All bets are off if the Fed and White House are wrong about inflation
1–10 of 27 posts
Re: All bets are off if the Fed and White House are wrong about inflation
#2They’re not.
Most of these price increases (e.g. semiconductors, lumber, consumer perishables) are supply-chain related. It’s reasonable to expect them to subside as the most acute phase of the pandemic recedes. Only one I’m not sure about is the price of a meal at a restaurant …
Re: All bets are off if the Fed and White House are wrong about inflation
#3My early 2000s car went up in value by 30% according to credit karma last year.
This should not be happening. Something is Broken.
Re: All bets are off if the Fed and White House are wrong about inflation
#4They’re not. Most of these price increases (e.g. semiconductors, lumber, consumer perishables) are supply-chain related. It’s reasonable to expect them to subside as the most acute phase of the pandemic recedes. Only one I’m not sure about is the price of a meal at a restaurant …
They are… you cannot roll back wage inflation.
“Oh hey Jim, I know we hired you at $25/hr.. well now that things are normalizing, well have to pay you the real rate of $12/hr”
Even the PepsiCo CEO was commenting on passing higher prices and the consumer accepting them just fine.
Re: All bets are off if the Fed and White House are wrong about inflation
#5My early 2000s car went up in value by 30% according to credit karma last year. This should not be happening. Something is Broken.
This one (used cars) is interesting.
Combination of supply limitation and a large number of start-ups/VC money in the sector.
It really is true today that buying a trusted used car is WAY easier than buying a new car.
This has squeezed a LOT of the previous depreciation math out of the market (read: there was a huge arbitration opportunity)
Re: All bets are off if the Fed and White House are wrong about inflation
#6My early 2000s car went up in value by 30% according to credit karma last year. This should not be happening. Something is Broken.
The microchip shortage has impeded new car manufacturing, and car fleet operators are buying back fleets they sold during the pandemic to stay afloat. Give it a year.
Re: All bets are off if the Fed and White House are wrong about inflation
#7They’re not. Most of these price increases (e.g. semiconductors, lumber, consumer perishables) are supply-chain related. It’s reasonable to expect them to subside as the most acute phase of the pandemic recedes. Only one I’m not sure about is the price of a meal at a restaurant …
They are… you cannot roll back wage inflation. “Oh hey Jim, I know we hired you at $25/hr.. well now that things are normalizing, well have to pay you the real rate of $12/hr” Even the PepsiCo CEO was commenting on passing higher prices and the consumer accepting them just fine.
Idk. I somewhat agree; but I’m not sure what to think of that because it’s a fiscal and not a monetary intervention. Minimum wages going up (whether explicitly or because unemployment benefits are competing with them) will definitely bump up demand and will also bump up costs for some industries, particularly restaurants and hospitality. Insofar as demand responds positively a little inflation is imo not a terrible price to pay. This article, however, is bringing up a boogeyman that inflation will somehow slip from the Fed’s grasp, which I very much doubt.
Re: All bets are off if the Fed and White House are wrong about inflation
#8Earlier quoted context omitted.
They are… you cannot roll back wage inflation. “Oh hey Jim, I know we hired you at $25/hr.. well now that things are normalizing, well have to pay you the real rate of $12/hr” Even the PepsiCo CEO was commenting on passing higher prices and the consumer accepting them just fine.
Idk. I somewhat agree; but I’m not sure what to think of that because it’s a fiscal and not a monetary intervention. Minimum wages going up (whether explicitly or because unemployment benefits are competing with them) will definitely bump up demand and will also bump up costs for some industries, particularly restaurants and hospitality. Insofar as demand responds positively a little inflation is imo not a terrible p…
So idk how deep you want to go into “basic” common sense economics and not this trashy thing they call it now, but the divide between fiscal/monetary is by name only. Let me explain:
There used to be the real divide between both, but now every action by the fiscal side is effectively done by the monetary side. Congress writes some laws, the treasury calls up the FED the night before the day of selling new bonds and just like magic, the bonds get sold at a superb price.
The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates, would lead to default as just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost…
So what’s the FED to do?
Why are living expenses going up faster than real wages?
Why do you think theres a godly group of supremely moral and righteous humans sitting at the FED?
Re: All bets are off if the Fed and White House are wrong about inflation
#9My early 2000s car went up in value by 30% according to credit karma last year. This should not be happening. Something is Broken.
The microchip shortage has impeded new car manufacturing, and car fleet operators are buying back fleets they sold during the pandemic to stay afloat. Give it a year.
Lol. Don’t you think it’s very linear and simple variable thinking with that comment?
The car salesman won’t see the higher prices? The guy down the street won’t see the higher prices and ask for higher wages to afford the price increases?
Re: All bets are off if the Fed and White House are wrong about inflation
#10Earlier quoted context omitted.
Idk. I somewhat agree; but I’m not sure what to think of that because it’s a fiscal and not a monetary intervention. Minimum wages going up (whether explicitly or because unemployment benefits are competing with them) will definitely bump up demand and will also bump up costs for some industries, particularly restaurants and hospitality. Insofar as demand responds positively a little inflation is imo not a terrible p…
So idk how deep you want to go into “basic” common sense economics and not this trashy thing they call it now, but the divide between fiscal/monetary is by name only. Let me explain: There used to be the real divide between both, but now every action by the fiscal side is effectively done by the monetary side. Congress writes some laws, the treasury calls up the FED the night before the day of selling new bonds and j…
> The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates
400 basis basis points, back to the level of late 2005-early 2007, is a “tiny” increase in rates? That's an enormous increase...
> just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost…
If you look at history of Treasury interest rates and Fed Funds rates, the relationship you imply where even that giant increase to the Fed Funds target would do that... doesn't exist.