Federal Reserve Now Targets Inflation Above 2%, Bitcoin Breaks $11K - page 2.

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Quote from: sunsilk on September 17, 2020, 10:14:10 PM

Quote from: kolbalish on September 17, 2020, 01:26:04 PM

On average, officials don't expect 2% inflation until 2023.

They've just printed stimulus checks and then assuming that only 2% inflation by the next three years? I'm not an economy expert but with all of those injections that they've made, it's already that enough or even too much to project how big the inflation rate for the next years to come and could happen as early as it can be.

It could be that they can slow down the process of inflation by cutting off interest rates. But CMIIW, that it's an imminent thing to come after with all of those printed money.

i think most of it is only to keep the masses calm and try to keep the inflation rate of both this year and the next at a smaller percentage. otherwise with the way economy has been hurting over the past months along the crazy amount of money they keep printing we can expect a lot more inflation than 2% for this year alone which we've already started to see too, and a lot more for next year.

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Quote from: Torque on September 18, 2020, 12:59:56 PM

True asset inflation is already running at ~6-8%/year.

The Fed is full of shit. How they measure yearly inflation is a lie.

Yeah, if you live in Malaysia since the 1990s, where the government feels so proud to announce annual inflation every year at about 1%, but you see your coffee and meals price go up 10% every year, paying 2x as much in just less than 10 years, then you realize the silly money and economics games that all governments play to keep you less worried than you ought to be. Our faith lies in Bitcoin.

el kaka22

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The regular inflation should always be a bit under 2% that is what we are thought, if there is zero inflation that means there is zero profits over time, there needs to be inflation in order to pay everyone more, and also get more money from everyone as well, if you do not increase the price of stuff, you can't pay people more and if you do not pay people more that means you are not going to find people since they will go to places they will get paid more.

At the end of the day, have a small like 1-1.5 inflation and that is fine, the moment you have like 8% or even more (like some other countries) suddenly your money worths almost nothing and you are basically poor just because you are not getting inflation worth salary increase and that causes people to get significantly poorer.

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Quote from: exstasie on September 18, 2020, 02:30:15 PM

Quote from: Torque on September 18, 2020, 12:59:56 PM

True asset inflation is already running at ~6-8%/year.

The Fed is full of shit. How they measure yearly inflation is a lie.

What is that based on, inflation of asset prices? Which assets do you look at? I've always wanted to find a way to plot dollar inflation against assets as an alternative to CPI but.......too much work.

Take a look at Shadow Stats:

http://www.shadowstats.com/alternate_data/inflation-charts
http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement

LFC_Bitcoin

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Quote from: adaseb on September 18, 2020, 03:40:34 PM

There is some index called the "Burrito index" and if you search for it on Google it represents a good value of inflation because it uses the average burrito prices throughout the years. Its accurate because it takes into account the cost of the restaurant serving the burrito, the cost of the ingredients, etc. However I am not sure its being updated anymore.

The trouble with the burrito index is the lack of historical, primary sources for the data. The only people who cite this metric are Austrian economists, gold bugs, and people like that. I don't exactly trust their data, which never shows any primary sources. We just have to take their word for it. If we do, then real inflation is 4-5x CPI. I haven't seen any updates since 2018 which leads me to think the burrito index may not currently suit their narrative.

I have no doubt real inflation is higher than CPI. I just don't know how much or exactly how to measure it. The BLS weighs certain things too heavily. For example, technological advances have made goods like televisions significantly cheaper, but given how often consumers buy televisions vs. how often they pay their rent or healthcare expenses, goods like this are weighed way too heavily. This hides exactly how much purchasing power is being eroded by rising housing and healthcare costs.

It would be nice to develop a more robust model for inflation, but it would take an awful lot of work and immense data collection and verification, something which armchair economists on the internet aren't accustomed to doing.

adaseb

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Yes inflation is not only going to be 2% a year. Going back 10 years or so, besides gasoline it seems everything has pretty much doubled in price. I remember going to the grocery store and usually spending $100 for weekly food. And now its pretty much double that. Same with heating bills, electricity, insurance, etc. Heck look at iPhone prices, the first iPhones were like $500 and now they are over $1000.

There is some index called the "Burrito index" and if you search for it on Google it represents a good value of inflation because it uses the average burrito prices throughout the years. Its accurate because it takes into account the cost of the restaurant serving the burrito, the cost of the ingredients, etc. However I am not sure its being updated anymore.

exstasie

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Quote from: Torque on September 18, 2020, 12:59:56 PM

True asset inflation is already running at ~6-8%/year.

The Fed is full of shit. How they measure yearly inflation is a lie.

What is that based on, inflation of asset prices? Which assets do you look at? I've always wanted to find a way to plot dollar inflation against assets as an alternative to CPI but.......too much work.

STT

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The statistics tactics of government include adjusted data which means if the price rises 5% one year they may adjust it to 1% and say the product has improved and so is justified in its price rise. I dont know how they can do this with a ton of butter because its literally the same but I suppose it mostly reflecting larger houses now they were previously built in decades past or the most obvious would be technology development or cars being more powerful etc. Without a doubt Dollar will lose more then 2% of its value a year because they have printed more new dollars in 2020 then existed total in 2009, the biggest difference for why that doesnt immediately impact prices would be the circulation of dollars around the world not just one economy and also the large amount of debt built up that contains dollar value.
Bitcoin is entirely different to Dollar but does have an expanding circulatory amount while within a defined total amount, its likely BTC price rises because of limited supply.

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True asset inflation is already running at ~6-8%/year.

The Fed is full of shit. How they measure yearly inflation is a lie.

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Quote from: sunsilk on September 17, 2020, 10:14:10 PM

It could be that they can slow down the process of inflation by cutting off interest rates.

I should preface by saying I'm not an expert either, but, the correlation between inflation and interest rate is inverse, in very simple terms; the higher the interest rate, the lower the inflation rate, and vice versa. So, lowering the interest rate to near zero is meant to stimulate the economy and keep the inflation rate stable at near 2% or slightly higher. If it goes much higher than this levels, hyperinflation would set in.

The pandemic has caused lots of businesses to shutdown, leading to employment and hence a stagnation of money in circulation, to counter this, Central banks initiate policies such as lower interest rate and stimulus packages, people would be able to take out loans at a much lower interest and would have cash with which to stimulate the economy - this would encourage spending.
The Bank of England is considering a below zero or a negative interest rate from the current levels of about 0.1%.

This policy can also be used to reduce the money in circulation; during a booming period banks can set much higher interest rates - this would encourage saving

We should note that these policies has its negative effects, banks giving out loans at a loss would lead to deficits, leading to losses and declines in bank stocks.
Encouraging people to take loans would also lead to more bad loans and more defaults, further straining the banking sector.

Quote from: sunsilk on September 17, 2020, 10:14:10 PM

But CMIIW, that it's an imminent thing to come after with all of those printed money.

I would assume the effect of printed money would be felt further down the road.

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Bitcoin looks like it's looking at 11k as resistance yet again, so I'm sure a lot of people are concerned and now moving more and more capital to ETH (to play with Defi of course) but I have a really strong suspicion that a huge move is coming in the months leading up to US elections so crypto is going to move as big as USD. Down or up we have to find out soon, stay safe people.

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Quote from: kolbalish on September 17, 2020, 01:26:04 PM

On average, officials don't expect 2% inflation until 2023.

They've just printed stimulus checks and then assuming that only 2% inflation by the next three years? I'm not an economy expert but with all of those injections that they've made, it's already that enough or even too much to project how big the inflation rate for the next years to come and could happen as early as it can be.

It could be that they can slow down the process of inflation by cutting off interest rates. But CMIIW, that it's an imminent thing to come after with all of those printed money.

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Federal Reserve officials said Wednesday they would hold U.S. interest rates at close to zero and work to push inflation above 2% “for some time.”

Federal Open Market Committee keeps interest rates unchanged close to zero, according to its statement.
Panel agrees to maintain accommodative monetary policy until inflation climbs above 2% "for some time."
The central bank will increase holdings of U.S. Treasury securities and mortgage-backed securities "at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions."
Projection materials released with the statement show officials, on average, expect rates to remain close to zero through 2023.
On average, officials don't expect 2% inflation until 2023.
Robert Kaplan, president of the Federal Reserve Bank of Dallas and a voting member of the panel, voted against the plan. He "prefers that the Committee retain greater policy rate flexibility."
Neal Kashkari, president of the Federal Reserve Bank of Minneapolis, also cast a dissenting vote. He prefers that interest rates stay on hold "until core inflation has reached 2% on a sustained basis," according to the statement.
Economists weren't expecting Fed officials to make any changes to U.S. interest rates – which in March were cut close to zero on an emergency basis – as the devastating economic toll of the coronavirus started to become clear.
Last month, Fed Chair Jerome Powell said in a speech that officials plan to let inflation rise above 2% and stay there for a while to keep borrowing conditions easy for a longer time and allow the economy to heal.
“The Fed kind of kicked the door open at their last meeting by indicating a more aggressive approach to inflation,” Mati Greenspan, founder of the cryptocurrency and foreign-exchange firm Quantum Economics, told subscribers in an email on Tuesday, a day before the Fed announcement. “Of course, now that they have everyone’s attention, followup will be critical.”
Bitcoin’s price was trading at around $11,022.90 at press time, up 2.4% in the past 24 hours. The price moved temporarily to $11,071.33 right after the Fed’s release.
The S&P 500 Index was up 0.35%.

Reference- https://www.coindesk.com/federal-reserve-fomc-september-jerome-powell-bitcoin?amp=1

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