Recession?

[IminWonderland]

How do I get that printed money?

How do regular people get that printed money?

[David Octavius]

Economics is such a pseudo-science, one can "prove" with the exact same data that we are in a recession, boom, stagnation or invasion by aliens...its all nonsense group think

[Fed Up]

Originally Posted by A_C_E

Using those stats^^^^ to calculate inflation isn't exactly a good idea, given that they all depend on each other, and on energy, which is not used in the core CPI.

Here's the way you do it (the way actual non-government economists do it):

(Money supply) * (Velocity) = (Aggregate prices) * (nominal GDP)

Cross-differentiate with respect to both money supply and GDP (dM/(dm)(dgdp)). Velocity and aggregate prices are constants, thus they drop out when you take the cross-derivative.

So, Money Supply growth = GDP growth. Whatever percentage the money supply is growing above and beyond GDP growth is your real, actually useful inflation measure.

For instance, if nominal GDP growth is 3%, and Money Supply growth is 3%, we have no problematic inflation, since the equation holds. Therefore, aggregate prices and velocity need not change. However, if nominal GDP growth is, say, 0.8%, and the money supply grew by 4%, then you have a real (problematic) inflation number of 3.2%.

The math really isn't all that complicated.

Ace, as David said, every side will think they're right. I'll invest though based on my own interpretation, not the other side's.

So let's use your formula, which I don't have a problem with as it is what it is.

GDP = 0.6% (Shadow Stats Gov has it at -2.7%, but we'll use the goverments better number)
M3 (money supply) = 17.38% (per SSG)

Therefore, Real Inflation = 16.78% per the forumla.

SSG utilizes the Fed's own info to come up with M3 (institutional money markets, large time deposits, repos and eurodollars).

We may differ also on how we define inflation. For me it is simply the "increase in the money supply," not simply the "increase in prices" that the government and its economists try to impress upon the sheeple.

Fed Up

[A_C_E]

Not to nitpick, but you have to use the nominal GDP growth, instead of the real GDP growth, otherwise you double-count inflation (i.e. inflation is already factored in to real GDP but usually not nominal GDP).

Also, everything we're saying now is just empty rhetoric anyway, since the Advance GDP report almost always gets revised greatly by the time the Preliminary report comes out.

I really do object to your constant use of the word "sheeple", by the way.

[Fed Up]

Originally Posted by A_C_E

Not to nitpick, but you have to use the nominal GDP growth, instead of the real GDP growth, otherwise you double-count inflation (i.e. inflation is already factored in to real GDP but usually not nominal GDP).

Also, everything we're saying now is just empty rhetoric anyway, since the Advance GDP report almost always gets revised greatly by the time the Preliminary report comes out.

I really do object to your constant use of the word "sheeple", by the way.

Understood...

I utilze the word "sheeple" to mean "ignorant" as opposed to "stupid." It's not a negative, just means people "don't know what they don't know." How many people understand any of what you say? Probably not many (unless they have your same major).

Fed Up

[Fed Up]

Just curious what your answer to this would be Ace...

How would you define 4 years in a row of contracting Real GDP (which is what we've had)?

I know you don't agree with the two quarters of negative growth definition of a recession, per a prior post in this thread, but I do have a query about the word "negative" vs. "contraction" in that definition.

Are they one in the same in your opinion, or two completely different situations (negative being an actual -%)?

Fed Up

[6SpeedTA95]

Originally Posted by IminWonderland

How do I get that printed money?

How do regular people get that printed money?

When the fed prints money they either store it as federal reserves or they send it out to their federal reserve branches who can then loan it out or divvy it up to commerical banks within their district.

[6SpeedTA95]

The recent history of the word inflation....

Inflation term definitions

[Donkey®]

It's funny to watch people nitpick how smelly a pile of shit actually is. Things are not good. Period. I don't need a textbook definition to tell me that.

[IminWonderland]

Originally Posted by 6SpeedTA95

When the fed prints money they either store it as federal reserves or they send it out to their federal reserve branches who can then loan it out or divvy it up to commerical banks within their district.

Why are they just giving it to commercial banks? Who gets money from commercial banks?

What I am trying to figure out, is if there are more directs ways of actually helping PEOPLE suffering through rough economic times. I know about trickle down theory, but seriously, children are sleeping in cars, people can't afford fresh food, and this is the solution that our government comes up with?

I thought there was something about "a government for the people," and it's turn into "a government for the money, power, and greed."

I thought this country was gonna be different.

(I'm not blaming you 65, just trying to negotiate the what has become the American symptom.)

[A_C_E]

Originally Posted by Fed Up

Just curious what your answer to this would be Ace...

How would you define 4 years in a row of contracting Real GDP (which is what we've had)?

I know you don't agree with the two quarters of negative growth definition of a recession, per a prior post in this thread, but I do have a query about the word "negative" vs. "contraction" in that definition.

Are they one in the same in your opinion, or two completely different situations (negative being an actual -%)?

Fed Up

In my mind, they are different. Positive growth is positive growth, regardless of whether it's at a slowing pace.

I sort of see it as two bad situations, but one worse than the other. If we have consecutive quarters of contracting real GDP, it probably means industrial production is going down, investment is going down, household spending is going down. It's a symbol that our economy is slowing and we should make some changes (tax cuts, etc.) to help speed it back up before anything gets worse. A preventative measure, so to speak.

I don't use the -% real GDP to consider a recession, for the reason that we can have positive GDP growth but still be in a recession. 0.2% GDP growth doesn't mean we aren't in recession if every other indicator is firmly negative. It's not that I don't agree that -% GDP results in economic recession; that definition just drastically over-simplifies the process, which is why it's considered a "newspaper definition" among economists.

[6SpeedTA95]

Originally Posted by Donkey®

It's funny to watch people nitpick how smelly a pile of shit actually is. Things are not good. Period. I don't need a textbook definition to tell me that.

You're basing this on what? A feeling you have? The fact is of those getting laid off 90% of them are finding jobs within 6 weeks...why? Because we're still at full employment and there's some that argue at 5% unemployment there's not enough liquidity in the labor pool. That unemployment should actuallyb e between 5.5 and 6.5%...

Things may not be good but they're not all that stinky yet either and it looks like the fed has a pretty good grasp on things as well. There looks to be a bit of capital movement resuming in the markets again and by the end of the year we could be back to reasonable economic growth instead of basically sitting idle where we're at now.

[Fed Up]

Thanks Ace...

Fed Up