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Confusion about current inflation

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tcostel posted on Tue, May 31 2011 2:58 AM

People say that rising prices are not as bad now because banks are not lending all the money. That makes sense, but they are still lending a ton, at least according to this graph.

I am confused about why prices are not higher if there is still that much lending. Is it because lending is not financed by inflation? Yes there is less lending, but there is still a huge amount of lending. It didn't go to zero.

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Top 75 Contributor
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I would say to give it time. Prices are gradually going up as time goes on. I dont know how high you expect prices to go up by, but I think it is safe to say that prices are going up.

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1. Have you looked into the CPI and how as presently composed its goal is to hide inflation?

2. Have you gone shopping lately, especially for food or gasoline?

3. Have you seen the charts for commodities prices?

4. Given our high unemployment, why hasn't the stock market dropped, or housing prices?


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I read recently that if inflation were computed today the same way it was in 1980, that we'd already be over 10% inflation, and this is just the beginning.

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Banks are still NOT lending out money in the sense you mean it. What you see is an increase in the purchasing of government securities (loans to the government).

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there is very little productive lending occuring.  The banks are lending that money to each other , the FED, and the US Gov.  The banks make money on the spread between each other and the FED has never before paid interest on reserve accounts, but it is now.  and obviously the US gov, supposedly, has AAA credit and will never default (always make payments) 


you gotta wait for it to hit certain markets (which it is), energy (??, i think will be deflationary in the interim), medical, education (my tuition is going up 5%), food, etc. Everywhere but imports...for now.

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