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Noting the recent increase in inflation, Bernanke once again calls this pressure "transitory."...

Noting the recent increase in inflation, Bernanke once again calls this pressure "transitory." Hopefully, one of the questioners can pin him down on exactly what this means.
Comments (31)
  • bbro
    , contributor
    Comments (10314) | Send Message
     
    Transitory..months...look at the futures contracts...love the media
    game of gotcha....I love it when people get mad because Bernanke can't predict the
    future...
    27 Apr 2011, 02:29 PM Reply Like
  • woollyB
    , contributor
    Comments (1019) | Send Message
     
    Inability to predict the future is not why people are mad at Bernanke.
    27 Apr 2011, 02:32 PM Reply Like
  • bbro
    , contributor
    Comments (10314) | Send Message
     
    Oh yeah I forgot he saved the country from a depression...
    27 Apr 2011, 02:34 PM Reply Like
  • drekon
    , contributor
    Comments (188) | Send Message
     
    Isn't that his job?
    27 Apr 2011, 02:34 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    "Oh yeah I forgot he saved the country from a depression..."

     

    groan...oh brother...
    27 Apr 2011, 02:36 PM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (551) | Send Message
     
    Inflation has been above target in the U.K. for nearly 3 years running, a development the BoE continues to call "temporary." Nobody expects the man to know the future. I'm curious to see what the Fed chair means by transitory.
    27 Apr 2011, 02:38 PM Reply Like
  • bbro
    , contributor
    Comments (10314) | Send Message
     
    Mguy..how's your buddy D. Rosenberg these days...
    27 Apr 2011, 02:40 PM Reply Like
  • j-dub
    , contributor
    Comments (1235) | Send Message
     
    Bernanke couldn't predict last night's playoff game
    27 Apr 2011, 02:41 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    remove the impact of sales tax hike and tell me what you see then. Ed

     

    headline inflation will move back down and towards the core

     

    think about it for more than a nanosecond

     

    oil prices are not going to go up another 40% from here - even if they remain flat - the yoy over change in that component will be zero

     

    same for anything else you care to mention and

     

    if we see a decline from $4 gas to say $3.50 gas then we see boom a 10% decline yoy

     

    you will all be screaming then - I am sure that the core does not reflect reality - really we will - I guarantee it

     

    this will occur in all the rest of the items - you are already seeing it in a few areas - inflation - true inflation requires
    1. too much money and
    2. not enough stuff and
    3. a belief by people that stuff tomorrow is going to be way cheaper than stuff today..
    4. a built in ratchet from a wage price spiral

     

    we have overcapacity - especially of people = unemployment - yes there is a lot of money out there but we have very low money velocity and lowish loan demand, minimal wage growth and there is no expectation of inflation - where is it? point to significant expectation inflation of prices or expectations outside of gas.

     

    and don't tell me qabout apparel - have you shpped at H&M or any other discount store. go and take a look.

     

    this is the problem - you have a bunch of people in the US Congress the majority of whom cannot balance a check book - this also applies to 90% of the SA firthful and assorted Tea Partiers opining about the monetary policy of the US based on the price of gas - great.

     

    Bernanke save the world. that's true. he also save the US. the destruction of productive capacity - read people on the scrapheap - from a Great Depression 2 would have been devastating - this was avoioded - what we have is bad enough but if you were in my shoes me and funding a business in fall 2008 and winter 2009 and unable - completely unable to get credit or even a phone call from a bank - when the only money was at almost usurious rates with very restrictive covenants then you understand what the abyss looked like and what was avoided.

     

    most of you - scratch that - all of you have no clue. you sit in your nice comfy salaried jobs - maybe you work for the Government and you see gas go from $3 to $4 per gallon and you think this is a crises. the luxury of beiong able to complain about this nothing is what Benanke has given you.

     

    the least you can do is to be grateful.

     

    E
    27 Apr 2011, 03:55 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    (e)condoc,

     

    Dollar at fresh mullti-year lows. Purchasing power of 70% GDP (read: consumers) gone. checkmate.

     

    I'm grateful for Bernanke as it pertains to my large silver pile's worth. Now that's hedging reality.
    27 Apr 2011, 04:02 PM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    You are dead wrong there....he clearly said that the score at the end of the 1st quarter would probably be transitory and he expected the game to proceed for an extended period. Problem is while he was speaking hot dogs at the concession stand went up 12%.
    27 Apr 2011, 04:09 PM Reply Like
  • Econdoc
    , contributor
    Comments (2944) | Send Message
     
    hey Gollum good to see you again

     

    remember thumbs down from the economically illiterate are a great endorsement

     

    E
    27 Apr 2011, 04:44 PM Reply Like
  • halconnoche
    , contributor
    Comments (68) | Send Message
     
    Existing or lasting only a short time; short-lived or temporary
    27 Apr 2011, 02:32 PM Reply Like
  • bricki
    , contributor
    Comments (1099) | Send Message
     
    Lasting only the short time until the next economic meltdown.
    27 Apr 2011, 03:01 PM Reply Like
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    In the meantime his debt that he created will last for our lifetimes and our childrens...
    27 Apr 2011, 02:39 PM Reply Like
  • j-dub
    , contributor
    Comments (1235) | Send Message
     
    One could say Hitler's regime was transitory.
    Transitory does not equate as not having long term devastating effects.

     

    He should have walked in with a cardboard box around his torso, visually demonstrating his predicament.
    27 Apr 2011, 02:39 PM Reply Like
  • j-dub
    , contributor
    Comments (1235) | Send Message
     
    My point:

     

    mother: I can't believe you got all F's on your report card
    son: Ma, don't worry. These bad grades are all transitory
    mother: WHAT?
    son: Transitory, you know, temporary, fleeting
    mother: What the hell are you talking about?
    son: Well, I just got expelled, so I won't be getting any more grades. Like I said, transitory.

     

    All better?
    27 Apr 2011, 02:47 PM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    If it's transitory perhaps we'll get a refund of the extra costs we lay out for gasoline, food, etc. Or is just the inflation transitory and the impoverishment permanent ?
    27 Apr 2011, 02:42 PM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
     
    How bout dat gold and silver?? I know, it's a bubble.

     

    Right..
    27 Apr 2011, 02:44 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Transitory means temporary, not permanent. He's correct. The condition of prices rising and wages flat cannot continue indefinitely. Reporters and commentators poking at this are simply asking the wrong questions; what everyone really means is not "when are the prices of staples going to stop rising?" but rather "when will my standard of living stop declining?" The answer to that question is not one that most people want to hear, so it doesn't get asked. Prices will indeed stop rising, but when they do the world will be unrecognisable to most Americans.
    27 Apr 2011, 02:57 PM Reply Like
  • Duude
    , contributor
    Comments (3398) | Send Message
     
    Our lives are transitory. What an empty explanation.
    27 Apr 2011, 03:00 PM Reply Like
  • Enpassant
    , contributor
    Comments (194) | Send Message
     
    The press is playing softball. Who issued the invitation list for this event?
    27 Apr 2011, 03:13 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    They were all "Congressionally approved" media participants. No joke. Complete set-up.
    27 Apr 2011, 03:26 PM Reply Like
  • hopem22
    , contributor
    Comments (3) | Send Message
     
    I'm confused.... how do you keep inflation low... while continuing to print lots of dollars?
    27 Apr 2011, 03:15 PM Reply Like
  • MarketGuy
    , contributor
    Comments (3983) | Send Message
     
    Don't be confused, you can't. That's why these events are stage shows.
    27 Apr 2011, 03:28 PM Reply Like
  • hopem22
    , contributor
    Comments (3) | Send Message
     
    It's almost like they are trying to convince the American people that by printing money we keep inflation low.... just another if you say it long enough and loud enough...
    27 Apr 2011, 03:51 PM Reply Like
  • Tack
    , contributor
    Comments (14293) | Send Message
     
    One aspect, that I find amusing, of most of the threads that devolve into long-winded debates about inflation is that many of those who promote the argument for inflation, excessive or otherwise, expect everything to inflate, except the price of equities. This is where they make their "bloomer," as the Brits would say, because if there are excess amounts of dollars causing the relative prices, in dollars, of everything to get recalibrated, then, the price of everything will rise. That includes commodities, salaries, taxes, revenues, profits, and, yes, even share prices. Even if everything doesn't get repriced in the same moment, it all will because the laws of supply/demand economics are immutable.

     

    So, the proper advice for the adherents of the inflation story, isn't to hunker down and await the end of the world, it's to get those dollars translated into other forms of value, or the "markers" therefore, which includes equities.
    27 Apr 2011, 04:44 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Yes and no. Yes, the value of equities will rise somewhat, in general. But no, because in general what we're talking about here is not a simple wage-price spiral like we had in the 1970s. It's the systematic destruction of the earning power of Americans. Therefore most companies will ultimately find that their margins are squeezed as they are forced to compete on the global markets for inputs but are selling to people who can't afford higher prices.

     

    The impact will depend on how leveraged they are in their customers' purchasing habits. Lower-leverage companies make staples; basic foodstuffs are at the bottom. Things we think of as "staples" may still be higher-leverage because substitutes exist; for example, people see oil as a necessity but in fact much oil consumption can be replaced with natural gas, coal, and eventually wood as the standard of living declines. But before we get there, we will find that the pooring of America will erode demand for luxury goods that are not of a quality that the global elite desire. That will devastate the value of companies that make, transport, and sell such goods. They are the most leveraged to the common man's standard of living, and will be the first to go.

     

    It's unfortunate that the same word is being used for different things. Price inflation without wage inflation is very different from, and much more pernicious than, simply tacking an extra zero onto the price of EVERYTHING each year. The latter can be easily modeled and accounted for in finance. While it's very bad, it's at least manageable. A scenario in which both cash and labour lose value relative to commodities is simply unsustainable and will eventually result in major changes to the structure of the economy itself. There will be few winners and many losers in that restructuring. Equities won't be the worst place to be (that would be cash), but I'm not optimistic that owning an index fund will preserve purchasing power. And that's really the point, isn't it?
    27 Apr 2011, 05:21 PM Reply Like
  • Tack
    , contributor
    Comments (14293) | Send Message
     
    bear:

     

    I'm just going to have to disagree with you.

     

    The supposed difference in "price inflation" without "wage inflation," i.e., having the former without the latter, is merely a timing issue. Initially, much of the excess in capital (currency) is being hoarded unproductively in commodities, mostly out of the usual fear-based behavior. At some point that unproductively employed capital will come rushing back out of these speculative hedges and get converted into demand for other goods and services, and at that point the economic system's current excess of supply and capacity will start to wilt away, and that will lead to increased cost to exapnd capacity, including labor costs.

     

    The demand for goods and services is ever expanding, short-term concentrations and misallocations of capital, and temporary business recessions, notwithstanding. In the end, the fundamental laws of supply and demand get satisfied, and everything gets repriced accordingly, depending on relative quantities. That's why inflation is perpetual, because fiat currencies always expand faster than goods and services. And, there is never a permanent diminution in monetary velocity.

     

    Also, from an investment perspective, in a global economy occupied by multinational companies, it really doesn't matter too much how one population segment does relative to another. Again, the whole will be constantly expanding, and entities serving it will be priced accordingly, based on available currencies versus the aggregate supply of the things such currencies purchase.
    27 Apr 2011, 05:56 PM Reply Like
  • Bropollo Inc.
    , contributor
    Comments (29) | Send Message
     
    If you're young and hung, it is time to invest in researching where you want to expat. Australia sounds decent. At least there, the poisonous vermin kill you quickly.
    27 Apr 2011, 07:41 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3333) | Send Message
     
    I'm sure the word "Transitory" makes the middle class making $45K per year feel comfortable.

     

    As if they will get a rebate or something, for the money that was once disposable income, and no longer exists.
    27 Apr 2011, 08:31 PM Reply Like
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