Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
August 30, 2014

Good News: Inflation is Rising

Ylan Q. Mui of the Washington Post argues that “inflation can be a scary word, but there’s nothing to fear in new numbers released this week.”

“Let’s look at the last time that inflation as measured by the 12-month change in the consumer price index hit 2 percent. It was in July, with broad increases in prices for apparel, tobacco and food. The numbers were released on the same day as data showing new claims for unemployment benefits over the past week hit a six-year low. Stock markets tumbled as investors worried the reports would spook the Fed into ending its stimulus campaign early.”

“Now here’s what actually happened: Just three months later, inflation hit a post-recession low of 0.9 percent. The Fed surprised Wall Street by waiting until the end of the year to announce it would start scaling back its support for the economy. And stock markets rallied to record highs.”

“Rising prices are a sign of growing consumer demand — and that demand is the engine of the American economy. A little bit of inflation also helps reduce the cost of doing business, which means companies can hire more people. And inflation makes debt easier to pay off, which anyone with a student loan or a mortgage can appreciate.”

  • Lorehead

    People in their fifties and sixties tend to remember from thirty to forty years ago that Inflation Is Bad. And too much of it is, but in recent years, it’s been too low for the short-term good of the economy. Long-term unemployment has been a much bigger problem. These people ought to remember that inflation in the Good Old Days of the late ’80s was around 4%.

    • zappa24

      Exactly. Inflation is a sign of a growing economy. As demand increases, it creates shortages that result in price increases. This usually result in an equal increase in wages. The problem is when inflation gets too high. Why? Because prices can be changed daily, but wages can’t since they are usually paid on a weekly, biweekly, or monthly basis. If prices are going up too quickly, by the time you get your next paycheck, it could be set for a price level from weeks before which will eat into your purchasing power.

      • Lorehead

        On the other hand, it’s great if you borrowed a lot of money that you will be repaying in inflated dollars and terrible if you lent a lot of money that will be repaid in inflated dollars. Inflation causes problems other than that, but a lot of old white people moralize the economy so that the government should always favor savers at the expense of borrowers, regardless of the consequences.

      • rick spalding

        supply and demand is not inflation you idiot

        • zappa24

          Inflation is a direct result of a increase in aggregate demand. Go take an economics course and get back to me.

  • rick spalding

    is he quoting yian at the end there? I get it there are a bunch of puppets that work for the establishment but do people really believe that inane propaganda?

    • zappa24

      So, if there is something that is a fact, but it is a fact that you didn’t know or don’t understand, then that something is propaganda? You need to take economics before you decide to start spouting off like you know economics. The last quote is an accurate statement of one of the basics of economic theory.

      • rick spalding

        uhh, i have a finance degree. I know exactly what I am talking about. Keynesian economics does not correlate inflation to your “supply and demand” . It is unsettling how many braindead people exist. Keep drinking the kool aid you sheep. You people have lost all rational thought.

        • zappa24

          I have an economics degree, and you have no clue about economics. In a growing economy, aggregate demand increases. Shortages occur. Prices for all goods and services rise (aka inflation). This isn’t even Keynesian economics, this is the old tried and true supply and demand model. Calling me names is not going to change basic economic theory.

  • Bill

    What this guy writes makes no sense whatsoever. inflation is good news because it is a sign of consumer demand rising. This is the most ignorant comment I have ever heard. First off consumer demand is down, retailers are struggling. So you can have low consumer demand and high inflation, as a matter of fact this is what almost always happens. Because higher prices reduce consumer demand. This is Economics 101. This guy really needs to learn the basic economic laws. Every economics book teaches that higher prices lowers demand. But prices are higher because there is more consumer demand? Ridiculous, in economics demand is a function of price, , but price is not a function and does not depend on demand. Price is the independent variable of this economic equation. Inflation does not make anybody wealthier, quite the contrary it makes us all poorer since we can afford less quantity of goods as prices rise. Is this guy suggesting that telephone rates should quadruple from current prices? Hell, no. it’s not going to make us wealthier. I am so glad that telephone rates have gone down in the last two decades to the point that long distance calls anywhere and outside the country have become affordable to everybody. We all win when prices decline, and we all lose when inflation raises its ugly head.

  • woodt

    Rising prices are not always because of consumer demand. Inflation can hurt companies that need to buy materials.

    Most consumers will not benefit from higher food prices.

    If he can show me this is because of consumer demand i will agree its a good thing.

    And unemployment claims are misleading. As more people are being forced of the official unemployment numbers despite being unemployed. Not to mention the underemployed.

    Bottom line is I wouldn’t get to excited about 2 percent inflation. Ever time it seems to be increasing it slows down again. This is because we have very weak demand.

    I am most scared of food and energy pricing. These are two item the consumers needs and depend on. So demand is built in.

    Thanks for letting me ramble.

  • YONATAN C

    THIS IS A VERY SAD AND SORRY SITUATION FOR OUR COUNTRY AND OUR PEOPLE . WE HAVE ELECTED PUBLIC OFFICIALS WHO GET IN OFFICE, AND ONCE IN OFFICE,FEEL THAT THEY NO LONGER NEED TO WORRY ABOUT WHAT THE PEOPLE WANT.THESE SELF-IMPORTANT, SELF-RIGHTEOUS, SELF-INDULGED, CAREER POLITICIANS, ANSWER ONLY TO THEIR PARTY AND SPECIAL INTEREST GROUPS. WE HAVE BEEN LET DOWN BY OUR ELECTED OFFICIALS, AND ARE NOW AT THE MERCY OF POLITICIANS WHO REALLY DON’T CARE ABOUT THE POOR AND UNEMPLOYED WHO ARE STRUGGLING AND SUFFERING WHILE THEY TAKE BREAK AFTER BREAK, AND VACATION, AFTER VACATION. THE REPUBLICANS ARE DIRECTLY RESPONSIBLE FOR THE MORE THAN 2.6 MILLION UNEMPLOYED FAMILIES WITHOUT BENEFITS, BECAUSE THEY CHOSE NOT TO HELP THEM. IT HAS BEEN FIVE MONTHS THAT THESE FAMILIES HAVE BEEN WITHOUT UNEMPLOYMENT BENEFITS, AND THEY HAVE WATCHED THE REPUBLICANS PLAY THEIR WAITING GAME, MAKING EVERY ATTEMPT TO STALL THE VOTING ON THE EXTENSION BILL, IN THE HOPES IT WILL GET TOO LATE TO VOTE FOR IT. THEY HAVE DELIBERATELY WASTED FIVE MONTHS, WHILE THESE FAMILIES FACED EVICTIONS, HOME FORECLOSURES, BANKRUPTCY, AND HOMELESSNESS. THESE POOR FAMILIES HAVE LOST EVERYTHING, WHILE WAITING FOR THE HELP THAT THEY DESERVED . THE REPUBLICANS HAVE NOW JUST HANDED OVER TO THE DEMOCRATS 2.6 MILLION NEW VOTES IN THE COMING ELECTION. THESE UNEMPLOYED FAMILIES WILL NOT FORGET THE BETRAYAL OF THE REPUBLICAN PARTY.

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