What money is real?
Gold is no more real than dollar bills. They both depend on a notion of value that is almost 100% imaginary faith.
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Fake money.
-John
Really?
Ohh for fucks sake.
Productivity-driven deflation has been a feature of the economy for centuries. Electronics like TVs and computers are a prime example; has commerce in laptops ground to a halt because today's laptop that costs $1,000 will be replaced with faster model next year that only costs $900?
I'll leave to you to defend why the Fed should prop up bubble prices in financial assets rather than letting natural price deflation occur. Feel free to explain why housing should cost $400/square foot rather than $100 or even $1, and why it would the Fed should be taking extraordinary measures to keep it high.
And you think this is a horrible thing?
The past 4 years has been the second largest land grab in US history. The fed is printing money out of thin air to buy as much property as they can, with the banks acting as a broker for the deals.
The FED has bought property?
P.s. Just curious: what could you print money out of, instead of thin air? I always found this expression fascinating...
What do you think mortgage backed securities are?
Mortgage backed securities are not property (at least in the sense that they are not real estate).
You want to know why the fed was only buying $85 billion a month? That is all the printing presses could make in a month.
Is this a joke? You realize we don't actually print money on a printing press when the fed creates it, right?
Mortgage backed securities are not property (at least in the sense that they are not real estate).
Are you saying the fed does not own the mortgages in those securities?
Buying someone's mortgage is not buying property.
Whoever owns the mortgage owns the property.
The owners of the final MBSs only own right to the financial fluxes generated by the security.
Show me a chart with home prices in relation to inflation.
He also led them to record profits
More profitable than Apple and Exxon COMBINED. Impressive
So your plan is for everything to get cheaper but for everyone to get paid the same. I hope you can see the obvious flaw in your plan.
The current system of everything getting more expensive while wages stay the same or decline does work a lot better, for a few, I guess....
No, the FED was created and evolved with the single purpose of maintaining price stability. In time, as we acquired more refined understanding of monetary economics and a lot more computing power, a secondary mandate to keep the economy close to potential output was added, always conditional to the first one. Some central banks still basically only have the primary mandate.
Allowing deflation would not lead to anybody being able to buy anything better than today. It would lead only to horrendous economic destruction. If you want examples of what deflation looks like you have The Great Depression and the Japanese Lost Decades to have a look at.
Again, your questions are legitimate, but you have the wrong interlocutor int he Fed. They are not monetary policy questions, but economic policy questions.
Except that hasn't been the case. Incomes since the 1960s have risen quite slowly after adjusting for inflation, but have still generally increased. They have not stayed the same or declined. That might have been true over the last few years, but that's normal for recessions.
Regardless, even if that were true that would still be preferable to deflation.
Funny how they are the only ones that think that "price stability" equals "ever increasing prices". Their mandate is not "create a stable increase in prices" but that is what they have done. I can understand erring on the side of caution and thus ending up with very slight inflation but I see absolutely zero reason that they can't, and would posit that their charter actually demands by law, target inflation at 0. No inflation and no deflation, unchanging, the very definition of "stable".
Whoever owns the mortgage owns the property.
Wages have not kept up with inflation. Wages have not kept up with the inflation in home prices either and despite the decline still haven't caught up.
As I said, it is preferable to a few.
And not once have I argued in favor of deflation, I have always and will continue to argue in favor of a zero sum policy. No inflation and no deflation, according to some the fed is incapable of preventing us from entering some sort of death spiral if they were to even attempt such a thing.
You are kind of answering your own question. You don't target a rate of zero because deflation is SO bad that you don't even want to get close to it. Low, sustained inflation is almost universally understood by economists to be the most desirable outcome.
I am sorry but a few 10ths of a percent of deflation for a single quarter or even a year before things can be tweaked to take said deflation out of the system isn't nearly as bad as you seem to believe it is. We aren't talking about massive swings in either direction nor are we talking about something that can't be tracked nor are we talking about something that can't be tweaked as needed in order to stave off even absurdly minimal deflation. In this day and age the Fed could quite easily set a target inflation rate of 0 and give or take a few 10ths of a percent to either side hit that mark.
The reason they won't (because they can) is because of the .govs debt. Period, full stop, end of story. If you wish to argue for or against that policy please feel free but lets at lest be honest about the reasons they do things.
At the same time, inflation combined with absurdly low interest rates make things that used to be necessary for our economy, like actually saving money, a bad financial move. I'm not sure what kind of economy you wish us to have but one in which saving money is a bad financial decision isn't what I would call ideal.
So we now live in a society in which its better to borrow money and downright foolish to save any significant sum and the banking sector is taking an ever increasing chunk of the GDP pie (making a select few even wealthier and the rest poorer). I honestly wouldn't think that the left would be so supportive of such a thing but as I always say, different names but owned by the same group of elite assholes.
they have kept up with inflation.
Funny how they are the only ones that think that "price stability" equals "ever increasing prices". Their mandate is not "create a stable increase in prices" but that is what they have done. I can understand erring on the side of caution and thus ending up with very slight inflation but I see absolutely zero reason that they can't, and would posit that their charter actually demands by law, target inflation at 0. No inflation and no deflation, unchanging, the very definition of "stable".