Comments on: U.S. GDP data starts to spell stagflation

By: AOLANHarvey

AOLANHarvey — Wed, 04 May 2011 01:51:03 +0000

GOOD!

By: SeniorMoment

SeniorMoment — Mon, 02 May 2011 06:22:41 +0000

Stagflation is not the most likely outcome today, because a habit of low inflation has been established. However, I am concerned that the Federal Reserve Bank doesn’t see a relationship between people working and spending. When the cost of capital is too low the situation exists like in Japan’s lost decade where the risks of hiring a worker are much greater than the risks of buying overly expensive equipment.

Stagflation comes from underutilization of the workforce coupled with low capital costs that make it nearly riskless to to displace workers with machines. Instead of productivity gains the result is a shortage of consumers, while nations that better utilized their workforce compete for natural resources driving up natural resource prices, such as to manufacture machines with Busnesses compensate for the lack of consumers by raising pricing margins in order to meet fixed costs. The lack of consumers is the “stag,” while the need for higher margins is the “flation”

By: martinm7703

martinm7703 — Sat, 30 Apr 2011 12:17:14 +0000

Let’s review — we had a financial crisis caused by the banking industry which Bernanke came from. Bernanke and the Goldman Sachs contingent in Treasury decided that the solution to having too much leverage was to leverage up big time — inject more stimulus than had ever been done in history. The best thing you can say about that approach was that it deferred the pain while it made the investment bankers rich (again). We have one branch of government printing money recklessly while another branch of government buys that same debt, and everyone pretends that things are fine. The emperor has no clothes, and the day of reckoning is coming, whether this is the 3rd year of the president’s term or not. In summer of 2007, the news about the mortgage crisis was fully known, yet the stock market kept making record highs right through December. What we are seeing now is deja vu all over again, as Yogi Berra would say.

By: Edopt1970

Edopt1970 — Sat, 30 Apr 2011 09:08:15 +0000

Bernanke said that the price of oil (gas)and food will not remain high for a long time…that is stupid, because as long as he debase the Dollar value and print more money, the price of energy will not come down !!. It is not about the supply and demand, it’s just LOGICAL investors are so Greedy to increase their wealth by borrowing the CHEAP Dollar, that is through commodities-thus Energy and the Metal prices will continue to go up. Go Ahead make a Loan and join the USD CARRY TRADE PARTY!!!!!!!!!!!!!!

By: mmugg

mmugg — Fri, 29 Apr 2011 17:33:18 +0000

Prices have gone up, but core inflation still hasn’t made a significant shift. There is no reason to begin to panic right now. If gas prices have hit a new normal and crop yeilds continue to be low for the forseable future, then infaltion will be a major concern. However, history suggests that the price of oil (gas) will come down and crop yeilds will increase. So while prices are high now, they are ot likely to remain that way.

By: Elektrobahn

Elektrobahn — Fri, 29 Apr 2011 13:51:54 +0000

I never thought I’d say this, but it appears that Mr. Bernanke has slipped up, badly. Printing money – in the hundreds of billions between QE1 and QE2 – turns out to have been just a catalyst for inflation, as many pundits predicted. Mr. Obama’s reckless borrowing and spending binge coupled with his unstated policy of driving down the US dollar certainly isn’t helping. What did Mr. Obama think would happen to commodity prices given a US dollar meltdown? Sorceror’s apprentices, indeed. This will end badly.

By: tiktin

tiktin — Thu, 28 Apr 2011 20:54:27 +0000

I wonder what Bernanke is going to do when he finally realizes his theories are wrong and his plan isn’t working. Right now he is in denial. Economy slowing down? It’s just temporary, it will pick up again. Inflation going up? It’s just temporary, it will slow down again. In the end I imagine he will go home and put a bullet through his head, poor man. But that will not be of much comfort to the rest of us.