Hearing your recommendation of David Roberts on the @ne0liberal podcast and then that... very bad thread by him on the same day was quite the experience. How “Inflation is a real thing” is seen as contrarian but “inflation is a nefarious media psy-op” isn’t, I’ll never understand.
Boots on the ground here, sourcing (and using) construction materials a big part of my work; so easy to see the giant lump{s) being slowly digested here - the influx of money, the paucity of materials, the 15+ month run up in demand.
If a Professional Imbecile like me (and all my peers who are also in the Hod Carrying trade(s)) can see this temporary situation - us Prof. Imbec. / Hod Carriers - whys can't youse professional credential-ists, wordy writers - chill the f*ck out, and learn how to do a better job 'splain'ing this temporary bullsh*tery, esp in the context of corporatist propaganda? / political posturing.
Fer sure, notable non-economist William Goldman's axiom, 'nobody knows nothing'* holds here too. How about - stick to fundamental principles, and it's all gonna be ok. Which - it is. Alls one has to do is look around at the fluctuations. And take the long view.
This shouldn’t be very hard. Fed commits to shrinking its balance sheet and it revises the pace on a weekly basis until 10 year inflation expectations are back to ~2%. I’m not even sure they would need to accelerate rate increases.
Truth is they lack the will. They are petrified of disturbing financial markets. Hard to understand this given the unbelievable gains to financial asset owners. When did we decide this has to be a one-way street? Presumably some of this extreme “wealth” creation fuels the price-insensitive consumption that created the inflation problem in the first place. And now we dare not disturb it?!
As a working stiff during the great inflation of the 1970s, I doubt the salience off inflation awareness in much off the word. It was a topic which never arose in conversation among worker's at the factory where I worked. After Volker's depression shut down my plant, I became a professional economist. Then, I started worrying about inflation. But unemployment is definitely the greater evil.
Isn’t the current inflation being driven by supply chain difficulties? Won’t these problems eventually work themselves out? Certainly inflation is a great issue for the Republicans, but so is racism, nationalism, and a host of other emotional hot buttons. Just like Jimmy Carter appointed Volker and screwed himself, Biden worked hard to end the pandemic, woke up the economy, and screwed himself. Now, economists can gleefully point out the revival of inflation, and put the burden of solving it on Biden’s shoulders. Big deal, every Republican politician is already doing that. Why don’t you address the Republicans directly and straighten them out.
Back in the 70's there were a couple aspects to inflation which have changed, at least as I remember it:
* while some union workers had escalator clauses in their contracts, seniors on social security did not. Congress passed increases and could brag to the voters about it.
* inflation helped liberals because it meant that taxpayers moved into higher brackets, increasing revenues without forcing anyone in Congress to vote for higher taxes.
Wait...are there people here who think it's govt spending that's causing the inflation we are experiencing now? It's not "printing" money that's causing this inflation and the size of the deficit has zero to do with the fact that there are supply chain issues. Which is what I've seen the Dems say.
Yes, inflation is real and it's painful. So Biden has been doing what he can to deal with supply chain problems, but maybe there is more to be done there. This isn't the Fed's problem to solve.
1) After 2008 the Fed was too hawkish. Is there reason to think they've genuinely overcorrected and are now too dovish, or is this just about soothing the bond markets with better communication?
2) Can the Fed still afford to calmly delay hiking next year if they think inflation is already subsiding, or are the bond markets or the macroeconomy sensitive enough to impose a big cost if the Fed doesn't hike until (say) March 2023 instead of June 2022?
you missed the money printing part… it’s impossible to solve without a hard reset… and it doesn’t care about your political feelings. this isn’t about biden’s presidency… this is about the average american’s ability to afford what they need.
Buy a new IPHONE it does not include the $59.00 charger. Inflation at its best.
Gasoline came down but still 1.50 to 2.50 above the price before JB.
Food is up 7-11% still
The little guy as JB put it won't suffer, only the guy earning 400,000 plus.
When people are working - They pay taxes, When people are working they pay into SS and Medicare. When people are working they spend money. When people are working they donate to worthy causes. When people are out of work inflation hits hard.
As I wrote to your earlier post, the compound average nominal annual PCE growth rate from 3q19 - just before the pandemic - up to 3q21 was 4.7%. That's less than the 5.1% nominal PCE growth rate in 2018. What it means is, the aggregate personal consumption spending levels that we saw in 3q21 were at a level that would not have driven >3% inflation, had there not been the disruption and volatility of the pandemic and recovery.
Another fact worth noticing: nominal personal income shrank 1% in September (month-on-month), mainly from pandemic unemployment benefits ending, and yet nominal personal spending grew 0.6%. Those are both extraordinarily big moves, and it is unheard of to see such big moves in the opposite direction. What they show is that post-pandemic splurge spending really is a big thing - it was apparently happening in September on a scale worth 1.6% month-on-month PCE growth, which is huge. That kind of surge of course cannot carry on for long unless it's matched by income growth. Since much of the splurge is going to imports, I'm not convinced that will happen.
How to manage the economy....when "no-one really knows how the economy works"?
1. Introduce an above-poverty Job Guarantee., funded by debt-free government-issued money,
to deal with any slack in private sector labor requirements.
2. Maintain interest rates at zero (so central - and private - bankers, financiers and rent-seekers
can no longer bully the nation with 'inflation expectations' crap . Bankers should only be paid a
fee for service, not usury.
3. Limit the nation's money supply to the nation's available resources and productive capacity ie
to goods and services available for purchase in conjunction with full utilization of the nation's
productive capacity, to avoid inflation. Levels of spending by *public versus private sectors* to
be determined by the electorates preferences, consistent with the first policy above (a JG).
Current IT and AI capabilities make such calculations achievable by government.
Meanwhile fun times ahead dealing with "inflation" ...as 'rich' countries burdened by covid-rescue debts believe they can't "afford" to aid poor countries, to transition to renewables, and are incapable of dealing with refugee disasters like Afghan children freezing to death on the Polish border.
Btw did you know Musk is now richer (c. $300 billion) than all those nations listed below about number 40, on the world GDP list of c 200 nations?
I am convinced that given inefficiencies brought by covid-19, real wages would have been significantly lower if central banks hadn't been aggressively stimulating.
Yes asset prices are up in a one-time on-paper increase due to low real interest rates but the trade-off for the rich is that expected asset returns are lower or negative or risky. This is very significant!
Rich people that want to maintain their wealth benefit from high central bank interest rates and low inflation because it turns money into wealth haven where they can get above market safe returns. It shields them from having to keep their wealth in risky businesses where they have to hire people and pay them to keep the business going.
When markets get turbulent, the rich want to kick employees to the curb and retreat to government stabilized paper to get those above market, less risky returns. I for one am very glad central banks are not allowing them to.
Hearing your recommendation of David Roberts on the @ne0liberal podcast and then that... very bad thread by him on the same day was quite the experience. How “Inflation is a real thing” is seen as contrarian but “inflation is a nefarious media psy-op” isn’t, I’ll never understand.
Inflation fears = short-term-ism writ large.
Boots on the ground here, sourcing (and using) construction materials a big part of my work; so easy to see the giant lump{s) being slowly digested here - the influx of money, the paucity of materials, the 15+ month run up in demand.
If a Professional Imbecile like me (and all my peers who are also in the Hod Carrying trade(s)) can see this temporary situation - us Prof. Imbec. / Hod Carriers - whys can't youse professional credential-ists, wordy writers - chill the f*ck out, and learn how to do a better job 'splain'ing this temporary bullsh*tery, esp in the context of corporatist propaganda? / political posturing.
Fer sure, notable non-economist William Goldman's axiom, 'nobody knows nothing'* holds here too. How about - stick to fundamental principles, and it's all gonna be ok. Which - it is. Alls one has to do is look around at the fluctuations. And take the long view.
This shouldn’t be very hard. Fed commits to shrinking its balance sheet and it revises the pace on a weekly basis until 10 year inflation expectations are back to ~2%. I’m not even sure they would need to accelerate rate increases.
Truth is they lack the will. They are petrified of disturbing financial markets. Hard to understand this given the unbelievable gains to financial asset owners. When did we decide this has to be a one-way street? Presumably some of this extreme “wealth” creation fuels the price-insensitive consumption that created the inflation problem in the first place. And now we dare not disturb it?!
As a working stiff during the great inflation of the 1970s, I doubt the salience off inflation awareness in much off the word. It was a topic which never arose in conversation among worker's at the factory where I worked. After Volker's depression shut down my plant, I became a professional economist. Then, I started worrying about inflation. But unemployment is definitely the greater evil.
Isn’t the current inflation being driven by supply chain difficulties? Won’t these problems eventually work themselves out? Certainly inflation is a great issue for the Republicans, but so is racism, nationalism, and a host of other emotional hot buttons. Just like Jimmy Carter appointed Volker and screwed himself, Biden worked hard to end the pandemic, woke up the economy, and screwed himself. Now, economists can gleefully point out the revival of inflation, and put the burden of solving it on Biden’s shoulders. Big deal, every Republican politician is already doing that. Why don’t you address the Republicans directly and straighten them out.
Back in the 70's there were a couple aspects to inflation which have changed, at least as I remember it:
* while some union workers had escalator clauses in their contracts, seniors on social security did not. Congress passed increases and could brag to the voters about it.
* inflation helped liberals because it meant that taxpayers moved into higher brackets, increasing revenues without forcing anyone in Congress to vote for higher taxes.
Both are now indexed to inflation.
Wait...are there people here who think it's govt spending that's causing the inflation we are experiencing now? It's not "printing" money that's causing this inflation and the size of the deficit has zero to do with the fact that there are supply chain issues. Which is what I've seen the Dems say.
Yes, inflation is real and it's painful. So Biden has been doing what he can to deal with supply chain problems, but maybe there is more to be done there. This isn't the Fed's problem to solve.
Two questions:
1) After 2008 the Fed was too hawkish. Is there reason to think they've genuinely overcorrected and are now too dovish, or is this just about soothing the bond markets with better communication?
2) Can the Fed still afford to calmly delay hiking next year if they think inflation is already subsiding, or are the bond markets or the macroeconomy sensitive enough to impose a big cost if the Fed doesn't hike until (say) March 2023 instead of June 2022?
you missed the money printing part… it’s impossible to solve without a hard reset… and it doesn’t care about your political feelings. this isn’t about biden’s presidency… this is about the average american’s ability to afford what they need.
Buy a new IPHONE it does not include the $59.00 charger. Inflation at its best.
Gasoline came down but still 1.50 to 2.50 above the price before JB.
Food is up 7-11% still
The little guy as JB put it won't suffer, only the guy earning 400,000 plus.
When people are working - They pay taxes, When people are working they pay into SS and Medicare. When people are working they spend money. When people are working they donate to worthy causes. When people are out of work inflation hits hard.
The inflation gaslighting has begun. I only agree with you about half the time, but I read you because you always seem to tell it like it is
Did you forget that Americans are mostly debtors? Inflating away the value of our debts may not be as noticeable, but it does make us richer.
As I wrote to your earlier post, the compound average nominal annual PCE growth rate from 3q19 - just before the pandemic - up to 3q21 was 4.7%. That's less than the 5.1% nominal PCE growth rate in 2018. What it means is, the aggregate personal consumption spending levels that we saw in 3q21 were at a level that would not have driven >3% inflation, had there not been the disruption and volatility of the pandemic and recovery.
Another fact worth noticing: nominal personal income shrank 1% in September (month-on-month), mainly from pandemic unemployment benefits ending, and yet nominal personal spending grew 0.6%. Those are both extraordinarily big moves, and it is unheard of to see such big moves in the opposite direction. What they show is that post-pandemic splurge spending really is a big thing - it was apparently happening in September on a scale worth 1.6% month-on-month PCE growth, which is huge. That kind of surge of course cannot carry on for long unless it's matched by income growth. Since much of the splurge is going to imports, I'm not convinced that will happen.
How to manage the economy....when "no-one really knows how the economy works"?
1. Introduce an above-poverty Job Guarantee., funded by debt-free government-issued money,
to deal with any slack in private sector labor requirements.
2. Maintain interest rates at zero (so central - and private - bankers, financiers and rent-seekers
can no longer bully the nation with 'inflation expectations' crap . Bankers should only be paid a
fee for service, not usury.
3. Limit the nation's money supply to the nation's available resources and productive capacity ie
to goods and services available for purchase in conjunction with full utilization of the nation's
productive capacity, to avoid inflation. Levels of spending by *public versus private sectors* to
be determined by the electorates preferences, consistent with the first policy above (a JG).
Current IT and AI capabilities make such calculations achievable by government.
Meanwhile fun times ahead dealing with "inflation" ...as 'rich' countries burdened by covid-rescue debts believe they can't "afford" to aid poor countries, to transition to renewables, and are incapable of dealing with refugee disasters like Afghan children freezing to death on the Polish border.
Btw did you know Musk is now richer (c. $300 billion) than all those nations listed below about number 40, on the world GDP list of c 200 nations?
I rest my case.
I am convinced that given inefficiencies brought by covid-19, real wages would have been significantly lower if central banks hadn't been aggressively stimulating.
Yes asset prices are up in a one-time on-paper increase due to low real interest rates but the trade-off for the rich is that expected asset returns are lower or negative or risky. This is very significant!
Rich people that want to maintain their wealth benefit from high central bank interest rates and low inflation because it turns money into wealth haven where they can get above market safe returns. It shields them from having to keep their wealth in risky businesses where they have to hire people and pay them to keep the business going.
When markets get turbulent, the rich want to kick employees to the curb and retreat to government stabilized paper to get those above market, less risky returns. I for one am very glad central banks are not allowing them to.