So, I’ve been having a rather one sided debate with a monetarist-esque friend of mine who says QE2 is good. He reads Scott Sumner (I think) and he says that the market had a good reaction to QE2 stocks rose, commodities and assets rose, and inflation expectations only went up a little bit. He talked about the TIPS spread and how it indicated that people only think there will be around 1.5% inflation in thirty years… why is it that inflation expectations are so low and how would you respond to the rest of his arguments regarding the market reaction?
If you pour more money into the stock market, the stock market will go up. Nominally :I
The rate paid on TIPS is correlated to the consumer price index numbers. How can stocks go up, commodities go up, the US dollar go down and things not cost more? Gee maybe the CPI numbers are BS. If the payout on TIPS were peoples expectations of inflation they’d probably be around 20% right now. They tell the old folks they don’t need a cost of living increase on their social security this year cause the CPI numbers say catfood cost the same as last year. Take one for the team Grandma…just walk it off.
Hey and before you attack me as a statist for defending Grandma’s right to a COLA. I never liked the fact that I was forced to pay into Social Security but I have for most of my life. I was self employed for most of my years in the system. You pay half and the company pays half. If you’re self employed you pay twice. Social Security was supposed to be insurance not an entitlement program. If Grandma wrecks her car is it all right if Allstate tells her to go ride a bike?
Actually its more like Grandma wrecking her car, Allstate having squandered all her payments as soon as it got them on wild parties, and now taking a gun to the grandkids to force the kids to pay her off. AKA two wrongs don’t make a right. Were you ripped off? Absolutely. Does that give you the right to rip off others? Nope.
Make no mistake, all the money you put into SS is gone the instant you make your payment, maybe on the various wars, maybe on sending a man to the moon, maybe on plane tickets to professional basketball players to play with Obama. They admit it.
Ya your right Dave, I’ll go ride a bike, but I aint gonna wear a friggin helmet.