No mention in the article why there is so much reaction from policy makers other than general monetary policy. In my opinion in some countries the politicians are scared shitless of large groups people not being able to pay the bills and actually taking action.
The anti-inflation pivot of 2022
31–40 of 308 posts
Re: The anti-inflation pivot of 2022
#32Earlier quoted context omitted.
Chart 1 lays it out. https://www.bls.gov/news.release/pdf/cpi.pdf Inflation isn't increasing much in August - relatively to July, but July was still high. That graph needs to go negative (a decrease in the inflation rate each month) for a long time before we get back to something "normal" like 2-3% inflation.
I think you're misreading the chart. My understanding is that 12 months of 0 means a year over year inflation rate of 0, not the same amount of inflation as the year before.
Correct, the chart is a rate of change in the CPI itself. 0 on the chart means the CPI hasn't changed, ie. no inflation that month.
Re: The anti-inflation pivot of 2022
#33Month to month inflation has been flat or near flat for some months now. It’s seems like we had a price spike in December/Jan for various reasons and now things have stabilized. If trend continues it seems we should be back in normal yoy inflation rates shortly once we start comparing against that post spike floor
Core was .6% last month, pretty horrendous after July looked good.
Yeah, this isn't just a one-time transient price spike that happened months ago. August fuel prices fell a lot (10.6%), a gift! — but core inflation erased all that progress, with a 0.1% month-to-month rise in the CPI overall. Food's up 0.8% in a month. Rent was up 0.7%. Cars were up 0.8%.
We probably can't rely on fuel prices falling 10% again next month.
Re: The anti-inflation pivot of 2022
#34> A generation of young people whose education was blighted by COVID lockdowns, will face a closed labour market.
But shortly after, when all inefficient companies bankrupt, they'll wake up in the booming economy, finding places in perspective businesses.
Crisis is good for the economy in the long term. I only worry that governments won't allow young trees to grow after the forest's fire.
Re: The anti-inflation pivot of 2022
#35> It is the most concerted effort to slow down growth and employment in the interests of monetary stability that we have seen since the 1980s. I see it as a war of generations. The boomers/genXers are eager to preserve their wealth and are once again dumping on young people. The 70s was a period of high inflation, it was also, according to piketty a period of high income equality for the world over. The central banks…
You know high inflation makes it worse to be poor right? Especially core inflation.
Everything is bad for the poor though. Rising rates fixes inflation, but reduces employment. As it turns out, unemployment is bad for the poor.
Lowering rates improves employment, but comes with inflation risks. As it turns out, the poor also hate inflation.
Screwed if you do, screwed if you don't. Dual mandate says that the Fed aims for as good employment as possible, while also aiming at a targeted 2% to 3% inflation rate.
> Especially core inflation.
EDIT: My understanding is that core-inflation isn't about "good or bad for people", its about "good or bad for statisticians". Food/Oil prices move too quickly and are therefore bad measurements. Too noisy. If food prices go up or down 10%, is it because the economy is bad? Or is it because of a terrible storm that wiped out a chunk of crops somewhere?
Ignoring food means we ignore these volatility / storm / disease issues. Oil is similar. A war started in Europe, and lo-and-behold, oil prices went crazy, both upwards and downwards. There's no amount of economic policy you can do to predict a war.
Re: The anti-inflation pivot of 2022
#36> It is the most concerted effort to slow down growth and employment in the interests of monetary stability that we have seen since the 1980s. I see it as a war of generations. The boomers/genXers are eager to preserve their wealth and are once again dumping on young people. The 70s was a period of high inflation, it was also, according to piketty a period of high income equality for the world over. The central banks…
Boomers / GenX can simply buy TIPS / I-Bonds if they're worried about inflation though.
Honestly, given how much they're invested into the stock market, raising interest rates will hurt their 401k / retirement accounts the most. Its not like the stock market or bond-market likes it when rates go up.
The job of an investor is to navigate these waters as the tides of the economy rise and fall. If you're in the wrong spot at the wrong time, you can lose everything. Alternatively, you keep your wealth spread out in a large basket of different goods: Stocks, Bonds (including I-bonds/TIPS), Cash, Real Estate, and hope for the best.
Re: The anti-inflation pivot of 2022
#37I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…
I ask this question every so often on economic threads - Are jobs created or discovered? What field of study is most associated with "new jobs"?
Re: The anti-inflation pivot of 2022
#38This article appears to take place in a universe where interest rates at central banks are at counter-inflationary levels. They've been inflationary for a decade, and continue to be so. With inflation at 10%, fears about "going too far with interest rates" make sense only *at least* north of 5%, and realistically, 8%.
Why 8? Doesn’t there need to be a premium for borrowing money? If i can borrow money at zero percent inflation adjusted rate, that is a great deal and still inflationary. I would say 12 percent would be neutral on 10 percent inflation.
We've had many years of 0% rates and 2%ish inflation. A return to that status quo ante isn't exactly crushingly tight monetary policy. But perhaps inflation will fall before we hit 8%.
Re: The anti-inflation pivot of 2022
#39> A generation of young people whose education was blighted by COVID lockdowns, will face a closed labour market. But shortly after, when all inefficient companies bankrupt, they'll wake up in the booming economy, finding places in perspective businesses. Crisis is good for the economy in the long term. I only worry that governments won't allow young trees to grow after the forest's fire.
Crisis is never good look at the correlation between unemployment and excess mortality rates…
Re: The anti-inflation pivot of 2022
#40I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…
I ask this question every so often on economic threads - Are jobs created or discovered? What field of study is most associated with "new jobs"?
spark+kindling+gust