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U.S. inflation reached a new four-decade high of 8.6% in May

wsj.com

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Re: U.S. inflation reached a new four-decade high of 8.6% in May

#21

Post by anotherman554 »

refurb wrote: post #11
voisin wrote: post #8

Earlier quoted context omitted.

> They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates. This is exactly why the easy-money economy should never have been allowed to occur and persist for so long.

The amazing thing is many were predicting this back in 2008. If anyone wants to listen to a prescient conversation about the feds actions post-2008 and inflation today, take a listen to this podcast. It was recorded in 2009. https://www.econtalk.org/meltzer-on-inflation/ It’s an interview with Prof Meltzer from Carnegie Mellon who has done extensive research on the federal reserve system and who wrote the de facto of…

"The amazing things is many were predicting this back in 2008."

Inflation was at historic lows from 2008 to 2020.

I guess an economist can be wrong for over a decade and still be "pretty accurate so far" in your mind.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#22

Post by voisin »

readthenotes1 wrote: post #12
voisin wrote: post #4

Earlier quoted context omitted.

It’ll last until money supply tightens.

And more gasoline is produced.

Everyone likes to blame the Russia-Ukraine conflict but inflation was spiking prior to supply issues. That war is a convenient scapegoat for politicians and bureaucrats who don’t want to take credit for profligate spending and loose policy for decades.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#24

Post by mc32 »

ren_engineer wrote: post #9
mariojv wrote: post #3

Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…

it will last much longer and will get worse, because everything is dependent on energy to be created/transported. There's also the fact that many retailers admitted to eating losses to try and keep customers happy assuming that inflation would be "transitory", pretty soon many of these retailers will be forced to raise prices to reflect reality

I find it hard to believe people running large retail operations believed the fed and whitehouse when they uttered the word "transitory" when everyone else pointed to the money printer still going full throttle.

It's their fault for going along with the narrative the fed/whitehouse + media were pushing.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#25

Post by puranjay »

voisin wrote: post #8
seibelj wrote: post #5

Earlier quoted context omitted.

They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates. They have to slowly raise them to keep stuff from falling apart. The ruling party also doesn't want to get hurt worse than they already are, and a stagflation recession would clobber them. So easy money and high inflation will remain for at least another year.

> They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates. This is exactly why the easy-money economy should never have been allowed to occur and persist for so long.

Mind boggling to me that you could get a 500k mortgage at 3% interest rate in the US.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#26

Post by mc32 »

voisin wrote: post #22
readthenotes1 wrote: post #12

Earlier quoted context omitted.

And more gasoline is produced.

Everyone likes to blame the Russia-Ukraine conflict but inflation was spiking prior to supply issues. That war is a convenient scapegoat for politicians and bureaucrats who don’t want to take credit for profligate spending and loose policy for decades.

Russia is a convenient excuse. It's not the reason. They cancel the XL and other pipelines but pressure KSA to produce more. The whitehouse has even admitted they are using this situation to push their stated agenda of transitioning to more renewables (noble, but not consequence free). They want to eat their cake and have it too. Reality does not work that way.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#27

Post by refurb »

anotherman554 wrote: post #21
refurb wrote: post #11

Earlier quoted context omitted.

The amazing thing is many were predicting this back in 2008. If anyone wants to listen to a prescient conversation about the feds actions post-2008 and inflation today, take a listen to this podcast. It was recorded in 2009. https://www.econtalk.org/meltzer-on-inflation/ It’s an interview with Prof Meltzer from Carnegie Mellon who has done extensive research on the federal reserve system and who wrote the de facto of…

"The amazing things is many were predicting this back in 2008." Inflation was at historic lows from 2008 to 2020. I guess an economist can be wrong for over a decade and still be "pretty accurate so far" in your mind.

Thanks for clearly ignoring 90% of my comment.

By “predicting this in 2008” they predicted a long period of low inflation before it started to accelerate quickly.

I’d say that’s pretty damn accurate.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#28

Post by throwaway0a5e »

voisin wrote: post #20
refurb wrote: post #11

Earlier quoted context omitted.

The amazing thing is many were predicting this back in 2008. If anyone wants to listen to a prescient conversation about the feds actions post-2008 and inflation today, take a listen to this podcast. It was recorded in 2009. https://www.econtalk.org/meltzer-on-inflation/ It’s an interview with Prof Meltzer from Carnegie Mellon who has done extensive research on the federal reserve system and who wrote the de facto of…

Thanks for sharing. This is largely why I think we are fooling ourselves with the idea that a few rate rises will be sufficient and this will be short lived with a soft landing. I think we are going to need high single digit rates to contain inflation and it will lead to a recession (I think we are already in one). Generally higher levels of indebtedness (public and private) will lead to widespread pain. I am normall…

> we are fooling ourselves with the idea that a few rate rises will be sufficient

Oh they will be.

But not until the people in charge nut up and raise the rates to the point of them actually being effective. We're beating around the bush with these paltry rate hikes right now and inflation will not abate as long as that continues and the longer it runs the more inertia it picks up as the expectation of inflation gets baked into more and more places in the economy and the tighter we will need to make the supply of money to put the brakes on it.

Re: U.S. inflation reached a new four-decade high of 8.6% in May

#30

Post by everybodyknows »

refurb wrote: post #18
anonuser123456 wrote: post #14

Earlier quoted context omitted.

Volcker was appointed by Carter, not Reagan.

He was first appointed to the treasury by Nixon in ‘73 and was instrumental in ending the gold standard. Then appointed by Carter in ‘79 to the Federal Reserve. But most of his interest rate tightening happened under Reagan with a peak tightening in ‘81 with fed funds rate at 20%.

Volcker has recounted an incident in which he more or less walked out of a White House meeting with Reagan and James Baker, after Baker tried to order him to lower the discount rate.

https://www.businessinsider.com/ronald-reagan-fed-chair-volc...

Volcker also recalled telling Carter during his interview for the job that yes, he could stop inflation -- but then Carter would not be re-elected. Carter's reply was "Do it anyway."

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