Gentle Ben and I--neither of Us are very gentle!

David Altig brings a response to a Economix argument that American Consumers are purchasing in a historically odd manner. It is all very well, but it still does not answer a Question which I would like answered: Are American Consumers paying off their debt at the same rate that they are decreasing their Consumption? A positive Answer will tell Us that they are still buying a Product–their own debt. A negative Answer explains that they are trying to create an immediate Cash reserve, and therefore expect a very negative economy in the future. This is the important information, which no one seems to be attempting provision. We cannot adjust properly until and unless the American Consumers match commercial endeavor, and Government speeches and writings at all levels seems to only build Consumer fears. We honestly need a "The only thing to fear is Fear" speech from Government.

I am throughly on Paul Volcker’s side that a 2% Inflation rate is an unsound nominal Price stability. It is clear that Inflation will feed upon itself within less than a Year, and will become a dominant factor within 5 years of occurrence. Some will state that this is an unreasonable position because of the existence of inflation in the first place, but calculate Inflation without the sounding board of previous year prices since 1933. Estimate the Cost of current Goods and Services in terms of 1933 prices with relevant choice of cost Price for new Products and Service since that Period, then compare this with the Price structure of Today. I will be revealing and state that I have not done so due to implied ineptitude, but it is the only method to determine the degree of Inflation feeding on itself. One could ask what such Study can do for Anyone; I would suggest one achieve the Research before posing the Question.

Mish probably explains the Situation far better than I could, and therefore, Tyler Cowen may miss with his Post, even if he is right. Ben Bernanke may get the Nobel Prize, but still achieve it for the wrong reasons. I do know that Inflation must be considered a Wage degradation of previous Periods, with the elimination of Savings from those Periods–check the Savings rate for those Years adjusted for intervening Inflation. Mish might be Right in stating that these factors are impossible of determination, but that is not to state these factors do not have a terrible impact on current economic achievements. The Bernanke 2% Inflation rate will destroy a 10% past Savings rates incredibly much faster than an economy can withstand. lgl