Is Inflation A Good Or A Bad Thing?

Economics, economic theories, and political realities often cross paths, and make many people wonder what's going on. We have offered heard about the dangers of inflation, the dangers of recession, and other similar terminology, yet most of us will hear the media, and especially the business media, one day warn of the risk of inflation, and another day cite the lower than anticipated inflation rate as something to be concerned about. There are even different sets of indexes, one that includes core items (whatever that really means) and another that measures the inflation rate including energy costs.

The only thing that most American consumers concern themselves about from day to day, is how these costs impact them. Is their cost of living going up, staying the same, or going down. I have not met anyone recently that has told me that he feels that things are costing him less. At the supermarket, manufacturers continuing their clever "game" of effectively raising prices by keeping prices the same but reducing the package size. Shouldn't pricing be considered for these cost of living indexes the way the unit pricing is required by a lot of states, that is, by showing the cost per ounce, or per serving? Most of us have observed increased costs in milk, most meats, fowl, fish, cans of soda, bottles of soda, etc. Yet, we are being told that there is no or little inflation.

Gas prices are constantly fluctuating, yet the pattern is that prices go up. About the only thing that has not kept pace with these increases is average wages. Many workers are being paid for fewer hours, while others have been laid off. The unemployment rate statistically is about 9.5%, but realistically is more than 15%. Many Americans are either under-employed or unemployed, and this has been going on for so long, that, for many, unemployment benefits are expiring. If these people's benefits run out, the statistics will show a lower unemployment rate, because the official statistics does not count people not collecting benefits. It also does not count individuals who owned small businesses, that had to go out of business, because owners of these types of businesses are generally not eligible for unemployment,

The bottom line is that statistics are misleading. There is an old saying that the difference between a recession and a depression is, that it's a recession when it happens to someone else, and a depression when it happens to you. It is time for the American public to demand that our government officials stop partisan politics, and realistically address the economy and the joblessness issues, making those the overwhelming top priorities.

Why is economic news is so confusing to understand?

No wonder most people don't understand the economy. Often what might seem good on one hand, has bad side effects on the other. For example, the stock market rises- one would think that was good! But that was mostly due to the rising price of oil- bad news. But the price of oil is rising because the "experts" believe the economy is improving and thus more oil will be needed in production- good news! But that rise in oil prices causes the cost of living to increase- bad news. But that helps the Gross Domestic Product (GDP)- good news! But that then causes inflation- bad news. But that inflation means the economy is improving- good news! But then the Fed becomes concerned about inflation and raises interest rates- bad news! Which causes the value of the dollar to improve- good news! But that hurts exports because now American products cost more overseas- bad news! But that means foreign products cost less in the US- good news! But that hurts American companies competetiveness- bad news!
And so on, etc. So you see why economic news often seems co confusing. Because it is- what is good for one consumer, might be bad for another- what is good for one company, bad for another- what might be good for one sector of economy- bad for others.
The stock market is often the most confusing. On days when there is "bad news," the market often goes up, while on some "good news" days, the market sometimes goes down! While the Dow, or the S&P, etc., might go up, it does NOT mean that the stock(s) you own, will follow suit.
Too often, for the sake of a sound-byte, the media tries to over-simplify economic news. Yet the economy is by definition quite complex.
The one issue there should be some agreement on is that high unemployment is not good. Yet even in that case, the "experts" can't agree upon, nor act upon a viable solution.
The best way to think about the economy is this-- the difference between a recession and a depression is that it's a recession when it happens to someone else-- it's a depression when it happens to you!
It is my belief that a healthy economy requires certain factors to be in place - - low joblessness; high consumer confidence; a strong manufacturing sector; and reduced government deficits. That is what we must demand!

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DOLLAR DOWN,METALS&OIL UP-WHAT DOES IT MEAN?

As of this morning, the US dollar fell to its lowest level since August 2008, while metals (led by gold and copper) keep moving up in price, and the price of crude oil has nudged upward once again. What is the meaning?
If you listen or read what the "professionals" say, you will probably be more confused than ever. The same company earnings report, for example, can be interpreted or "spun" in many ways. So here's my take. The weakness of the dollar indicates that the world community is becoming increasingly alarmed at the every growing US deficit, and seeing no end in sight. The real concern here is that commodities will stop using the US dollar as the benchmark for pricing, but will switch to another system. Since the US imports more than it exports, it means that consumers will find imported items more and more expensive. While this may benefit a few corporations, overall it is bad for both consumers and consumer confidence.
A bigger concern for most Americans is the creeping upward price of crude oil. Increased energy prices has the potential to cause a new round of inflation to be piled on top of our existing recession. The increasing US deficit exacerbates all other efforts to control or maintain a healthy economy.
The joblessness issue is the issue that should be "PRIORITY #1" because to improve the economy, the American public must have their confidence restored. Every effort must be made to retrain out of work individuals to get good employment, give incentives to businesses to hire, and re-create a "comfort" level. Old thinking, cliches, throwing good money after bad, bailout after bailout of greedy companies does not help with the joblessness crisis.And it is a crisis when the official unemployment rate is about 9.8%, and the estimated true joblessness rate is about 18-20%.
Why are metals going and commodities going up in price? Simple- to offset weakening dollar, concerns about US economy, and fear of upcoming inflation. We have to urge our elected officials to stop giving speeches, and start taking some real, well thought-out action!
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