The PPI was released yesterday (up 1.8% in June) and today the CPI appears, showing an upward move since December 2008, and now rising at a 3-month seasonally adjusted annual rate of 3.3%. The food index has stopped falling. “Most components of all items less food and energy posted increases; the indexes for shelter and medical care rose slightly, while the indexes for new vehicles, used cars and trucks, recreation, and apparel all increased at least 0.5 percent.” The trend of falling prices, the great boon of the recession and a wonderful relief for all consumers, seems to be at an end.
Source link: http://blog.mises.org/10286/prices-respond/
Prices respond
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So we’ve been stimulated? Time to quit using the picture of the pot of decaf coffee and switch to a picture of a “middle class” person unable to purchase a loaf of bread.
So all the newly printed Non-Federal Non-Reserve Notes (including the first $700 billion) are finally reaching Main Street? I’m surprised it’s only 3.3% and not 20% or 50% or 1000% or more like Zimbabwe or Weimar Germany or something. There’s been no “recovery”, just a bailout of the malinvestments that should have been liquidated. That will cause more harm for everyone else because the more Non-Money they use to bail them out, the less valuable eveyone else’s is. So it helps the malinvestments at the expense of everyone else.
The stimulus hasn’t even gone beyond $60billion from what I’ve heard. We’ve still got $700billion that are backloaded, meaning they’ll start kicking in by 2011-2012.
I bet what we’re seeing is the monetary bit by the FED.
Cheers
http://www.msnbc.msn.com/id/31548130/ns/business-personal_finance/
I’m still a neophyte at economics in general so how does the Austrian school respond to statements like:
“Anytime you can put money in someone’s hands to pay their bills, those dollars have an immediate, positive impact on consumer spending. Even in this recession, consumer spending remains the biggest driver of economic activity.”
from the above linked MSNBC web site? My limited understanding is that consumer spending is the wrong way to measure the economy, is that right?
But how can you even converse with someone when they use a different measuring stick?
Seriously I’m not a troll or looking for flames. I’m asking an honest question, and humbly exposing my ignorance on a subject the people here seem to be experts on. So serious answers only please.
Because everything they “consume” with that money is wealth that cannot be used as capital. That wealth leaves the economy. Wealth is destroyed through consumption. If you order a new car, a factory has to make that instead of making new factory materials for another factory.
Wayne,
Unless something is produced there is nothing to consume. Unless something is produced there is no income to buy whatever it is you want to consume.
The typical economic ignorance that results from Keynesianism and all of the other forms of socialism permeates mainstream media. The U.S. is getting very close to finding out what it is like to live in the Keynesian long-run, where consumption comes face to face with no production.
Another word for this plight is deprivation.
Just a note:
At an annual inflation of 3.3%, prices double in 21 years — if, the inflation rate doesn’t go up, of course. They could do worse, and they probably will.
to wayne:
“consumer spending accounts for around two thirds of total gdp” - this is the refrain used to justify all manner of kooky government spending initiatives. it drives me nuts.
please read this article by gerry jackson, and understand where this true (but irrelevant) statement goes awry.
http://www.brookesnews.com/071911useconomy_print.html
and another by reisman -
http://blog.mises.org/archives/007771.asp
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