I was nodding along to your commentary, including when you spoke about the oil price being due to supply and demand, with little OPEC can do about it, and then came to the bit where you said that as petrol taxes in many consuming countries are high, including in the UK, that if Governments were concerned they could reduce them.
What in the world? This would have. of course the effect of increasing demand, and so the price would, in a restricted supply situation, lead to increased prices, with the difference accruing to the oil exporting nations, whilst countries like the UK and US would now still be paying the same high price but would no longer have the funds their governments would have got from the tax.
Not too good an idea, I would have thought!
The way to economise would be to INCREASE taxes on petrol, and distribute that via cheques or rebates so that there was no adverse overall effect on the economy, but people would have every incentive to not use more than they had to of the commodity in short supply, oil.

I think the intended increased liquidity is paid, at an enormous price (very high inflation), over the backs of those who can least bare it (those who can borrow little): You go to work and do your job as well as always, and then you discover that, completely beyond your control, there’s your own Fed reducing the value of your hard earned salary by 4% while offering cheaper loans in return for which you do not qualify.

Remarkable how very different the Fed and the ECB think about their similar problems.

I find it interesting that that head of the Fed says there is no recession.
He needs to read the old article I found in the Dallas Time Herald from 1933 where John D. Rockafeller says there is no depression.
If your rich enough I guess you are immune,

I believe that they are denying the truth because the consequences are too frightening. If Bernanke says one negative word there will be a mass panik. After all money is just a virtual concept and if too many people stop believing the house of cards will tumble down. It was a very dangerous mistake to gamble with America’s housing market because that is the country’s economic core, it’s stability. Remember how quick the twin towers came down and nobody would ever have believed that possible. Denying the dangers are only going to make this problem even worse in the long run. The world is very different than just ten years ago and America must quickly adapt to this new environment. If the right decisions are made America will remain the leading force in our new developing democratic world. Lets keep our fingers crossed.

Recession, the act of going backwards. If you take it down to the lower levels in America, our working class, you can see the recession walking on the streets everyday. Many Americans are in a recession. Many of them have already taken 2 or 3 steps backwards in their lives to make end’s meet, mainly in their ability to relax and enjoy the fruits of their labor. For most, relaxation has become; stay at home and have a beer (but even that is costing more).

With American companies down-sizing, layoffs are in the works, and when a large Industry down-sizes, then not too long, all the support-type smaller business will be hit, and then their support businesses. Not all are Majory players, but their workers are.

The circle is something that for the most part, is only looked at on the outside edge, but the closer you get to the middle, the more you see a recession. I guess a recession is not a recession until the wealthy people in the outer circle start to feel it in THEIR pockets and complain. That may not happen because they have the flexability and finances to ride out any storm. The recipe is easy. Just cover it thru investing in oil futures with just a dash or two of a reasonable rumor thrown out into the speculation rumorville of shortages, your investment increases, and your way is paid, again on the back of the middle class.

I think we are thinking too “financial” here.. Worried about interest rate cuts and the good old “commodities … hedge agains inflation” sentence that get’s copied into one article to the other..
We should somehow look into what is under that glass that we look through when we are talking about the economy. We are under it too.
The flow is blocked somewhere down the line and the economy is unable to work flawlessly. We have to unblock it to make sure that it starts functioning and for this we might have to make things better. Banks have lent 100% against the value of a property as they thought that the market conditions were good and they could do it. Underwriters should have been prepared that all good things will come to an end once. Now the banks are not out there to solve the situation out although this should be their duty as they sold the mortgage products. We have to look at life on an individual level and coming from there the situation can be sorted. We have to look with the eyes of someone who has a mortgage and is probably paying more than half of his wages a month on repayments, probably commuting to work and has let’s say 2 kids.
Without saying that we are in a recession or not, if we solve issues around a model individual on a monthly period, we can start moving the economy in a good direction.

How can inflation be “only” 4% this year when everyone is complaining about food and energy costs. What do the economists who compute the inflation rate live on? Do they ear? Do they drive cars? Why are these “volatile” indicators excluded from the computation?

As to the oil price problem and food price crisis if the Fed keeps pumping reserves into the system and creating of the commodity we call money and the physical volume of food and oil remain stable (forget about drought and lifting declines) why should the price of these commodities not rise when we measure them in terms of a commodity where the supply has expanded dramatically. Did any else learn about supply and demand in economics 101? Does the term “elasticity” mean anything to modern economists? What have we done to poor Milton Friedman? How did monetary economics get turned on its head?

I am confused. Can anyone set me straight?

I think Mr. Bernanke is claiming victory too fast. 1.5% and 1.2% economic growth with a summer incentive means a recession is coming. I think Mr. Bernanke’s policies and the stimulus to the economy will not render the results desired. He needs to work harder and consider the housing crisis and oil prices in order to react faster to a changing world. For example another stymulus sometime in the next two quarters.

If it walks like a duck, talks like a duck… geese figure it out… It´s a duck!!!! Well I´m not an expert in economy or intend to be, though what´s going on with food prices, gas prices, and the acquisitive power of the individuals. If it´s not a recession what is it? Would you call it just a slow down?
With all due respect, I believe we should send back all these economists back to school so that they can figure out what a recession really means. And also teach them a little about social sensitivity, I happen to have the privilege of knowing how these ridiculous prices affect the average Joe and it hurts to see that mid-class families have to cut down spending on basic goods at all means in order to make end
So Mr. Bernanke, please be really careful of the words you use because the rest of us really do feel the pain while corporate America (and other offshore multi billion dollar corps) feels the gain.

The action of the FED reminds me on Tschernobil. A crew was doing routine work and then the process gets out of control. As a first reaction they did teh obvious and it was always a short relief until the meltdown.

Credit crunch? Flood the market with money. Trade deficit? Let the dollar decline. There is no masterplan. It is trial and error.

I think it is more interesting how the chinese strategy will work out. They reduce credit although the economy has new challenges. Obviousy they are more concerned about short term inflation than long termn growth problems. In my opinion they are right. It hurts now but it will help long term. But obviously the longest period an US administration can plan are 4 years.

So, you have a bear on your porch, breaking the door down to get at all your food. You know its a bear. You know it’s going to damage you, your home, and leave you with nothing to eat. It’s gonna be painful.
But hey, it’s not a bear until the park ranger turns up and tells you it’s a bear, so you’re safe to sit in your chair and watch it happen… Right? Well, so they would have you believe. Time to save your behind, get out the back window and run for the hills because it seems nobody’s going to come along and tranquilise that bear.

Todd Benjamin has been shouting ‘recession’ for months, and we do not have a recession and likely will not. There is an economic definition of recession, 2 consecutive quarters of negative growth. A 1.5% growth does not mean a recession is coming, as one of your bloggers said. And if another does not believe the 4% inflation number, that is his problem. Inflation refers to more than food and gasoline.
Another suggest these economists should go back to school. Just what are his credentials?
Some people are having a very bad time, especially those who borrowed too much money for the purchase of a house they could not afford. Others are getting along just fine even though they are not necessarily rich.

I think that Bernanke and the Bush administration speech writers are unfortunately trying to con the American public and anyone who listens to them in the rest of the world that things are getting “rosey” again in the U.S. This economy is in the tank and it’s heading deeper into the tank for every American except for those who are speculating on the price of crude oil and gasoline. In the knee-jerk political reaction of enacting legislation for ethanol development because of oil price spikes, those in Washington who are supposed to be intellegent leaders of the free world have managed to turn the cost of food into ascending price spiral. Perhaps we should create a Bozo Award Show for some of our lawmakers. I bet we’d have a whole bushel full who would tie for first place.

Mr Benjamin, I live in spain and I’m about to change my mortage to a multi visa which is run by the currancy values. Do you think the dollar is going to get weaker or stronger in the next 5-6 months. and do you have any advise with regards to multi visa mortages

Lewis: “Others are getting along just fine even though they are not necessarily rich.”
Right, but would you not agree that the richer you are, the more you can borrow (at a low interest rate), and the more you can get compensation for the inflation caused by the low interest rates?
So, would you not agree that the poor pay for the rich when interest rates are reduced at the cost of increased inflation?
By the way, 4% inflation may be right, but for those who spend most of their money on essentials only (food and gas), of course it is much more than 4%, and who cares about the prices of non-essential items?

This gas price rising seems expected. Americans are making good money. Oil companies have to anticipate a demand. I think prices have to rise or oi companies will lose money. If consumers can spend more they will demand less. So a recession is a break to these companies who may lose in the long run, so they to raise prices in order to break demand. When their is a slow down in the economy like we’re having now they are recompensing for the time being or the time ahead.

Inflation has been evident for a long time now but only recently are the media admitting it. Why is this? The answer lies in the fact that the public have now woken up to price increases because it is no longer possible to hide them, and CNN does not want to look completely foolish by continuing to deny it.

Also, on CNN Todd Benjamin was recently asked what inflation was, and he answered by saying it was ‘rising prices’. IT is NOT rising prices, but rather it is increased money supply (a.k.a. printing money), a function carried out by the Fed and the government between them in a complicated exercise to make it appear they are not printing money. The result from this is then rising prices, and we should call that ‘price inflation’.Now Todd didn’t want to say this because it reveals the fact that government is the cause of inflation.

Some things you are allowed to know and some things not!

M3 money supply figures are no longer published by the government because they do not want you to see them, but are calculated privately by http://www.shadowstats.com and are running at an amazing 16%. Other countries are doing the same and some are far worse than the U.S. It is this increase in money supply worldwide that is causing price inflation, and along with it massive increases in the price of oil and other commodities, not some mysterious force like an act of God, or greedy oil companies, or that other famous red herring, ’speculation’.

It is incumbent on the media to report the truth, the whole truth, and nothing but the truth, which means also not omitting items, or ‘interpreting’ data in a biased way in order to shape public thinking, even if they think it is for the public good that some matters are not revealed.

CNN has already embarked on a more direct approach to be more in tune with an increasingly outraged populace, even admitting that some of the government figures about CPI may be rigged. Unfortunately the situation will get far worse than it is now and the ensuing deep recession may be very prolonged, as in maybe several years, and we will all be forced to face many new realities about the economy and also the way we live, and try to make our laggard officials institute new policies that are more in tune with reality, hopefully with the help of the main media outlets portraying the truth so that we can all deal with the situation in a concerted and effective manner.

SOS

Peter, I believe you are correct. That is why the Fed is now consideng increasing the rates to rein in likely inflation.
I just cannot go along with the mantra “the sky is falling, the sky is falling”, as so many in the media, including Todd Benjamin, are voicing.

I believe, and I hope to be wrong, that with oil prices soaring towards a 200 $/barrel value it looks difficult to pause cost-push inflation spiral effect on commodities and services. It takes more than reducing interest rates to stimulate demand on Goods. Some good effort should be made on reducing money to be spent in a war that seems endless and divert it to improving production and export plans on the other hand, better efforts must be addressed to minimize dependency on oil-based energy consumption policies. It would be a good start to an anti-inflation reduction plan.

Todd..I agree with you 100%.
Whether America is in ressession or not,you don’t have to be an American to feel the pinch…one question, who are these ‘financial terrorist? I know of the others…

A report I rarely see or hear is regarding how many OPEC member countries have declining oil production. For example, Indonesia’s production had declined about 30 % since 1995 or so, and in fact it is now a net importer of oil. This facet of oil and energy costs might help explain the rise in crude prices.

I think Mr. Benjamin can be right in an extent, inasmuch as lifestyle has been changed everywhere as a consequence of high oil prices, high food prices and lack of credit. And at this stage, I have to agree with him that that is what matters.
But I honestly think that it is temporary. The inflation is caused by this nasty commodities bubble; and the credit is going to be available as long as the banks restore back their confidence and balance, what seems to me, it is going to happen soon.
And then, the speculative moves toward the commodities will cease and the US economy will show its resilience more clearly as the financial market is refuelled by the same capital once driven into this mentioned bubble.

I’m from India and the news reports now suggests there is a drastic cut in motor fuels dispensed from govt. controlled pumps after the recent administered price hike.Then,howcome international media still says that b’cos of growing demand in developing countries like India,crude prices are shooting up.Actually,all economic indicators from India and China for last month clearly indicates a sharp downturn.I feel the single biggest factor is that the refineries in U.S. depend on sweet crude which is tightly regulated by few of the OPEC countries whereas the sour crude produced by Saudi Arabia and most other middle eastern countries are available in excess of demand.So,the answer lies in converting the existing refineries to process the more readily available crude with higher sulphur content as is being done in India.

If my money won’t buy as much as it used to, that “feels like” inflation, which is not the same as recession. If unemployment has doubled, that “feels like” massive layoffs, which is not the same thing as a recession.

This argument is really silly. Those wanting to scold the “experts” SHOULD say “Whether it’s a recession or not is irrelevant– there are other important issues.” Why insist on trying to convert the word “recession” into meaning something that it hasn’t conventionally meant? Just so economists will be forced to come up with a brand new word to mean what “recession” USED TO mean, before all the “it FEELS LIKE one to me” types changed the word’s meaning?

Fred, you said:

“It is incumbent on the media to report the truth, the whole truth, and nothing but the truth, which means also not omitting items, or ‘interpreting’ data in a biased way in order to shape public thinking, even if they think it is for the public good that some matters are not revealed.”

To which I reply: the media companies are owned by their shareholders, and it is incumbent on the media companies to deliver shareholder value. If you want “the media” to report “the truth, the whole truth, and nothing but the truth…” then, if you’re lucky enough to live in a free country, feel free to start your own company. If I own GE shares, then personally I’d rather its subsidiary NBC protect its brand and its profit margin– which may or MAY NOT mean “telling the whole truth”– than pursue the truth at all costs. Of course other shareholders would be free to outvote me.

Oil price rise is nothing but a bubble created by Fed’s easy money policy. Until USA goes back to conservative policy like that of Paul Volker, there will be one or the other asset price bubble cropping up in one or the other asset.

Economics is a psuedo-science based off on bull@#$!. Statistics are very easily manipulated or misrepresented, a good example being unemployment stats. If you don’t know the right numbers to look at and only look at the raw unemployment numbers you are getting a very skewed perspective. Also, you must take into account that there are many undocumented workers (we have millions of them) who are affected and do contribute to the economy. Their untold story impacts the economy as well.

As far as CNN is concerned, they have vested interests (stock prices and advertisers) to protect. Sadly, I also have to use a lot of indie media to get accurate information like shadowstats.com, theoildrum.com, and energybulletin.net to get a clearer picture of what is taking place. There are many other interesting sites that examine energy and economic issues much better than the mainstream media currently does.

The problem for journalists is that they are left to tell a story with so many conflicting interests involved. Yes the economists say, we’re optimistic about this rate change or that bit of new stimulus.. but things keep tanking. The people who are complaining (nearly everybody I know middle class or lower) are the canaries in the coal mine. The rich are getting richer or at least maintaining without too many terrible sacrifices, that is nothing new. The problem is that the the average person will not be contributing to the growth of the economy, with the mandatory exception of the oil companies.

Even the oil companies have little control over what is happening. They are responsible for the situation to the extent that we’ve allowed them to operate with few obstacles. Greedy corporations do exactly what they are designed to do… maximize shareholder dividends and stock price or go out of business. If energy prices reduce drastically it will only be because of demand destruction and the tanking of the economy.

Energy demand has been outpacing supply for a while now. That, more than anything, is the catalyst for what is unfolding. Here’s a favorite joke of mine:

Two economists find themselves locked in a basement. They’re not sure what time it is, because it’s dark and they can’t read their watches. They think it’s nearly dinner time, cause they’re starting to feel hungry. But they’re not worried; they are not starting to panic - because they know that their demand will create sandwiches for them!

I believe in this troubled economy, we are only at the tip of the iceberg or as the saying goes, there is more to come. The difference this time is the housing crisis, the energy crisis, the unbelievable cost of the two current wars and really the lack of common sense. We saw the warning signs in the 1980’s savings and loan crisis. The answer,we did nothing. The energy crisis warning in the 1970’s; we did nothing. Vietnam,unreal that we should repeat this political mistake again.
My question is, anybody at home (so to speak) in the Senate and the Congress for the last 40 years? Why does the phrase” The Government lives better than its people” have a certain ring of truth to it? Why does it seem that everybody that runs for public office has more money than God and still wants more? If the current foreclosure crisis was the Titanic, then picture our elected officials in the life boats waving goodbye to the women and children still aboard the sinking ship we now call the USS Economy. We need to elect people who represent the best interest of all the American people and who do not represent themselves. We have the talent, the brains, the knowledge, we just lack the common sense to do the job. I am not angry anymore, but I am afraid.
MLB

In my opnion ;the only solution to ease down recession to pursue world peace and explore opportunities to increase our supply . The world leaders would have to sit together and ensure that all the developing & third world countries which have sizeable populations have to achieve peaceful accords . Africa which so much potential is mostly under turmoil due to the lack of peace . With non functioning economies almost throughout Africa , with Middle East and South Asia living under a constant threat of war . None of these nations are able to contribute positively to the world in terms of supplies plus minus a few special cases and contributions.

I personally feel that the dearth of peace is the bane of recession in the world currently . If we have peace than we would be able to quell speculation , we have seen how investors are now into commodities including edible their chances of ripping us off would be low . We would be effeciently use the lands which could not be tilled due to the non-exitence of peace especially in Africa ; here big countries like China & Europe could out source certain production of its edible requirements this would not only help ease down supplies but at the same time would also help in developing local economies . I am not against capitalism but the over zealous capitalists which is seeing a much widening gap between the rich and the poor should be forced to invest a certain percentage of their earned fortunes to develop infrastructure pertaining to requirements linked to food etc in the developing/third world nations .

The G7 should adopt a formula to invest and develop job opportunities globally and should adopt a target approach in which they spend a certain proportion of thier incomes on the same . This should be done in line with the burdoening requirements . With world peace this would create opportuinities for even their resources globally who would venture out to find good jobs elsewhere and would ease down pressure on their internal job demand .

Most importantly the consumption by any nation has to be linked with its progress . The more you consume ; the higher the responsibility to expedite opportunities to ease down pressure on demand by investments in alternate supply channels , investments in countries which are being siphoned every day and where poor class is growing in numbers and this investment should be ensured as a responsibility rather than a loan or even aid .

Hey all!

In 2001 Mr Bush refered to his presidential inheritance as “A RECESSION. “Uhuh, he sure did. This is the first time in American history that a president has signed off on any stimulous package, NOT TO MENTION THREE times. Call it what you will, but I can attest to the resolute fact that I was MUCH better off after eight years under Mr Clinton than eight years of Mr. Bush …..and a turd by any other name still stinks. So when the “experts” lament the numbers game and don thier SEE NO EVIL< HEAR NO EVEIL< SPEAK NO EVIL posture, I say LIARS! LIARS LIARS. My paycheck hurts!

It’s the primary reason Mr. Bush refuses to sign ANY legislation for asitsnace to those poor unemployed American folks who have lost thier jobs thanks to Mr. Bush and 14 years of republican congressional trade posturing. You see, if we allow 280,000 unemployed Americans to drop from the roles of “UNEMPLOYMENT” every 6 months, you add to a higher percentage of job gains not calculated any longer as a loss, and unemployed numbers. (good for Mr. Bush, worse for America). Now that practice alone speaks volumes about the thought process of our political arena. Numbers games are thier forte. Like Rummsfeld said, the numbers can get so confusing, they are almost meaningless. Of course that is unless you are working all week only to put every penny into the tank or on the dinner table. So like every one of us 285,000,000 Americans who actually keep America running with our hard earned paychecks, If it looks like a duck and quacks like a duck, and walks like one……IT”S A FREEKING DAMN RECESSION!

Bush will never admit that he’s been a horrid mistake for not only America, but the entire world might clearly have been better off without this wooden headed pupet(master Cheney) lead around by his thin strings, stamping litterally every reckless bill the repubs, sent him. That is until 2007 when the Dems took control with such a slim majority that they were inefective from day one. Remove leiberman and Kennedy and you now have the repubs back in total control, while you do nothing constructive for Amreica and our future, and blame the Dems for not allowing you to do even more damage.

Mr. Bush stood in front of the camera during the 2000 election and blamed Bill Clinton for the record HIGH price of oil, $31.00, “They have no energy policy” and NOW………eight years later, oil is $143.00, he stands in front of the camera and again….blames the Dems, “they won’t send me meaningful legislation.” That he will pass anyway. And DO NOT FORGET, HE HAS AN ENERGY POLICY, he and Mr Cheney set it up behind closed doors with the oil industry eight years ago. So I ask you, Who the hell is it that has run, is running, and hopes to continue running this country? And, folks, fellow voters, ask yourself this. When you walk away from a grocery store, drive or push your car to the gas station, walk out of a hospital, or pharmacy, the tax office, the utility company’s office, auto parts store, apliance store, or even a popcorn stand, do you have a smile on your face? I sure as hell DO NOT. Be honest for once in your, over paid, sit on your lying butts, cushy forever jobs, and tell the truth. WE ARE IN A RECESSION! And, if you fools do not watch it, we’ll be in another DEPRESSION. Close the borders to Corporate exodus, bring our jobs back, and tax em like you should.

Yes Mr. Bush claimes to be the master link in the chain of job creation. Forget about the 10,000,000 lost meaningful jobs, but lets talk about the 3,000,000 new minimum wage jobs. I know, I have two of them in order to keep my humble home and high fat diet(cheap hotdogs and macaroni) and worn out shoes. Every new Walmart, McDonalds, Wendys, Burger King, Hardees, Culvers, and Applebees that opens gives Mr. Bush his magical Superman hero employment numbers. NAFTA was signed by Clinton, but the NAFTA he signed isn’t the same NAFTA Bush and the repubs tore down and rebuilt. The corporate give-aways and tax-breaks were not a part of the NAFTA Clinton signed. The 67,000 international temp workers were increased to 240,000, Wedgie Co. Inc. could now move corp. headquarters off US soil and pay ABSOLUTELY NOTHING IN CORP. TAXES. That wasn’t the NAFTA Bill Clinton signed. It beggs to be told just who our president really serves. Trade numbers through our reckless agreements are fudged since the seccess numbers started rolling in. Take Corp. A, they send a train-load of raw materials to Central or South America so the Honduran workers can build our washing machines, “That’s Free Trade At work” then they ship that train-load of machines back to the United States” and VIOLA!!!! Freeeeeeee TRADE WORKS!!!!!!! It’s all the same………….. people, Corporate profits are in the multi thousands of percent, because the Bush crowd runs the numbers. Rummydumsfeld was right. Because if they meant anything to AMERICANS, these things would not happen. It all adds up to JOB LOSSES, CORPORATE GREED, POLITICAL CORRUPTION , ABUSE OF POWER, LIES, and finally a RECESSION IN AMERICA that if not stopped, will turn into much worse!
Oh yeah, if you are an American fed up and suffering under all these tricks, then keep McCaine out of the white house. If you like the Bush record then by all means, vote McCaine in Nov. Lord knows the repub. deserve the blame.

God Bless.

no recession…? 3 of the 6 starbucks i go to got shutdown! that’s a RECESSION.

Dear Todd, OK we all know about the recession but I would like your and your readers views of where har earned money should go to find a safe home. What do you think about gold coins?

I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you down the road!