Ambrose Evans-Pritchard both dangerous and insane.

[charliebrown]

Re: Ambrose Evans-Pritchard both dangerous and insane.

Can the entitlement structure of the government serve as wage inflation? More and more people will be going to social security, medicare, food stamps etc. All of these programs are inflation adjusted. I know the benefits are small compare to wages. But they are inflation adjusted, and effect large portions of the population.

[Bundi]

Re: Ambrose Evans-Pritchard both dangerous and insane.

Can the entitlement structure of the government serve as wage inflation? More and more people will be going to social security, medicare, food stamps etc. All of these programs are inflation adjusted. I know the benefits are small compare to wages. But they are inflation adjusted, and effect large portions of the population.

At the risk of recycling debates that this site's senior level members have already had and digested...

In an academic sense it seems possible to me. This concept is why I don't necessarily see the Fed as tapped out. At some point can't we all just receive a check from Ben/Tim in the mail (many people already are/have, but I mean even more).

It gets to a circular logic pretty quickly as I suppose this leads to potentially adverse outcomes for the US bond market and reserve currency status, which would be the likely source of the entitlement spending. Would this leave the Fed as the only meaningful buyer of US debt? Does legislation mandate a portion of the currently >$50T in household/non profit financial assets be used to fund treasuries? Etc...

How does this resolve the easing is tightening conundrum of US$ purchasing power of oil?

Again, real growth prospects seem tougher to see than the 70s (better demographics, less debt, more concentrated US economic power) or 30s (devaluation was against gold and the US didn't import oil, wasn't the reserve currency, net creditor, etc...)

Life seems to be a matter of degree, the infationary scenario above my be subject to thresholds. That said, I can see why EJ is afraid of a recession in the US.

[c1ue]

Re: Ambrose Evans-Pritchard both dangerous and insane.

Originally Posted by charliebrown
Can the entitlement structure of the government serve as wage inflation? More and more people will be going to social security, medicare, food stamps etc. All of these programs are inflation adjusted. I know the benefits are small compare to wages. But they are inflation adjusted, and effect large portions of the population.

At the risk of recycling debates that this site's senior level members have already had and digested...

In an academic sense it seems possible to me. This concept is why I don't necessarily see the Fed as tapped out. At some point can't we all just receive a check from Ben/Tim in the mail (many people already are/have, but I mean even more).

As far as I understand it, no.

The reasons you cannot get a social services/safety net wage/price spiral:

1) The social services/safety net is a step down for anyone who was previously working. How then can you get a spiral when the first step is tripping over a log?

2) COLA adjustments are political, not economic. A glance as the Social Security COLA adjustments for the last decade shows this clearly:

January 1999 -- 1.3%
January 2000 -- 2.5%⁽¹⁾
January 2001 -- 3.5%
January 2002 -- 2.6%
January 2003 -- 1.4%
January 2004 -- 2.1%
January 2005 -- 2.7%
January 2006 -- 4.1%
January 2007 -- 3.3%
January 2008 -- 2.3%
January 2009 -- 5.8%
January 2010 -- 0.0%
January 2011 -- 0.0%
January 2012 -- 3.6%

The net increase in SS due to COLA is 41.36% from January 1999 to January 2012.

GDP in 1999 was $8.7 trillion, and US GDP in 2010 was $14.7 trillion - the growth being 68.8%

3) Social services/safety net payments in general are not automatic, they are subject to legislative modification at any time for any reason. We saw this with Bush Jr. and Medicare Part D, just as every single politician of national repute is talking about reining in Social Security/Medicare today.

[aaron]

Re: Ambrose Evans-Pritchard both dangerous and insane.

has embraced relativism in most areas

Can you elaborate on this for us younger iTulipers... I was not around 40 years ago.

What has changed? (although I feel like things have declined over that past 10 years for sure)

[lektrode]

Re: Ambrose Evans-Pritchard both dangerous and insane.

...

The net increase in SS due to COLA is 41.36% from January 1999 to January 2012.

GDP in 1999 was $8.7 trillion, and US GDP in 2010 was $14.7 trillion - the growth being 68.8%
...

could this be the 'smoking gun' evidence that CPI is mis/understating the true inflation or putting it another way
- the DOLLAR DILUTION - numbers?

i bring up this term after having seen what that phrase has done to my original 'investment' in PLUG...