Fed Is Expected to Boost Rates Again

[leftchick]

http://story.news.yahoo.com/news?tmpl=story&ncid=716&e=6&u=/ap/20040921/ap_on_bi_ge/fed_interest_rates

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Although private economists have mixed opinions whether the economy still is working through its late-spring blues or has emerged, most believe the economy is in good enough shape for the Fed to boost rates again.


Despite high energy prices, inflation currently is not a threat to the economy, analysts said. The Fed wants to make sure it doesn't become a problem in the future.


That's why economists believe Fed policy-makers will increase the target for the federal funds rate to 1.75 percent from 1.50 percent at their meeting Tuesday. An afternoon announcement was expected. The funds rate is the interest that banks charge each other on overnight loans and is the Fed's primary tool for influencing the economy.


"The Fed's No. 1 goal here is just to remove some of the unneeded stimulus" and raise rates slowly from emergency levels of liquidity to more normal levels, said Richard Yamarone, economist at Argus Research Corp.

[mbperrin]

1. "Despite high energy prices, inflation currently is not a threat"

I guess I'm the only dumbass in the US who's paying $4 per gallon of milk when it was $2last year; $15 for 1/2" plywood which was $7 last year; $1.90 for gas which was $1.20 last year; double the deductible on my health insurance, 350% of the premium for my health.

Good thing it's just energy!

[UpInArms]

2. what you aren't seeing there is that

those price increases are all related to "energy" and therefore can be deducted from the price - voila! no inflation!

:nuke:

[0007]

3. Somethin' gotta give

All around the mulberry bush
junior chased the weasel.
junior thought 'twas all in fun.
Pop! goes the weasel.

A penney for a spool of thread,
A penney for a needle.
That's the way the money goes.
Pop! goes the weasel.

Up and down the City Road,
In and out of the Eagle,
That's the way the money goes.
Pop! goes the weasel.

Half a pound of grounded meat,
Half a pound of crakers,
Mix it up and make it nice,
Pop! goes the weasel.

[4dsc]

4. NOt to mention the price of meat

I don't even buy steak any more unless its on "sale".. I remember not to long ago that a good sirloin cost about $2.80 LB.. Now its over $7.00.. Now tell me there's no inflation..

[TahitiNut]

7. Hell, and chicken breasts are going for $5/lb. Unfreakingreal.

[Ganja Ninja]

5. The real reason the Fed is raising rates.

They won't come out and say it because they would hurt the chimps chances for re-(s)election but the real reason is Bush's out of control spending.

[Yavin4]

6. Yes, Virginia There Is Real Inflation

Higher home, engery, education, and healthcare prices do figure into inflation at some point. Inflation is indeed running rampant in this economy primarily due to Greenspan's manipulation of interest rates to support Bush's presidency. Couple that with the government's out of control spending, and we could be facing a hyper-inflation spiral.

As for the economy, we're headed straight for a collapse. As Greenspan raises these rates, the economy will slow down, specifically consumer spending. Without real jobs growth, consumers will have to cut back on their spending.

[ProfessorGAC]

9. That's Already Happening Yavin

Consumption is already running at an increase rate that is only 50% that of overall nominal GDP growth rate.

When the total inflation rate is cumulatively examined against nGDP, the consumption growth rate is <30% of rGDP. C is growing at a far lower rate than GDP as a whole, and inflation has a stronger leverage on C than on overall GDP.

So, anyone who says inflation is not a problem, is looking at the numbers in a vacuum. Anyone who says that GDP growth is acceptable is looking at nominal values without regard to the overall inflation effects. And, anyone who says that there is some mystery about a "jobless recovery" doesn't understand the first thing about the causative relationships within the macroeconomy.

Some "private economists" have mixed opinions? No kidding. The mixture is of those who are right and those who are wrong!
The Professor

[Richardson08]

8. 2:15pm est is when the Fed makes their announcement

[jmcgowanjm]

10. What if's: