Monetary policy

Years ago I worked for a trucking company as a rate analyst. Bureaucrats in the federal government used to send trucking companies books in which the bureaucrats had set the prices for all trucking routes in the US. You could go to jail for not charging those rates. In the 1970's Bureaucrats set the prices for all transportation, including air fares. They set prices for oil and natural gas, interest rates on savings accounts and many other items. How capitalistic was that?

May I suggest to The Economist that they add +1, -1 ratings to comments. Some of the comments on this post are blitheringly stupid.

Flymulla, I think you misread American history. The majority of Americans had adopted socialism long before the Russian revolution. Read speeches by Teddy Roosevelt and Woodrow Wilson. Of course, they called themselves “progressives” in order to distance themselves from the atheism of socialists, but economically they were socialists.

Americans envied the USSR and thought it had the best economic system. Americans didn’t like the atheism and dictatorship. They wanted to maintain religion and democracy while moving toward the same economic system. That’s why Hoover tried government intervention in the economy for the first time at the start of the Great Depression. Coolidge, the president Hoover replaced, considered Hoover a socialist.

FDR desperately tried to recreate the US in the economic image of the USSR. Eisenhower’s interstate highway system was effort at Soviet style central planning to boost the economy. Kennedy’s space program imitated the Soviet system. Finally, there was LBJ’s “great society.”

Reagan was the first president to break with the trend of imitating the USSR on economic matters.

Until the collapse of the USSR, most Americans, and especially those in government honestly believed that the USSR would become richer and more powerful than the US because of its superior economic system. Paul Samuelson, who wrote the best selling economic textbook for 50 years regularly informed students of that fact.

Throughout the 20th century the US had a love-hate relationship with the USSR. The US tried to imitate the Soviet economic system while fighting its atheism and totalitarianism. Americans tried to recreate Soviet socialism while retaining American religion and democracy.

The U.S .population, which was one-third smaller than Russia's at the time of the Revolution, is now 313 million and growing: "The Soviet Union put the United States on the ideological defensive for the first time in its history. ... In November of 1917, V. I. Lenin led the Bolsheviks to control of Russia in 'ten days that shook the world.' Now in putative control of a huge nation, the Bolsheviks saw themselves as leaders of a global movement to liberate people everywhere from bonds forged in the American and French Revolutions of the late eighteenth cen¬tury and fastened on the limbs of workers in particular during the Industrial Revolution of the nineteenth. Lenin defined imperialism as 'the monop¬oly stage of capitalism' and 'a colonial policy of monopolistic possessions of the territory of the world which has been completely divided up. We only want to keep on thinking kicking Greece and not use any other method. "Whether as supporters or critics, Americans paid close attention to Rus¬sia because it seemed to exemplify a new revolutionary spirit detached from their own largely
liberal, middle-class tradition; indeed, it seemed rooted in an attack on middle-class capitalism and democracy as enslaving rather than liberating forces. Tensions ran high in the United States because the revo¬lution in Russia implied that a communist. . “Constant kindness can accomplish much. As the sun makes ice melt,kindness causes misunderstanding, mistrust, and hostility to evaporate.” ~ Albert Schweitzer (1875-1965)
I thank you Firozali A.Mulla DBA

core inflation is an idiotic number used to exclude the things going up in price and include the things going down in price.

According to the BLS...

Inflation:
2006 2.5%
2007 4.1%
2008 0.1%
2009 2.7%
2010 1.5%
2011 3.0%

2nd last column....
data back to 1913

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

As for "core" inflation....

Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He proposed—albeit unsuccessfully—that the Labor Department, which prepared both seasonally adjusted and non-adjusted unemployment numbers, should just publish whichever number was lower. In a more consequential move, he asked his second Federal Reserve chairman, Arthur Burns, to develop what became an ultimately famous division between “core” inflation and headline inflation. If the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of “volatility,” categories that happened to be troublesome: at that time, food and energy. Core inflation could be spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. (The economic commentator Barry Ritholtz has joked that core inflation is better called “inflation ex-inflation”—i.e., inflation after the inflation has been excluded.)

http://harpers.org/archive/2008/05/0082023

Regards

Regards

I actually ate unicorn tonight - am I doing something wrong? Cheaper than steak for the unemployed that Ben evidently cares about so much.

I'm left to muse that Mr Grassley must say good-bye when he enters a room and hello when he leaves, and wears his shoes on his head.

S.E.C. Is Avoiding Tough Sanctions for Large Banks
By EDWARD WYATT | New York Times
2/3/2012

WASHINGTON — Even as the Securities and Exchange Commission has stepped up its investigations of Wall Street in the last decade, the agency has repeatedly allowed the biggest firms to avoid punishments specifically meant to apply to fraud cases.

By granting exemptions to laws and regulations that act as a deterrent to securities fraud, the S.E.C. has let financial giants like JPMorganChase, Goldman Sachs and Bank of America continue to have advantages reserved for the most dependable companies, making it easier for them to raise money from investors, for example, and to avoid liability from lawsuits if their financial forecasts turn out to be wrong.

Senator Charles E. Grassley, an Iowa Republican who serves on committees that oversee the S.E.C., said he was baffled that the agency had recently asked Congress for more enforcement powers when it had ceded much of the power it already had.

“It’s really hard to see why the S.E.C. isn’t using all of its weapons to deter fraud,” he said. “It makes already weak punishment even weaker by waiving the regulations that impose significant consequences on the companies that settle fraud charges. No wonder recidivism is such a problem.”

http://www.nytimes.com/2012/02/03/business/sec-is-avoiding-tough-sanctio...

Regards

Loan sharks knew that if they took the dollars printing machines under their control they could suffocate the world ...they could initially suffocate USA and after taking the USA from the Americans, they could move and suffocate the whole world and take the countries from their people.

FED printed cheap money and loansharking multiplied this money in an unnatural way within the American economy boarders and they discarded them abroad so that they did not threaten USA. USA became the first state in the world with artificial “breathing”...

It cannot be possible but just in the USA for only the last year, more than one million houses were seized. It cannot be impossible but the New World has returned to tents and shelters ..has returned to the ages of Columbus. It cannot be possible that we allow to a few loan sharks looting the toils and the assets of people...

http://eamb-ydrohoos.blogspot.com/2012/01/global-debt-crisis.html

------------------------

Global Debt Crisis

Authored by PANAGIOTIS TRAIANOU

Republicans concerned that the Fed is focusing too much on the unemployed? Nothing remotely political or (heartless) about that.

Well, well. When it was Greenspan's turn, Congress would bow down before him and offer to shine his boots by licking them. Now it's Bernanke's turn and they spit on him. Honestly, do they actually need the Chairman there, or would they do just as well with a cardboard cut-out?

How many of US know that it was CONgressman Jim Leach (R-IA) that co-authored the CITIBANK RELIEF ACT, 1999 that unleashed predatory bankers on US ? The Gramm-Leach-Bliley ACT removed safety regulations put in place by the Glass-Steagall Act.

Why would they have Symphony for the Devil? What's troubling them is the nature of his game.

Alas, the senators are trying to make Bernake responsible for things that are not theirs to be critical of. Yet their very system leaves their president without the power to manage their fiscal policy. The congress and senate have to do their job. They are not and have not... listen to the State of the Union. You know why Canada has a good fiscal regime... because the Prime Minister, when he has the majority has power. Unlike the CEO of United States of America. Paul Martin continued what Mulroney initiated and the current Government is staying to Course from Trudeau's inflationary population pushed fiscal spending and the consequential result of high inflation, massive debt and out of control deficits.
The US Senate is just playing the blame game. The problem with monetary policy is every goal contradicts the other. It is almost impossble to have Full Employment, Economic Growth and Stable Price Levels at the same time.
That is Bernake's job.. tought one I would say.

Who spilled the beans about the unicorns?

In the last two years I've seen my rent go up 10% (which I've read is the national average increase), the cost of filling my sedan with gasoline go up 50%, and the FAO food price index increase by nearly 20%. But I'm just a lowly civilian rather than a mighty econometrician, so I'll pretend that they know best and go spend as if the cost of expenditures are rising far more rapidly than income.
By the same measure, of course, true unemployment is closer to 15%. So I suppose the government is fudging both numbers.

"Core" inflation is a useless metric.

"Hey, why don't we measure the changes in the prices of jewelry boxes and lawnmowers! It's not as if the average bloke spends much money on things like, oh I don't know, FOOD and ENERGY!"

Democrats did the same thing in 1990 and 1991. They supported an "independent" Fed that was too tight because it would hurt GHWB while Republicans (back then) wanted policy to be looser because they were worried about a balance sheet recession. It's just politics, get over it.

Inflation freaks with little to no understanding of economics are dime-a-dozen in the White House and on the internet.

The obsession on inflation is what brought ECB's Trichet to minimize the importance of the risk of a crisis when he was ECB head. the EU would have been in much less a dilemma if the policy would have not been so bent on maintaining inflation down. Now the obsession is on austerity, mainly on Merkel's imposition to the other 26 EU members.