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Associated Press: YOU are the reason for runaway inflation....

The Tradition

HR King
Apr 23, 2002
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REHOBOTH BEACH, Del. (AP) — While motorcading to his beach house last weekend, President Joe Biden could have looked out the window of his limousine and seen firsthand why he has struggled to contain inflation.

Lining Delaware’s Coastal Highway as it leads into Rehoboth Beach are miles of strip malls, outlet stores, restaurants, hotels and gas stations. The advertised price of gasoline was approaching $5 a gallon. Vacationgoers had packed into the parking lots of pubs and taquerias.

No one is happy that inflation is close to a 40-year high, but it will be hard to bring down prices so long as people keep eagerly spending.

Browsing the Polo Ralph Lauren factory store, Nina Cooper was displeased about her rising expenses yet she was still shopping for new outfits. Inflation was not enough to deter the hospital worker, who was grateful that a seven-minute commute spared her some pain at the gas pump.

“Everything is going up — look at these prices,” Copper said. “But you still got to live.”

Biden faces a delicate trade-off as he tries to help his fellow Democrats in the November elections. He needs U.S. consumers to pull back just enough so inflation eases, but not so much that the economy risks plunging into a recession.

The president has flicked at this idea in recent speeches, noting that the pace of hiring has slowed and “we’re beginning a shift to steady growth” after a rapid recovery from the coronavirus-induced recession. That recovery that was fueled, in part, by his $1.9 trillion relief package.

Consumers account for most U.S. economic activity, meaning they steer much of what happens with their collective choices. Their role tends to get overlooked in political speeches, which generally reduce the economy to talk about jobs, factories and other forms of production. Biden has gone so far as to say that his policies to promote port upgrades and domestic manufacturing will lower costs by improving production, a long-term fix to an immediate problem that can be reduced, simply, to demand exceeding supply.

Friday’s report on consumer prices is expected to show that annual inflation slowed ever so slightly to 8.2% in May from 8.3% in April. Economists surveyed by FactSet indicate the decline will largely be driven by expenses other than food and energy, as Russia’s invasion of Ukraine has led to higher prices in those categories worldwide.

Republicans are tapping into the public impatience with inflation remaining persistently high, instead of dropping as promised when the economy reopened after pandemic-related closures.

Senate Republican leader Mitch McConnell of Kentucky has attacked higher electricity and gas prices as ultimately the result of an ideological choice by the Biden administration to move away from fossil fuels. The GOP solution is to embrace policies that it believes would increase energy supplies.

“A few days ago, President Biden said soaring gas prices were just part of ‘an incredible transition’ that will leave us ‘less reliant on fossil fuels,’” McConnell said Tuesday in the Senate. “Did you hear that, American workers? Democrats say your financial pain is the necessary cost to make America more to the liking of the radical environmental left.”

Part of the problem with inflation is that consumers have yet to significantly cut back. AAA reported that average prices at the pump have jumped 62% from a year ago. But the Energy Department reported that gasoline usage in the U.S. has only fallen 1.8% over the past year, meaning that most consumers are accepting the financial burden imposed by inflation.

University of Michigan economist Betsey Stevenson, a former adviser to the Obama White House, said it would be helpful if Americans reduced their spending. This would lessen demand and allow supplies to catch up, easing pressure on the Federal Reserve to lower inflation through higher short-term interest rates.

“Fundamentally, the problem right now is the opposite of stagflation -- it’s regular inflation driven by an economy operating at or even above its potential, with consumer demand outstripping the capacity of the economy,” Stevenson said. “I’m hoping that people stop digging into their savings and cut spending a little -- not enough to slow the economy, but enough to slow the price increases.”

Stevenson also acknowledged that gas prices in particular might be driving the broader dissatisfaction, such that overall inflation could fall and do little to calm public anxieties so long as prices at the pump are high.

“Cars seem to be important to people’s sense of control and high gas prices for some might feel like losing your ability to just hop in your car and go where you want,” she said.

Despite the spike in prices, consumer spending increased faster than inflation during the first four months of this year. Whether consumers can maintain such robust spending will largely determine how the economy fares in the coming months.

 
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Makes you wonder...where’s all the money coming from? For years we hear about middle class struggles and lower income challenges, yet now it’s like everybody is spending like drunken sailors. I know that’s not the case, but what groups are driving the increase in consumer spending?
 
Stop buying things!

A lot of people either have quite a bit of dispensable income or they are spending their savings. Contractors are backed up for months. We were looking for a painter. They are booking August. Its hard to find any type of contractor just to give you a bid.
 
Stop buying things!

A lot of people either have quite a bit of dispensable income or they are spending their savings. Contractors are backed up for months. We were looking for a painter. They are booking August. Its hard to find any type of contractor just to give you a bid.
Try booking any kind of “fence work”...especially vinyl! Be patient!
 
Still have to go to work and eat. Some sectors will definitely see cutbacks. We'll have Q2 numbers in a couple of weeks.
 
Makes you wonder...where’s all the money coming from? For years we hear about middle class struggles and lower income challenges, yet now it’s like everybody is spending like drunken sailors. I know that’s not the case, but what groups are driving the increase in consumer spending?
I think people are running up credit cards, not saving for retirement, and trying to accumulate WANTS no matter what.

good news is we will have plenty of older well seasoned people working well into their 60’s in a few decades.
 
Well, that certainly is part of the issue. Of course, it's not just one thing. There are many, many things contributing to inflation. It's also why taking one small action isn't going to fix it.
 
No. But it probably does have something to do with their own stimulus packages

Uh, no

It has to do with pandemic fallout and supply chain problems, combined with energy price spikes from the war in Ukraine.

Ergo: not a whole lot either Canada or Biden can do to fix it in the near term. It's a global problem right now, not a US problem, and "America First" rhetoric doesn't fix it.
 
Why is regular gas ~$5.66/gallon for Canadians right now?


Since we canceled their pipelines, they should have PLENTY of domestic supply.

Something is wrong with your logic here.
 
LOLYes.

Inflation is happening worldwide. Not a "US" thing. No matter what your "conservative 'news' sources" tell you.

Lol. This coming from someone that gets their news from lolgop.

I don’t get my news source from any conservatives, that’s for sure. I just have sound understanding of basic economics.
 
Lol. This coming from someone that gets their news from lolgop.

What is your explanation for inflation, then?
Since Canada is currently paying MORE for gas than we are, and they have PLENTY of supply since the Keystone pipeline was canceled.

I'll hang up and listen....
 
What is your explanation for inflation, then?
Since Canada is currently paying MORE for gas than we are, and they have PLENTY of supply since the Keystone pipeline was canceled.

I'll hang up and listen....

Why are you bringing gas into this conversation? There is a whole lot more to inflation than just gas prices. Albeit, gas is a big contributor right this moment. My explanation is the same that has been explained ad nauseum on this board. Too much of an increase in the money supply at one time. This is a federal reserve problem.
 
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LOLYes.

Inflation is happening worldwide. Not a "US" thing. No matter what your "conservative 'news' sources" tell you.
Nice strawman. Maybe they should take a look at their inflationary policies as well. As far as I can tell, their policies aren't causing US inflation. The US dollar is still pretty strong against most other currencies.
 
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Nice strawman. Maybe they should take a look at their inflationary policies as well.

So, why is the US incurring inflation, then?
Can you link how each and every policy outside the US is impacting them, and us?

No, you cannot.
 
Why are you bringing gas into this conversation? There is a whole lot more to inflation than just gas prices. Albeit, gas is a big contributor right this moment.

Translated: "Why are you bringing gas into the conversation"
"Yeah, gas is really the problem right now"

🙄
 
Stop buying things!

A lot of people either have quite a bit of dispensable income or they are spending their savings. Contractors are backed up for months. We were looking for a painter. They are booking August. Its hard to find any type of contractor just to give you a bid.
Huh? You want people to stop buying things yet you’re looking to pay someone to paint.
 
The covid response was, and will continue to be until the federal reserve pulls back in that money supply. Period.

...which, AGAIN, is not explaining why OTHER countries are experiencing WORSE inflation than the US.
 
So, why is the US incurring inflation, then?
Can you link how each and every policy outside the US is impacting them, and us?

No, you cannot.
I've posted many times what the 2 drivers of inflation are in the US. Those same drivers exist in other countries as well, but the impact varies by the extent of those policies.

I'm probably going to regret taking the time to even point that out, because you are already entrenched in your lack of understanding.
 
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...which, AGAIN, is not explaining why OTHER countries are experiencing WORSE inflation than the US.

I already told you. They all had similar stimulus. Every country experiencing inflation right now did the same type of money printing in some way, shape or form as the US did. Most of those countries foolishly waited even longer than the US did to start tightening. They are further behind the 8 ball than we are. Also. You do realize who the leader in the world economy is, correct? There are more US $'s in circulation and buying goods and services than any other currency in the world, and it's not even close.
 
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I already told you. They all had similar stimulus. Every country experiencing inflation right now did the same type of money printing in some way, shape or form as the US did. Most of those countries foolishly waited even longer than the US did to start tightening. They are further behind the 8 ball than we are. Also. You do realize who the leader in the world economy is, correct? There are more US $'s in circulation and buying goods and services than any other currency in the world, and it's not even close.
Like Russia and China? Lol
 
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Lol at you for overall nonsense.

And avoidance.

So you don't believe the $6t increase in money supply has anything to do with the inflation we are experiencing? And I am not avoiding anything. I am laughing at you for using Russia and China to try to make a point. It's funny.
 
Uh, no

It has to do with pandemic fallout and supply chain problems, combined with energy price spikes from the war in Ukraine.

Ergo: not a whole lot either Canada or Biden can do to fix it in the near term. It's a global problem right now, not a US problem, and "America First" rhetoric doesn't fix it.


What was the Bank of Canada balance sheet January 2020?
What is it today?

Answer: 118 billion then, currently 462 billion.

If only we could figure out what causes prices to rise when the government prints money.

If, 20 years ago, a central banker explained what they would do in a crisis, maybe someone could have seen this coming:


A little parable may prove useful: Today [ed note: speech was given in 2002] an ounce of gold sells for $300, more or less. Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost. Moreover, his invention is widely publicized and scientifically verified, and he announces his intention to begin massive production of gold within days. What would happen to the price of gold? Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would collapse immediately after the announcement of the invention, before the alchemist had produced and marketed a single ounce of yellow metal.
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.


- Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. November 21, 2002
 
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