Seeking Alpha

Fed's Evans: Where's the inflation?

  • "I am somewhat exasperated by these repeated warnings given our current environment of very low inflation," says Chicago Fed chief Charles Evans, tweaking those who have been calling for higher inflation for the last five years.
  • Evans sees inflation remaining below target "for several more years," and says there is "substantial room" for stronger wage growth without inflation pressures building. The Fed's massive balance sheet? Not a "classic warning sign" of inflation.
  • Full speech
Comments (12)
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    Hello !! No inflation if you don't eat, drive or rent. Meanwhile, keep those wages low and bank rates at zero for M&A's that usually end up in more pink slips and lower wages.
    9 Apr, 03:49 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    I haven't been able to raise my rents at all since 2008, based on the market.

     

    Gas/oil rose to these levels before the QE.

     

    Food hasn't moved much.
    9 Apr, 05:33 PM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    kmi,

     

    I haven't been able to raise my rents at all since 2008, based on the market.
    <<< You alone do not represent the rest of America. Go read up on rising rents since the housing bust.

     

    Gas/oil rose to these levels before the QE.
    <<< Point is energy is not considered core and also seasonally adjusted. In 2009, energy prices fell below $40 a barrel and less than $2 at the pump.

     

    Food hasn't moved much.
    <<< Oh really? Are we talking about 1% or 3%? Fed's target is 2%. Again, food is also non-core and not counted.
    9 Apr, 08:12 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8176) | Send Message
     
    In the late 1970s people didn't argue about whether there was inflation or not.

     

    That tells me that inflation isn't nearly as bad as I expected it to be by 2014.

     

    The only inflation is in areas where government interferes with natural pricing.
    9 Apr, 03:58 PM Reply Like
  • Charles A. Smith
    , contributor
    Comments (1082) | Send Message
     
    "Where's the inflation?"

     

    The young couple unable to buy their first house because prices have again spiked out of range will tell you where to find it.
    9 Apr, 04:00 PM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    One more: check out those College tuitions, fees and books. So, what is cheaper today than last year, refurbished computers, Goodwill clothes, land-line phones and generic drugs from India or China?
    9 Apr, 04:11 PM Reply Like
  • kmi
    , contributor
    Comments (3984) | Send Message
     
    Education and Healthcare are both captive industries with their costs rising faster than dollar depreciation - or inflation - for decades.
    9 Apr, 05:35 PM Reply Like
  • wmateri
    , contributor
    Comments (518) | Send Message
     
    Inflation as calculated by the same formula used in the 80s (http://bit.ly/nyzRiF) is near the same levels that then Fed Chair Paul Volker used to justify huge increases in the Fed rate. These days we call much of that inflation "wealth", e.g. increased housing prices. It's there for the Fed to see, but the question is, why are they ignoring it?
    9 Apr, 04:16 PM Reply Like
  • SivBum
    , contributor
    Comments (1581) | Send Message
     
    They are comparing the car prices if we were able to buy those $2000 Didge Darts without aircon, manual brakes and windows, no ABS etc. They figured that the new Dart at $30,000 with all those new gadgets must cost us a fortune in the 70's. Same for those DOS computers, Cathode Ray Tube TVs and medical tests that used to take weeks to get results.
    9 Apr, 04:22 PM Reply Like
  • Charles A. Smith
    , contributor
    Comments (1082) | Send Message
     
    "It's there for the Fed to see, but the question is, why are they ignoring it?"

     

    Because if house prices hadn't risen by 35% over the last 4 years or so, it would still be obvious that every major U.S. bank was insolvent. This way, at least its less obvious.
    9 Apr, 04:42 PM Reply Like
  • ExBiggie
    , contributor
    Comments (22) | Send Message
     
    I was taught that inflation was caused by "too much money" chasing "too few goods". The FED and banking system may create more money, but they cannot control where it goes. It seems to me that the "too few goods" may have been 1st tech stocks and then real estate. However the FED as far as I can tell does not believe in asset price inflation. So maybe after another bubble bust, they will come up with newer theories, right?
    10 Apr, 10:20 AM Reply Like
  • Charles A. Smith
    , contributor
    Comments (1082) | Send Message
     
    "...they will come up with newer theories, right?"

     

    When all of their "theories" fail and their previous policies collapse (see the fall of 2008), they have only one theory (protect the banks and bureaucrats at all cost) and one tool - an electronic printing press. True material progress - the kind that comes from risk taking, improved productivity, price deflation and real growth - is neither predictable nor "manageable" in a way which maintains their power base. So they suppress it.
    10 Apr, 10:44 AM Reply Like
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