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Nobody wants to be the next Jimmy Carter who lets the fed raise interest rates to stem inflation because it invariably triggers a recession that gets said president and his party voted out of office. So rates will stay perpetually low.
It's very sad to consider young men dying for their country while old men are too afraid to risk four years off their political career for it.
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Eh, we had high interest rates in the 90s and it worked out. Also, involving politicians is a huge mistake, the Fed needs to recapture its independence so it can make tough decisions. As for the rest, we as a society have become too petulant, expecting a forever boom and doing hardly anything to mellow out the boom bust cycle. And it’s not just the USA either.
If you never stop drinking, you never get a hangover? If we get hyperinflation, maybe housing will be affordable again? Tough time for retirees and folks who put money in the bank already (and not the stock market), but what else is new.
This isn’t hyperinflation, nor is it on the precipice. It’s not in the same ballpark, it’s not in the same league.
The only way the US experiences hyperinflation is if the petrodollar system completely collapses along with several other shocks to the system at the same time. Not impossible, but completely separate and distinct from current fed policy.
Reading this article and going through these comments make me realize that while I know what these words are I have a real lack of understanding how this stuff works. This may not be the best place to ask but do any of you guys have any recommendations on where to learn more about economics? Preferably something with good historical context.
A main cause of inflation sticking around is public perception of inflation existing. I feel like there is solid perception that inflation exists. I would not bet on it being transitory. Even if the underlying cause goes away, it will take longer for the perception to go away because is a self reinforcing phenomenon.
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If you never stop drinking, you never get a hangover? If we get hyperinflation, maybe housing will be affordable again? Tough time for retirees and folks who put money in the bank already (and not the stock market), but what else is new.
> If we get hyperinflation This isn’t hyperinflation, nor is it on the precipice. It’s not in the same ballpark, it’s not in the same league. The only way the US experiences hyperinflation is if the petrodollar system completely collapses along with several other shocks to the system at the same time. Not impossible, but completely separate and distinct from current fed policy.
Inflation reduces the value of debt and an era of increased inflation stands to benefit a lot of households. Of course, it helps if wages go up alongside prices, and they have. But even without wage increases, the value of debt lost to inflation is likely worth more than the value of salary lost to inflation for many households.
Maybe. The policy responses to inflation are to increase supply and/or raise interest rates. Both of those put downward pressure on housing prices. So, inflation devalues the debt you owe (good for household) but also devalues the underlying asset (bad for household).
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I'm told that NYT, WaPost and others are all solidly Blue Team and yet they seem to be running stories about inflation and how much it's risen daily. It's not a good thing in my opinion, but who's to say it's not transitory?
It's never "transitory", thats a bullshit world the Fed is using to keep people call. The prices are never going to go back to normal even if the rise of inflation ends we don't go back to normal prices unless things deflate.
Hey everyone - we need to chill out for a second. Stop buying the knee jerk reaction of the media trying to freak everyone out and get some good advertising dollars. This is going to take until after the new year maybe Q1-Q3 timeframe to see if it is transitory. Reminder: we had an unprecedented global supply collapse followed by shutdowns and border closures for more than a year combined with historic levels of fast…
You miss the key point on why this is happening and will continue to get significantly worse. What happens when the number of dollars approximately doubles in 2 years as it happened? Do you think prices stay the same and everything is just 50% off? Reality is that the current number is off by reality quite a bit, real number has to be much higher. It's just math and the worst part... it can't be just reversed.
> it can’t just be reversed
I don’t know where you’ve gotten this idea from. The fed can destroy money just the same as it can create it.
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I'm told that NYT, WaPost and others are all solidly Blue Team and yet they seem to be running stories about inflation and how much it's risen daily. It's not a good thing in my opinion, but who's to say it's not transitory?
It's never "transitory", thats a bullshit world the Fed is using to keep people call. The prices are never going to go back to normal even if the rise of inflation ends we don't go back to normal prices unless things deflate.
What I'm saying is there are reasons to believe it can go back to normal.
Interest rates really should have went up a couple of years ago. Not just for the sake of stemming inflation, but what good is the tool of lower rates in bad times when they are already at bottom in good times? If something goes wrong (or more wrong) we will have no effective economic tools available because they are constantly running as if we are in crisis already.