Inflation Scaremongering
drummerboy said:
Dennis_Seelbach said:
drummerboy said:
Fortunately, we are not in a demand driven inflation.
And ignorance is bliss.
I'm not sure how much more evidence I can supply for my contention. Seems kind of overwhelming.
Even the Fed doesn't think so.
W/o getting into another impermeable debate on the current economic situation and the causes of our current inflation, I'm wondering how you would explain the Fed's motivation here.
Correct me if I'm wrong on any of this, but I believe you have said the Fed shouldn't raise rates, they know they shouldn't raise rates, and yet they are raising rates. They are acting for political reasons, ie to do SOMETHING to placate the rabble in the pit.
But why would they do this? The Fed is purposely kept (or at least attempted to be kept) non-political, with the chair and Board of governors serving lengthy and staggered terms so as to be insulated from political elections.
According to you, the Fed is jacking up rates for no good reason, just as inflation is clearly about to come down on its own. So the endgame presumably will be an unnecessary recession, and they'll have to undo the rate increases within year or two, with egg on their faces. Anyone associated with the 2022 Fed will have damaged credibility for the rest of their careers.
So why on earth would any Fed governor, who serve friggin 14-year terms, take this shortsighted view, rather than do what they think is right?
Makes no sense.
Smedley said:
W/o getting into another impermeable debate on the current economic situation and the causes of our current inflation, I'm wondering how you would explain the Fed's motivation here.
Correct me if I'm wrong on any of this, but I believe you have said the Fed shouldn't raise rates, they know they shouldn't raise rates, and yet they are raising rates. They are acting for political reasons, ie to do SOMETHING to placate the rabble in the pit.
But why would they do this? The Fed is purposely kept (or at least attempted to be kept) non-political, with the chair and Board of governors serving lengthy and staggered terms so as to be insulated from political elections.
According to you, the Fed is jacking up rates for no good reason, just as inflation is clearly about to come down on its own. So the endgame presumably will be an unnecessary recession, and they'll have to undo the rate increases within year or two, with egg on their faces. Anyone associated with the 2022 Fed will have damaged credibility for the rest of their careers.
So why on earth would any Fed governor, who serve friggin 14-year terms, take this shortsighted view, rather than do what they think is right?
Makes no sense.
not to you maybe
drummerboy said:
not to you maybe
Yet only to you. Note all of the support you you are getting on this thread.
jimmurphy said:
Yet only to you. Note all of the support you you are getting on this thread.
believe me, that is of no concern. I started out on MOL many years ago in a case of an assault at Millburn High School, where I was the only one (pretty much) urging caution in jumping to conclusions. Took a few months, but it turned out I was right. And I was up against a lot more people than the 3 or 4 in this thread.
The Fed is taking a too aggressive turn here, launching an attack against a barely existent cause. They are doing it because public opinion (and finance opinion) forced them too.
Inflation will come down - partly because of the Fed and partly because it just seems to be easing anyway. But we are probably going to have to suffer higher unemployment than we need to - this is going to cause pain to millions of people - people that the Fed and finance could give a sh!t about.
As for the support in this thread - that's puzzling, because the data is clearly supporting me. Not sure why you and the gang don't see it.
drummerboy said:
Smedley said:
W/o getting into another impermeable debate on the current economic situation and the causes of our current inflation, I'm wondering how you would explain the Fed's motivation here.
Correct me if I'm wrong on any of this, but I believe you have said the Fed shouldn't raise rates, they know they shouldn't raise rates, and yet they are raising rates. They are acting for political reasons, ie to do SOMETHING to placate the rabble in the pit.
But why would they do this? The Fed is purposely kept (or at least attempted to be kept) non-political, with the chair and Board of governors serving lengthy and staggered terms so as to be insulated from political elections.
According to you, the Fed is jacking up rates for no good reason, just as inflation is clearly about to come down on its own. So the endgame presumably will be an unnecessary recession, and they'll have to undo the rate increases within year or two, with egg on their faces. Anyone associated with the 2022 Fed will have damaged credibility for the rest of their careers.
So why on earth would any Fed governor, who serve friggin 14-year terms, take this shortsighted view, rather than do what they think is right?
Makes no sense.
not to you maybe
That is correct, obviously - I wrote a fairly lengthy post about what I don’t understand about your argument. Was hoping for an actual response to what I think was a fairly straightforward inquiry, but no dice apparently.
drummerboy said:
believe me, that is of no concern. I started out on MOL many years ago in a case of an assault at Millburn High School, where I was the only one (pretty much) urging caution in jumping to conclusions. Took a few months, but it turned out I was right. And I was up against a lot more people than the 3 or 4 in this thread.
The Fed is taking a too aggressive turn here, launching an attack against a barely existent cause. They are doing it because public opinion (and finance opinion) forced them too.
Inflation will come down - partly because of the Fed and partly because it just seems to be easing anyway. But we are probably going to have to suffer higher unemployment than we need to - this is going to cause pain to millions of people - people that the Fed and finance could give a sh!t about.
As for the support in this thread - that's puzzling, because the data is clearly supporting me. Not sure why you and the gang don't see it.
Yes, you’re always “right.”
Noted many times over.
drummerboy said:
They are doing it because public opinion (and finance opinion) forced them too.
this is what makes your argument a house of cards. there is no basis to this. How exactly is public opinion and finance opinion forcing them to raise rates?
Smedley said:
drummerboy said:
They are doing it because public opinion (and finance opinion) forced them too.
this is what makes your argument a house of cards. there is no basis to this. How exactly is public opinion and finance opinion forcing them to raise rates?
because they're people?
What do you think the Fed is anyway? A robot? Programmed to always offer the perfect solution?
jimmurphy said:
Yes, you’re always “right.”
Noted many times over.
you know, if I just strutted around saying I'm right, that's one thing.
But you know as well as I that I do as much research for my posts as anyone here, if not more. I don't come to my conclusions without a lot of work.
It will probably take some years, but we'll eventually see if the Fed took the right action here. Hopefully I'm wrong and we won't have thrown millions of people out of work and crushed wage growth for the people who really need it.
drummerboy said:
you know, if I just strutted around saying I'm right, that's one thing.
But you know as well as I that I do as much research for my posts as anyone here, if not more. I don't come to my conclusions without a lot of work.
It will probably take some years, but we'll eventually see if the Fed took the right action here. Hopefully I'm wrong and we won't have thrown millions of people out of work and crushed wage growth for the people who really need it.
Confirmation bias is a bitch.
jimmurphy said:
drummerboy said:
you know, if I just strutted around saying I'm right, that's one thing.
But you know as well as I that I do as much research for my posts as anyone here, if not more. I don't come to my conclusions without a lot of work.
It will probably take some years, but we'll eventually see if the Fed took the right action here. Hopefully I'm wrong and we won't have thrown millions of people out of work and crushed wage growth for the people who really need it.
Confirmation bias is a bitch.
The accusation of confirmation bias only applies if you can show where my research is wrong or that I'm ignoring countering data.
Don't think that has happened in this thread to any great extent.
drummerboy said:
The accusation of confirmation bias only applies if you can show where my research is wrong or that I'm ignoring countering data.
Don't think that has happened in this thread to any great extent.
Gonna let this sit, which flies in the face of the non-partisan Federal Reserve, whose only charge lies in promoting the health of the US economy, and wait for all your support.
Who the inflation really hurts is people on a fixed income. That's who I feel bad for.
The fact of the matter is that our monetary policy has been what you'd expect if we were In a dire emergency for basically this whole century.
I will fully admit that I'm surprised it has gone this long without CPI inflation. Though I will note that asset inflation has been off the charts for some time now. The problem is that generally speaking people like asset inflation. Specifically people who are well connected, because well, they're holding assets.
The Fed seems decidedly behind the curve. I would have preferred 100 basis points. I think the real issue here is that a soft landing seems unlikely.
The interesting question will be if and when asset values start falling precipitously, will the Fed blink if inflation is still high. My guess is they blink, which IMO will be a big mistake.
drummerboy said:
The accusation of confirmation bias only applies if you can show where my research is wrong or that I'm ignoring countering data.
Don't think that has happened in this thread to any great extent.
The fact that you couldn’t explain the jump a year ago in PCE (due out again at 8:30 tomorrow morning, so set your watches) in the chart you posted two weeks ago was evidence of ignoring countering information when you repeatedly say inflation seems to be easing.
DaveSchmidt said:
drummerboy said:
The accusation of confirmation bias only applies if you can show where my research is wrong or that I'm ignoring countering data.
Don't think that has happened in this thread to any great extent.
The fact that you couldn’t explain the jump a year ago in PCE (due out again at 8:30 tomorrow morning, so set your watches) in the chart you posted two weeks ago was evidence of ignoring countering information when you repeatedly say inflation seems to be easing.
I disagree with your interpretation. I think.
ETA: actually, I barely remember it.
jimmurphy said:
drummerboy said:
The accusation of confirmation bias only applies if you can show where my research is wrong or that I'm ignoring countering data.
Don't think that has happened in this thread to any great extent.
Gonna let this sit, which flies in the face of the non-partisan Federal Reserve, whose only charge lies in promoting the health of the US economy, and wait for all your support.
The Fed may be non-partisan, but c'mon. It's clearly conservative, clearly favors the financial industry, could give a sh!t about workers and wages, and has a peculiar habit over the last several presidencies of raising rates when a Dem is in power, and lowering them when a Rep is in. I posted a chart to that effect in this thread somewhere. (Of course it could just be an indication of who runs the economy better)
drummerboy said:
I disagree with your interpretation. I think.
ETA: actually, I barely remember it.
I trust that your wide-ranging, MOL-renowned research will get to it eventually.
DaveSchmidt said:
drummerboy said:
I disagree with your interpretation. I think.
ETA: actually, I barely remember it.
I trust that your wide-ranging, MOL-renowned research will get to it eventually.
now that I think about it a bit, not sure why a spike a year ago has anything to do with anything.
drummerboy said:
now that I think about it a bit, not sure why a spike a year ago has anything to do with anything.
No kidding. See: “ignoring countering data.”
If your pride allows a humble suggestion, a quick look into “base effects” may prove informative.
DaveSchmidt said:
drummerboy said:
now that I think about it a bit, not sure why a spike a year ago has anything to do with anything.
No kidding. See: “ignoring countering data.”
If your pride allows a humble suggestion, a quick look into “base effects” may prove informative.
is it unreasonable to assert that over the past year PCE inflation seems to be on a downward trend?
drummerboy said:
is it unreasonable to assert that over the past year PCE inflation seems to be on a downward trend?
I’d say it’s unreasonable to assert that the apparent trend is meaningful, and a reason for the Fed not to raise its rates, without comprehending, or even trying to comprehend, base effects.
Let’s see what today’s PCE update brings.
drummerboy said:
Smedley said:
drummerboy said:
They are doing it because public opinion (and finance opinion) forced them too.
this is what makes your argument a house of cards. there is no basis to this. How exactly is public opinion and finance opinion forcing them to raise rates?
because they're people?
What do you think the Fed is anyway? A robot? Programmed to always offer the perfect solution?
Hardly. I've said a number of times that I think the Fed was wrong late last year in holding at 0-0.25%, which you seem to ignore.
At any rate. It's just silly to predicate an argument on the notion that the Fed is taking its cues from the chattering classes on Twitter and CNBC, again given that nobody at the Fed needs to run for election. Powell: "hey guys, this pundit I just saw on TV raked us over the coals. I guess we gotta do something. What say we raise rates?"
But, you do you.
Smedley said:
Hardly. I've said a number of times that I think the Fed was wrong late last year in holding at 0-0.25%, which you seem to ignore.
At any rate. It's just silly to predicate an argument on the notion that the Fed is taking its cues from the chattering classes on Twitter and CNBC, again given that nobody at the Fed needs to run for election. Powell: "hey guys, this pundit I just saw on TV raked us over the coals. I guess we gotta do something. What say we raise rates?"
But, you do you.
Funny where you went when I said public opinion - I didn't mention pundits.
Core PCE (excluding food and energy) rose 0.3 percent in May from April, the same pace for the fourth straight month. A moderating trend but not a downward one.
It rose 4.7 percent from a year earlier, the third straight dip in the annual rate. Remember, though, annual comparisons are where base effects come into play. And it’s a falsehood to claim a downward trend “over the past year” or “year-long”; the annual rate of core PCE inflation rose every month from November to February.
https://www.bea.gov/news/2022/personal-income-and-outlays-may-2022
"The central bank uses core PCE to guide policy decisions, including interest rate hikes. The gauge excludes food and energy, two of the most volatile categories.
Including food and energy, annual inflation, measured by the PCE price index, remained unchanged from the previous month at 6.3%, below forecasts for 6.5%.
Over the last few months, core PCE has come in “much softer” than inflation as measured by the consumer price index, wrote Citi economists on Thursday. This is partly because shelter receives a larger weight in CPI, while PCE includes Medicare payments which have been reduced by Congress, they wrote.
“For these reasons, we think CPI may be giving a more accurate read on inflation,” they added. CPI jumped 1% in May, up from a 0.3% increase in April. Year over year it accelerated to a 40-year high of 8.6%."
https://www.barrons.com/articles/inflation-consumer-spending-federal-reserve-51656593118
terp said:
Who the inflation really hurts is people on a fixed income. That's who I feel bad for.
The fact of the matter is that our monetary policy has been what you'd expect if we were In a dire emergency for basically this whole century.
I will fully admit that I'm surprised it has gone this long without CPI inflation. Though I will note that asset inflation has been off the charts for some time now. The problem is that generally speaking people like asset inflation. Specifically people who are well connected, because well, they're holding assets.
The Fed seems decidedly behind the curve. I would have preferred 100 basis points. I think the real issue here is that a soft landing seems unlikely.
The interesting question will be if and when asset values start falling precipitously, will the Fed blink if inflation is still high. My guess is they blink, which IMO will be a big mistake.
I agree with everything you said. Several years ago we had this discussion about interest rates. The low interest rates, or the zero interest rate, was responsible for a gigantic asset bubble of all kinds - housing, stock, bonds, Bitcoin, you name it. The Fed is deflating that asset bubble. Stocks are finishing the first half of the year with their largest percentage decline in 50 years.
"U.S. Treasuries, the global fixed income benchmark, have delivered total year-to-date losses of 11%, setting them on course for the worst year on record, according to an ICE BofA index tracking seven- to 10-year Treasuries since 1973.
That also marks the worst first half performance since 1788, Deutsche Bank estimates."
The era of cheap money is over. Cheap money fueled the asset bubble. Hedge funds were borrwing at almost zero cost to buy stocks and bonds. Cheap money allowed people to borrow at almost zero cost to buy Bitcoin. Historically low mortgage rates allowed people to drive up housing costs. Houses attracted multiple bids with sales prices sometimes $100,000 - 200,000 over asking price. Because people couldn't afford houses they were forced to rent, driving-up the cost of renting.
And people on fixed incomes, as you point out, were being hurt.
The Fed. should have raised interest rates a long time ago - not just last year things were heating up.
cramer said:
I agree with everything you said. Several years ago we had this discussion about interest rates. The low interest rates, or the zero interest rate, was responsible for a gigantic asset bubble of all kinds - housing, stock, bonds, Bitcoin, you name it. The Fed is deflating that asset bubble. Stocks are finishing the first half of the year with their largest percentage decline in 50 years.
"U.S. Treasuries, the global fixed income benchmark, have delivered total year-to-date losses of 11%, setting them on course for the worst year on record, according to an ICE BofA index tracking seven- to 10-year Treasuries since 1973.
That also marks the worst first half performance since 1788, Deutsche Bank estimates."
The era of cheap money is over. Cheap money fueled the asset bubble. Hedge funds were borrwing at almost zero cost to buy stocks and bonds. Cheap money allowed people to borrow at almost zero cost to buy Bitcoin. Historically low mortgage rates allowed people to drive up housing costs. Houses attracted multiple bids with sales prices sometimes $100,000 - 200,000 over asking price. Because people couldn't afford houses they were forced to rent, driving-up the cost of renting.
And people on fixed incomes, as you point out, were being hurt.
The Fed. should have raised interest rates a long time ago - not just last year things were heating up.
Yes, on this I can agree with Terp, and as usual, with you.
Comes with unfortunate timing for me, hopefully 5 years or so from retirement.
Take the medicine now.
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Stephanie Kelton cites the Federal Reserve Bank of Francico's report which found that supply factors accounted for one-half of the difference between current 12-month PCE inflation and pre-pandemic levels, and demand factors accounted for one-third. That's not chopped liver.