about that inflation

[kathyp]

http://www.cbsnews.com/8301-505144_162-57387655/inflation-not-as-low-as-you-think/

[BlueBee]

OK, so we have inflation….seems I can’t convince y’all otherwise.

So why are people are still buying billions of $ of US debt at a yield of 2% or less?  Why would capitalists eagerly do something where they are knowingly going to lose nearly 8% a year?  (-8% if we are to believe this article of yours). 

Would you loan out $1000 to somebody at 2% knowing you’re only going to get $940 back next year?  Or would you instead demand at least 8% on your loan so you at least break even?

[kathyp]

there are probably a number of answers to that. 

they are guaranteed.  we are in better shape than europe.  the same kind of people who were still buying houses when the market was becoming obviously unstable. the bank is paying less the 2% for cash savings.  and this:

http://www.reuters.com/article/2011/06/30/us-usa-china-treasuries-idUSTRE75T2MI20110630

owning debt is owning control.

[BlueBee]

Bought some more milk today for $2.49 a gallon.....

I did see gasoline is up to $3.73 here today.  Ouch!

I wonder how high gas will go this time?  With Europe near recession and growth slowing in Asia, demand for oil is suppose to be dropping.  When demand drops, prices are suppose to drop.  Right?  The problem is when investors/speculators start dumping $$$$ into something, the price goes up no matter the circumstances.  Take a look at Apple stock if you don't believe that.

I really don't see the Iran paranoia getting resolved in any positive manner in the near future.  I think we'll be seeing gas in the $4.50 to $5 range this spring.  Supply doesn't matter (as I've been saying), Geo politics and demand is what matters.  Excessive high gas will undoubtly dip us back into recession, killing the demand side again and prices will dip at that point.  If you don't believe a big drop in demand will drop prices like a rock, look at the charts for Natural gas prices!

[buzzbee]

The Natural gas production boom in the Northeast near where some of the largest consumption is has something to do with the price reduction.They are drilling here and lots of it. Gas storage for the Northeast is in deep salt caverns not too far from the drilling sites. This results in needing a lot less compressor units  to move the gas through the system.It is a sign that domestic production of a fossil fuel works on reducing cost. Now if we could just tap our own supply of low sulfur coal which the Clintons sealed in a a national forest area.
There is no threat of the Iranians closing our domestic production or threatening the transport of our gas.

http://www.wnd.com/1998/05/3242/
Power companies had to buy coal from Indonesia to get the same quality.Of course adding to the cost of electricity.
 
And now with giving food to North Korea it can only feed the inflation. Someone has to pay for what we are giving away with virtually nothing in exchange.
I would not be surprised to see inflation surpass the Carter years.

[kathyp]

oil is traded like any other commodity.  even though OPEC is a big factor in price it's not so much different that the way corn or coffee is traded.  speculation has both good and bad sides.  years ago southwest airlines anticipated a rise in oil costs and locked in its purchase price for several years.  because they did that, they were able to keep prices low, build a loyal base, and keep that base even after their lock passed and prices went up.  

if purchases of commodities were based on real time factors, there would be continual panic every time there was any twitch in any market. consider the floods we had last year that destroyed a lot of the corn and wheat crops.  there was some fluctuation in price, but not what there might have been if people were buying based on real time conditions.

the down  side is that because they are not buying based on real time supply and demand, rather on what they anticipate the supply and demand will be, speculation can drive up the prices with no real cause at the moment.  

we have a lot of oil companies based in this country, but they produce and trade internationally.  the price is based on the international trade of oil, not the local production.  however....there are a lot of US companies which are smaller and would produce just for the US but many of them have been run out of business by regulation and the pulling of permits.  additionally, we have stupid requirements for multiple fuel mixes that take up refining time and run cost up.  we also have a shortage of refineries and it's near impossible to get permits to build new ones.  

some of the things we could do to bring prices down both short and long term are very easy, but have been made either hard, or impossible by this admin.  and yes...on this, the Obama admin is to blame.  

    

[Old Blue]

But....but.....but....Kathy.......
                  The Fed told us inflation is only 2% !
                               Don't you believe them? !

Old Blue
Where they not only believe that stuff but support it !  in....
Kali-bone-ya

[BlueBee]

The scary thing is we’re going to have to bail out Wall Street AGAIN if the bee keepers are right and inflation is really 8% or more.  The people who bought trillions of dollars of bonds with yields under 2% are going to lose a massive amount of money if y’all are right.  Since the politicians reward failures by the 1%ers, we’ll have to bail them out and take the hit ourselves.  Tack another few trillion on your kids backs.

[BlueBee]

I would not be surprised to see inflation surpass the Carter years.

13% buzzbee?

Now if we could just tap our own supply of low sulfur coal which the Clintons sealed in a a national forest area.

Why would you want to tap coal that is more expensive than natural gas?  Once again Clinton with right.

speculation has both good and bad sides.

I agree with that as long as the wall street bankers are not manipulating the market.  Remember the fake electricity crisis Enron created on the west coast?  Market manipulation.  When the Wall Streeters are buying 85% of the oil contracts, is that really the same as Southwest hedging their future fuel costs, or is it just about short term greed that hurts the entire country?

“Wall Street Fights rule limiting oil speculation”.   That’s WALL STREET, not users like Southwest!  http://money.cnn.com/2012/02/27/markets/oil_speculation_rules/index.htm

[sterling]

Steven Chu O's energy secetary told congress the other day that they wanted the gas prices high.

I don't think food and gas is considered in the inflation numbers. ??

[kathyp]

That’s WALL STREET, not users like Southwest! 

not so.  who do you think the speculators speculate for?  anyone using or selling a commodity, buys and sells by way of speculators.  they are to the commodity market what traders are to wall street.

Why would you want to tap coal that is more expensive than natural gas

?

they are not necessarily interchangeable.  you might be able to replace coal fired power plants with gas, but can it be done cost effectively and in a timely fashion.  why would a company even try when the permitting process is so nasty and expensive...+ you can be guaranteed a run in with tree huggers.

Enron was taken care of by the courts.  this is as it should be.  rather than stomping on the entire market, get the bad actors and punish them. 

The scary thing is we’re going to have to bail out Wall Street AGAIN if the bee keepers are right and inflation is really 8% or more.

no, we are going to bail out fannie and freddie again.  more billions down the crapper.

[BlueBee]

So let me see if I have this right….

You don’t believe the Fed when they report that inflation is low but you DO believe Wall Street when they say speculators are not driving up the price of oil   That is almost funny 

The local power company here just scraped plans to build a multibillion dollar coal fired plant because Natural Gas is cheaper and cleaner than coal.  That happened even after all the time and expense of getting an air permit from the State of Michigan.  Can we admit, JUST ONCE, that Bill Clinton was right?

[kathyp]

The scary thing is we’re going to have to bail out Wall Street AGAIN if the bee keepers are right and inflation is really 8% or more.

that's not what i said. 

The local power company here just scraped plans to build a multibillion dollar coal fired plant because Natural Gas is cheaper and cleaner than coal.

that may be, and i'm all for it.  we still have many coal fired plants that are running fine and coal is cheap as long as the admin doesn't mess with it.  we have an abundance of it.  we export it. 

we also have an abundance, especially in my area, of hydro.  if you can keep the tree huggers from wanting the dams blown up, it's another good, clean, and cheap source of power.

it's not either/or or one single thing.  it's all of those things being used well in each area.  trucking in coal doesn't make sense here when we have hydro.  NG would have been a great option for my area if the tree huggers hadn't gotten the LNG line blocked.  when you have an admin more apt to listen to, and capitulate to, the tree huggers, you are going to have an abundance of Volts and not much else.

[kathyp]

if you are going to spend tax dollars, why not do what need done?  rather than subsidize electric cars, failing "green " companies, and buying off unions...how about we upgrade our power grid.  not only is it a matter of survival and national security, it could be justified as a legitimate federal project.

[buzzbee]

I believe what I see when I pay my bills.
13 percent inflation,thats not a tiny number,especially now that 47 percent are relying on a government subsidy of one form or another.And when unemployment numbers are as high as they are.If you are comfortable with inflation at 13 percent or more and a jobless rate at the level it is now,I'm happy for you.
And no I didn't think it is a good idea for one person unilaterally (executive order versus states rights)decide what energy forms are off limits to the rest of society.He was caving to enviromentalists,not looking to save the utilities money. It is the motives,not necessarily the results.
 

[BlueBee]

If you are comfortable with inflation at 13 percent or more and a jobless rate at the level it is now,I'm happy for you.

Heck no, I would really be worried if inflation was at 13%. 

What was the mortgage rate during the Carter years when inflation REALLY was 13%?  It looks like the 30 year was about 18% in 1981. 

There is a RELATIONSHIP between the interest rates people will loan out money and the TRUE rate at which the dollar is inflating.  30 years are now sitting a shade below 4%!!!!  A FAR drop from the Carter years.  Only a fool would lend money at 4% if the dollar is inflating at 13%.  Capitalism and free markets simply don’t believe in the same level of inflation as our bee keepers do.  You can’t both be right.

And on that note…….I will mention I saw $4 gasoline here today! 

For the record, Bernanke DID say that higher oil prices would likely stoke inflation in the near term.

[BlueBee]

when you have an admin more apt to listen to, and capitulate to, the tree huggers, you are going to have an abundance of Volts and not much else.

What would the world be like without trees  

Why don't you like trees  

[kathyp]

Only a fool would lend money at 4% if the dollar is inflating at 13%

the fed is keeping the interest rate low. 

trees are a crop. 

[BlueBee]

the fed is keeping the interest rate low.

If the fed sets interest rates like you imagine, why didn’t they just “set” them back to 0% in 1981 instead of wreaking the economy with 18% mortgages?  Why didn’t Ronny just “set” them back to 0% when he took over?  The answer is the Fed does not control longer term interest rates, the free market does..  Haven’t we gone over that before?  We don’t have a communist system here, we have capitalism.  Free markets set prices, not the government. 

And on the subject of prices….

I see Milk is on sale at the local Krogers for $1.99 a gallon.  So it has gone from $2.50 to $1.99 in a month.  Is that inflation?  Could we be getting deflation confused with inflation? 

Chicken is cheaper for pound now than 10 years ago.  Eggs are cheaper.  Fish and Beef may be up a little.

I guess if you buy a bunch of processed foods, maybe they’re up this elusive 13%, can’t say, don’t eat that stuff.

[buzzbee]

Milk here is 3.63 a gallon,no reduction in recent times,cheapest chicken,.99 per lb. no reduction, perhaps the government is subsidzing Mi voters?

If this chart is correct,someones paying the difference.
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5096546
But it's a government chart .I must be wrong on what I'm paying. Simple average is 3.62,consider your self lucky.
Maybe after bailing out GM they need to prop up the idea that all is good. But thats the conspiracy theory at work.Or is it?