Alan Rudy wrote:
I didn't say prices weren't going up. I did say two things: 1) that CPI was an outdated lame ass measure (or at least I said it in one of the comments I made on one of the many places I saw this meme spread - if not here, mea culpa) - but the fact that the CPI is a lame ass measure is not an excuse to tie all sorts of things not measured by the CPI to the CPI in an argument rooted in claims about the CPI... the point would have been better made had they just said that pretty much everything important to folks is going up but the gov't either doesn't measure, mismeasures or misunderstands the meaning of things (at least in part) because of the way they reify their own mismeasurements... and I said that 2) the Fed is NOT arguing that there is deflation, they are worried that there will be deflation and they say they are trying to forestall it.
My point was that the piece was making a lousy ideological argument, not that the Fed and the government are doing a good or just job. And this is why I ended the comment with a rejection of the idea that the enemy of my enemy is my friend argument implicit in the willingness of folks who can't stand right wing anti-government libertarians spreading this right wing anti-government meme.
Last, I guess some of a reasoned response to your question would depend on how deflated is operationalized... it seems pretty clear to me that auto company sales are being led by loss leaders, special pricing, etc., which they can weather because of how they've thrashed wages and benefits but which they probably can't withstand over the long haul... I'm no expert on this by any means but I'd imagine that while consumer goods deflation is a concern of the Feds their real concern is the deflation of capital goods and the multiplier effects that'd have in terms of investments, innovation, etc. and I think that this may be the case even if I don't agree with the Fed's position.
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Thanks Alan. I'm just fishing for answers. I'm no expert either. Seems the Keynesians are divided about whether QE is worthwhile; for example, Paul Krugman supports it as a dollar-devaluation tactic while Joseph Stiglitz worries that it will be counter-productive. Meanwhile, Krugman, Stiglitz, Dean Baker, and all the other Keynesian types agree that more stimulus spending would be preferable to QE, and more effective.
A lower dollar sure doesn't help a bloke like me and I suspect this kind of cut will be a way to 'deal' with the baby boomer SS retirement hash which keeps being brought up.
Like I said...just asking, Mike B)
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