when the CPI-U and other measures of inflation go above a 2% annual increase on a sustained basis. On a year-over-year basis, we're still experiencing deflation. But in comparison to the low in December '08, we're experiencing a little lower than 2% inflation.

I doubt the Fed will be too eager to raise rates considering the deflation we experienced at the end of last year. Deflation is a rare bird, with November '08 being the worst monthly deflationary reading by far in the post-War era.

[crycleascentyv]

I love the fact that trev thinks he's qualified to give advice on what "the interest rate" should be, when he's apparently completely ignorant of the fact that there are actually many, many interest rates.

Trev, "the interest rate" is, at least in the US and Canada, the target for short-term yield on government bonds. Generally, movements in this rate affect the more relevant rates like the risk-free rate (say, LIBOR rates), and movements in this rate directly affect consumer rates.

Trev, nobody is FORCING THE BANKS TO LEND AT 0%.



They charge a spread between the price they pay for credit and the price the consumer pays.

[DINAKuncher]

Noone forces them too and therefore they do not. There is almost no interbank lending now, largely because the risk is greater than the return

Are you ****ing stupid? There's plenty of interbank lending. When there wasn't much (9-12 months ago), the TED spread (that's the SPREAD between treasury rates and, basically, interbank rates) went UP. What the **** does the spread have to do with the ABSOLUTE VALUE of the lower quantity?

Get a ****ing clue, dude. Do some reading before sounding off.

[Bounce]

It's obvious trev knows NOTHING about how an economy, economics and financial systems work based on the various threads he's posted in. I advise ignoring him.

No one cares what you think.

[lopesmili]

Apt analogy, Shane.

[Konidurase]

Is this Seeker's new BUY GOLD thread? Is he just coming here to validate his predetermined opinions?


Gold is ****ing useless. Everyone should stop buying it. Now there's a ****ing gold bubble thanks to people like Seeker. It's all going to come crashing down, and I'm going to laugh. I'M GOING TO LAUGH.

[Sliliashdes]

Are you ****ing stupid?

IIRC he's a biblical literalist.

[drugstore]

It's still stupid. It's a random market.

I've got a 25% return since April on some small-cap index funds I bought. And unlike gold, it's still going to keep going up.