311–320 of 693 posts
We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. I don't know if it's the fed or if the government pushing to win elections, but feels like we didn't take care of the house in good times and we have led ourselves into this cycle.
When inflation is at 8%, that's like pissing on a forest fire.
They are saying they will raise it several more times this year. Inflation isn't the worst economic problem you can have, unemployment and deflation are. And raising interest rates risks raising unemployment, and even causing a recession if you're too aggressive. The inflation could still be a temporary effect of the COVID years, so if you overdo it, you'll risk dampening economic activity too much when it was going…
Inflation is almost 100% caused by "too much money" chasing "too few goods". "Too much money" is a condition almost always caused by the creation of too much "fiat currency" (ie a currency that is backed by nothing but the good faith and credit of the issuing government) As we all should know, in the US, on 6/5/1933 FDR took the US off gold-backed currency and started the fiat currency situation we still find ourselv…
I'll agree we probably need at least a 0.5 increase in interest and that's on hte low side. I see so many new land grabs around town and too many new businesses popping up because it's pretty easy to get a loan right now.
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imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. What i really think are needed --Clinton era 4-5% rates-- are all but taboo to the market post-housing-collapse. nearly a year ago the fed was cheerleading "transient" inflation in an attempt to avoid culpability for the corporate credit bub…
> imo this has been a comically glacial effort, and im not sure the feds 1.9% interest target by EOY is anywhere near aggressive enough to stave off 10% or greater inflation by Q4. How much of the current inflation has anything to do with interest rates? You think oil/gas prices will care much about the Fed's action? And we still have supply chain issue before all geopolitical problems even started: just try asking n…
Supply chain issues are being exacerbated by "free money" from the fed...
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> I never quite understood how this theory would work while avoiding inflation I see this sentiment any time MMT is brought up. I think it shows a misunderstanding of what MMT is saying. While I’ve got my own issues with MMT, it’s always been made clear by MMTers that inflation is an important signal to respect and that you can’t infinitely ‘print’ money due to the constraint of real resources.
You're correct, but I think the problem is that a lot of people who advocate for MMT, don't actually understand it, because many of the pro-MMT people I've talked to really do think you can print money forever . It's not unique to MMT, the same thing happens with plenty of other subjects too.
An interesting aspect of this is that the endless printing of money in the last few years was a sort of stress test of modern monetary theory, which has been seeing lots of discussion in those same years. I never quite understood how this theory would work while avoiding inflation, and what's happening now seems to at least be related - https://www.nytimes.com/2022/02/06/business/economy/modern-m... Conceptually the…
[1]:https://scholar.harvard.edu/files/mankiw/files/skeptics_guid...
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It has everything to do with it. If they were higher, people would go bankrupt, not have money to drive, use less gas/oil, thus reducing demand, thus reducing price, thus reducing inflation.
It certainly does not have everything to do with it. The answer is somewhere in the middle. Cheap money absolutely causes inflation, but so do global supply chain breakdowns.
i would believe supply chain issues were major contributors to inflation if wages were not rising. It seems to me a supply chain problem causes price to go up but wages would not. The price increase by the retailer is there to pay for their price increase to the wholesaler, not to increase employee wages.
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> ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no? Certainly, there is inflation. There isn't full employment.
Aren't there record job openings? I know "full employment" is a loaded term here, but at least in a general sense all who want a job could at least find something right? One thing I'd be interested in seeing a discussion on as it relates to this topic is what happens when there is a legitimate labor shortage.
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Hmm - I wonder who appointed the current Fed chair?
Yeah no doubt about this. But its also important to remember we've been doing this non stop since 2008 minus a few months in 2018. So this is a multi president, both parties are involved in continuing this train.
here begins the process of the fed sllowwwwly raising rates, well behind the rate of inflation. Either buy stocks or lose $ due to inflation. NO way out