can some on explain this i am really trying to understand inflation?

Question

NEW YORK (CNNMoney.com) -- The U.S. economy shrugged off problems in the housing and credit markets in the third quarter, as the pace of economic growth showed an unexpected gain in the government's latest reading.

The government report Wednesday buttressed arguments on both sides of the question of the day: Should the Federal Reserve cut rates?

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The unexpected strength reduced the need for the Fed to cut interest rates to combat fears of economic weakness. Yet a tame inflation reading in the report could give the central bank a green light to go ahead with a rate cut without worrying about spurring inflation.

Which sides wins the debate will be revealed at 2:15 ET, when the Fed concludes its two-day meeting.

The gross domestic product, the broadest measure of the nation's economic activity, rose at an annual rate of 3.9 percent during the three months ended in September, according to the report.

That's up from the 3.8 percent growth in the second quarter. Economists surveyed by Briefing.com had forecast growth would slow to a 3.1 percent percent growth pace.

It was the strongest pace of economic growth since the first quarter of 2006, when the U.S. economy was catching up from the hit it took in the wake of hurricanes Katrina and Rita the previous quarter.

The report showed that consumption by individuals grew at a 3 percent annual rate, as consumers increased their purchases of most items other than autos.

Exports grew 16 percent, helping to add nearly a percentage point to the overall pace of growth.

The growth in business inventories added nearly 0.4 percentage points to the growth rate, which also was stronger than expected.

The report also showed that prices rose at only a 0.8 percent pace in the quarter, down from a 2.6 percent increase in the second quarter. Economists had forecast that measure, known as the GDP price deflator, would slow to a 2 percent rise in the latest reading.

Answer 1

I use to listen to report like this and not understand, so studied economic and got a masters degree, and I still don't understand. What I did learn is there is no coherent economic theory for why business cycles (booms and recessions) happen. Most economist believe in a descriptive mechanism that is called monetarism, that holds that the amount of money in the economy determines growth and inflation and to produce growth without inflation you need just the right amount. The problem is that no one is quite sure what money is, it is not just currency but the ability to buy things on credit, so the FED controls the interest rate instead. The FED and people who are trying to find the perfect balance look at all sorts of economic data, and people who don't understand it write incomprehensible articles about the process.

Answer 2

Inflation rates are artificially reported on by not including most basic items such as housing, food, gas.

Explanations for inflation are always wrapped in economic fluff to hide the major cause, which is Government borrowing, and fraudulent banking practices "Fractional Reserve".

Inflation is caused by an over increase of the supply of money. Increasing the money supply devalues the dollar, by having more dollars chasing the same amount of goods and services. Deflation has the opposite effect.

1. Gov borrows money from Federal Reserve.
2. Gov spends money into economy.
3. Money supply is increased, more money chasing same goods/services.

From step 1 to 3 takes approx 6 months to 1 year to surface as inflation.

Also did you know, that ALL US income taxes go to pay interest on government debt to the "Federal Reserve". Which basically means the Government is bankrupt.

Answer 3

Easy.Very easy.Forget the controlled media and do a little study on centralized banking in a nation.Only a few nations in the world left without them and they are being targeted as we speak.Inflation is artificially created [in this country] by the Federal Reserve;which is neither federal,nor does it have any reserves.Deep subject that ties into Globalism and Fascism,but that's the answer in a nutshell.

Answer 4

Too much info for such a simple question. Tima sabe says Tonto. Me no sabe.