The Specter of Stagflation

To Ohmstede: Yes, many people live beyond their measn. They are not necessarily stupid. Inflation has outpaced salary for a significant number of occupations over the last decade. The financial institutions are among the most aggressive sale forces that exist, Way back in the 70's when telemarketing was big, banks did more telemarketing than any other business--selling loans to consumers, farmers and small businesses. Look at the ads on tv, the junk mail and spam. The offers for loans and credit cards are outrageous. My parents generation had repeated and strong message that acceptable consumer debt was home mortgage. My generation had mixed messages. The generation below me (I am 55) has an overwhelming message that debt is normal. Did you notice that as soon as the recent tax rebate/credit was passed that financial institutions immediately began advertising cards to spend the money without having to wait for the credit?
Some people are stupid and/or greedy but many are not. The sad part is that the people who got sucked in are getting help, the lending institutions continue to pay bonuses in excess of a million dollars to executives and often several hundred thousand to people on the board of directors while the people who are saving and investing for retirement with a 100 shares of their companies or in mutual funds that own the companies are getting shafted as the stock prices plummet.

If people make stupid mistakes, they should pay and learn from them. Living well beyond your means is a huge mistake and when the bill comes, they should be made to pay. If I go to Las Vegas and bet 10,000 on something and loose, the Government should not bail me out. Same thing, people bet on their house going up in value and leverage them to the 9's, they bet, they lost, they pay.

free market queen wrote:
"Debt is a bad thing and people want to live larger than what they should. The democrats want to intervene? The last time I checked when government intervenes with the free market is risky for the overall health of the market."

free market queen should re-read her history. The Bush administration has been "interfering" in the free market for quite some time, with corporate welfare handouts for big business. She's right that this is unhealthy for the market - but don't blame the Democrats for this debacle.

free market queen wrote:
"Debt is a bad thing and people want to live larger than what they should. The democrats want to intervene? The last time I checked when government intervenes with the free market is risky for the overall health of the market."

free market queen should re-read her history. The Bush administration has been "interfering" in the free market for quite some time, with corporate welfare handouts for big business. She's right that this is unhealthy for the market - but don't blame the Democrats for this debacle.

I hope that you all learned a lesson and do not vote for McCAIN.
McCAIN is not economically grounded and will continue BUSH policies. ECONOMIC FEUDALISM. STAGFLATION OCCURS WHEN THE GOVERNMENT RIps off it's own people and medals to much with the FED. THE FED reduce interest rates again.

THE MEDIA LOVES TO create a crisis and a panic, because they are controlled by the same entities that want the "average JOE"S" to spend at all COSTS. IT is a REFLECTION OF THE BUy AT ALL COSTS ATTITUDE OF THIS ADMINISTRATION AND GREEDy INVESTORS. TOO MUCH MEDALING. THE MARKET MUST SUFFER A LITTLE, WHAT GOES Up MUST COME DOWN. IT iS A NATURAL CyCLE. INTEFERING WITH THE CyCLE over and over again will cause weird things to happen like STAGFLATION.

the central theme that the Fed controls inflation may be wrong! this assumes that the declining dollar and inflated imports are a minor factor. since the US economy no longer seems to control the price of oil, the US economy may no longer control much at all.

You're exactly right about wage increases and everything else. Unemployment has increased significantly. Those countries will loose the most from free trade, due to Uinted States lagging behind on wages and job lost. America needs more training programs to teach our people the technical jobs and keep jobs here in America. Americans need to work to earn a living like the foreign countries.

I hope that you all learned a lesson and do not vote for McCAIN.
McCAIN is not economically grounded and will continue BUSH policies. ECONOMIC FEUDALISM. STAGFLATION OCCURS WHEN THE GOVERNMENT RIps off it's own people and medals to much with the FED. THE FED reduce interest rates again.

THE MEDIA LOVES TO create a crisis and a panic, because they are controlled by the same entities that want the "average JOE"S" to spend at all COSTS. IT is a REFLECTION OF THE BUy AT ALL COSTS ATTITUDE OF THIS ADMINISTRATION AND GREEDy INVESTORS. TOO MUCH MEDALING. THE MARKET MUST SUFFER A LITTLE, WHAT GOES Up MUST COME DOWN. IT iS A NATURAL CyCLE. INTEFERING WITH THE CyCLE over and over again will cause weird things to happen like STAGFLATION.

Exactly my reaction to this piece, Jaelithe: what wage increases could he possibly be referring to. Wage increases have been trailing *real* inflation (as opposed to the contrived statistics the government creates)for decades. Free trade agreements only made the situatiion worse. And now that the American consumer has tapped out his home equity, there's just not going to be the kind of strong demand that drives inflation for a long, long time. And the risk of rising unemployment? Not much here; they've already sent most of those jobs to India, China, and Latin America. It's those countries that have the most to lose from the inevitable closing of American consumer pocketbooks. They are the ones who will bear the brunt of the pinkslips. Time for those countries to experience "downsizing" -- corporate America-style.

You are right on. I was a newly wed during the 70s when Carter came in to office. We lost our jobs, interest was 22% so we couldn't hardly pay for our farm. Then Carter and company put a luxury tax on the toys of the "rich" and put another 2 million or middle class workers out of a job. Reagen came in and gave us tax breaks, took off the luxury tax and put everyone back to work. From that time on I became a die hard Republican.

There are several things I'm doing to fight stagflation. 1) I gave away my car and received a huge tax credit at AutoGiver.com 2) To on my electric bill I went to SunLightTech.com and got some solar panels for outdoor lighting . 3) I consolodated my outstanding creditcard bills at MoneyStuck.com 4) I use healthnradiance.com to save on my medical cost. I am also carpooling now to work.

This article posits that easier credit will cause wage inflation, but we certainly haven't seen that happening yet, at least not among average people. Middle class wages in the United States have been stagnant for years in the face of rising energy, food, and health care costs; this fact is widely known and has lately been a topic of frequent discussion among economists (and politicians).

Is the author referring to wage inflation among company CEOs or Hollywood actors? Because that's the only wage inflation I've seen happening.

A radical mind shift is needed in America. Borowing for foreigners to 'stimulate the economy' is like getting a second mortgage to pay up the current one that you could no longer pay....But hey, isn't the goverment behaving like its own irresponsible people that took loans that they can not pay?
The only difference here is that the foreign lenders are not fools, and they are not going to repeat the same mistake the subprime national lenders made. At some point somebody has 'TO TAKE THE MEDICINE' and
say no more subsidy for stupidity and greed.

How does the federal debt fit into all of this?

I agree, the feds need to stop lowering rates. It won't help anymore. Many people are stuck with high credit card bills and student loans ect. I consolidated all my loans at MoneyStuck.com Highly Recommended.

People, one element of the equation that is frightenlingly absent in discussions like this is the decrease in value (internationally) of the dollar. This will continue to spiral downward due to the incredible fiscal irresponsibility of the current administration and the congress for allowing it. In just 8 years the national debt has skyrocketed to mars and beyond from 5 trillion to 10 trillion, and the war expenditures in the middle east will continue to add to the deflating value of the dollar due to the debt funding by such countries as China and Saudi Arabia. China has already seen the writing on the wall and needs to diversify its investment and wants to cease funding US treasury bonds. Most nations as well are at a point of wanting to do the same thing. We CAN NOT pull ourselves out of the inevitiable recession and stabilize our currency until we become responsible in our national budgetary policies. Regardless of your position on military police actions, the funding of such endeavors will collapse us if we continue the war for "another 100years if that is what is needed.:"( As John McCain has stated.) It wont take even another 5 to bring us to a depression if we continue propping up corrupt middleeastern dictatorship/ puppet democracies. NONE of the candidates will even address this issue, because of the hidden and unspoken need of a controllable global economy based out of Iraq.This is what has been intended all along. Russia is to volitile and manipulative to count on for European oil needs, so the U.S. ties with the European countries need to have a sustainable oil source prevents our government from extracting our military presence from countries like Afghanistan and Iraq and even soon to be Iran. The western world powers believe they can control and manipulate the backward middle east, but Russia and China would never be able to be controlled. Wait and see, 10 years from now the new global Trade center will probably be in Iraq somewhere close to Bagdad or the ancient center of word affairs, Babylon.

People, one element of the equation that is frightenlingly absent in discussions like this is the decrease in value (internationally) of the dollar. This will continue to spiral downward due to the incredible fiscal irresponsibility of the current administration and the congress for allowing it. In just 8 years the national debt has skyrocketed to mars and beyond from 5 trillion to 10 trillion, and the war expenditures in the middle east will continue to add to the deflating value of the dollar due to the debt funding by such countries as China and Saudi Arabia. China has already seen the writing on the wall and needs to diversify its investment and wants to cease funding US treasury bonds. Most nations as well are at a point of wanting to do the same thing. We CAN NOT pull ourselves out of the inevitiable recession and stabilize our currency until we become responsible in our national budgetary policies. Regardless of your position on military police actions, the funding of such endeavors will collapse us if we continue the war for "another 100years if that is what is needed.:"( As John McCain has stated.) It wont take even another 5 to bring us to a depression if we continue propping up corrupt middleeastern dictatorship/ puppet democracies. NONE of the candidates will even address this issue, because of the hidden and unspoken need of a controllable global economy based out of Iraq.This is what has been intended all along. Russia is to volitile and manipulative to count on for European oil needs, so the U.S. ties with the European countries need to have a sustainable oil source prevents our government from extracting our military presence from countries like Afghanistan and Iraq and even soon to be Iran. The western world powers believe they can control and manipulate the backward middle east, but Russia and China would never be able to be controlled. Wait and see, 10 years from now the new global Trade center will probably be in Iraq somewhere close to Bagdad or the ancient center of word affairs, Babylon.

Any president (OR PRESIDENTIAL CANDIDATE! I see no real "change" on it's way) gets in trouble when they make it their job to solve problems they shouldn't. When on the campaign trail, they're always asked things like "my husband lost his job last year, what will you do to make sure that doesn't happen to others?" or "How will you help me stay in a house I can't afford?" or "I prefer to spend rather than save money, how will you provide for my retirement?".
The answer from any candidate should be "I'm not going to do anything about that, it's not up to the president to to guarantee any of those things."
I have yet to see any president or candidate correctly answer those questions.