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The anti-inflation pivot of 2022

adamtooze.substack.com

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Re: The anti-inflation pivot of 2022

#61

Post by A4ET8a8uTh0 »

nie100sowny wrote: post #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.

Eh. It sounds great in theory, but in practice ( including in US, where all the more recent crises shown ) inefficient companies get saved if they are sufficiently connected or 'important' enough to the system writ large.

I am not defending the practice, but I want to point to obvious flaw in the analysis since it diverges from reality somewhat ( I just noticed the inclusion of government involvement ).

Re: The anti-inflation pivot of 2022

#62

Post by howmayiannoyyou »

spywaregorilla wrote: post #30

I 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 think the US (and Canada) just needs to ride the tide and let all the other boats sink.

Look at USD FX rates. The US may be able to purchase resources and goods abroad at more favorable exchange, but who can afford to buy US exports as the USD rockets skyward? And what is the logical follow-on to unobtainable USD units of trade? Substitutes that China, for example, are more than delighted to support if it means they exert (even) more control over the global monetary system.

Re: The anti-inflation pivot of 2022

#63

Post by roflyear »

refurb wrote: post #57
roflyear wrote: post #54

Earlier quoted context omitted.

To safely park cash. Think government securities.

Ok, fair point on that one. Eliminate the default risk and you're willing to take 0% or even a negative real interest rate.

Yeah. But without getting value through some mechanism like that (or, imagine if you're convinced that equities will be flat or return negative over the next few years) you're correct - you should make money from lending money.

Re: The anti-inflation pivot of 2022

#64

Post by ch4s3 »

dragontamer wrote: post #35
ch4s3 wrote: post #23

Earlier quoted context omitted.

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% inflati…

I'm referring to core inflation because it shows upward trend across all prices, which means people without much disposable income will feel the pinch everywhere. High inflation also erodes savings, making it hard to get out of poverty, particularly the generational type.

Unemployment is obviously a problem, but the labor market is super tight right now. There's room to fight inflation without a big dip in employment.

Re: The anti-inflation pivot of 2022

#65

Post by landemva »

nie100sowny wrote: post #46
desindol wrote: post #39

Earlier quoted context omitted.

Crisis is never good look at the correlation between unemployment and excess mortality rates…

I think you refer to the long unemployment. Crisis time needs to be shortened then. Banks should raise rates firmly, reaching levels higher than inflation. Big companies should not be artificially saved from collapsing, and regulations simplified. The unemployment period will be then short.

I agree with much of this. If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed. Instead, Fed in partnership with government will prop this up and protect the incumbents/existing winners.

Re: The anti-inflation pivot of 2022

#66

Post by dragonwriter »

landemva wrote: post #65
nie100sowny wrote: post #46

Earlier quoted context omitted.

I think you refer to the long unemployment. Crisis time needs to be shortened then. Banks should raise rates firmly, reaching levels higher than inflation. Big companies should not be artificially saved from collapsing, and regulations simplified. The unemployment period will be then short.

I agree with much of this. If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed. Instead, Fed in partnership with government will prop this up and protect the incumbents/existing winners.

> If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed

Interesting belief. Things like the Long Depression challenge it, though.

Re: The anti-inflation pivot of 2022

#67

Post by landemva »

howmayiannoyyou wrote: post #58

Monetary policy is far from the whole picture here. Global policy makers are dealing with about 25% of the global population being lifted from poverty over the last several decades and their increased consumption and wages are supply-side inflationary in ways not easily (or appropriately) reversed. The impact isn't just economic. Inflation is destabilizing (Venezuela, Argentina, Turkey). The west invested heavily in…

Much manufacturing left the West to relocate the pollution. Pollution colonialism.

Re: The anti-inflation pivot of 2022

#68

Post by A4ET8a8uTh0 »

jmyeet wrote: post #8

Here's the lesson I want people to learn: we had 40+ years of stagnant real wages (overall; there are exceptions). What happened in the pandemic was: 1. People realized going into an officce to work was unncessary and even anachronistic for many jobs; 2. Employers like employees in the office as a form of control; 3. Employers made short-term decisions to lay off huge amounts of people (even after taking PPP loans fo…

I will admit that to me this pandemic was eye opening in several different ways. One thing that surprised me is how lazy both management and propaganda machine in US is these days. They ( management ) have gotten so used to the idea that all they have to do is to hint at layoffs and people will immediately be motivated to do the work that they forgot how to do anything else ( the phrase I heard used to describe the situation was "I had to throw away my toolkit for WFH" ). As a result, WFH exposed management class as clearly coasting for the past few decades in terms of motivation skills alone.

But as bad as management is, having watched OWS downfall, I did not expect propaganda effort for fighting WFH to be so downright awful. I still remember the initial batch of articles claiming commuting to work is my zen time. It felt so ridiculously bad that even people, who would normally accept any advertisement at face value kinda asked:"The fuck?" since it is so at odds with their daily experience.

And now policy makers are openly discussing saying "Lets crash the economy so that companies can keep their leverage." I was always mildly cynical, but I found it ridiculously sad that "We are in this together." slogan is just a slogan the moment the sacrifice has to be shared by the ruling classes.

And as always, the sacrifice hits the poor the most.

Re: The anti-inflation pivot of 2022

#69

Post by landemva »

fennecfoxen wrote: post #33
colinmhayes wrote: post #16

Earlier quoted context omitted.

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.

> fuel prices falling 10% again next month.

Mid-term elections are approaching and gas pump prices are an easy talking point. With SPR releases, why won't USA fuel prices drop?

Re: The anti-inflation pivot of 2022

#70

Post by fennecfoxen »

landemva wrote: post #69
fennecfoxen wrote: post #33

Earlier quoted context omitted.

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.

> fuel prices falling 10% again next month. Mid-term elections are approaching and gas pump prices are an easy talking point. With SPR releases, why won't USA fuel prices drop?

Okay, you've convinced me. Now how about the month after that?
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