Inflation Scaremongering
I would posit that it is impossible for the Fed(or anyone else) to know the right rate or exactly how much Quantitative Easing or Quantitative Tightening to do at any given point in time. They act like experts, but its all guesswork. They have no idea what they are doing. This is just the most recent example.
terp said:
I would posit that it is impossible for the Fed(or anyone else) to know the right rate or exactly how much Quantitative Easing or Quantitative Tightening to do at any given point in time. They act like experts, but its all guesswork. They have no idea what they are doing. This is just the most recent example.
That's not really the problem.
The problem is that they are raising rates when more than 80% of inflation pressure (as per the last ten posts or so) is not affected by raising rates.
Wrong tool for this time in history. They should all be fired.
The Fed sucked in 2H 2021 when they sat on their hands like simps as inflation rose to 4-5%. But they've found religion. This speech was masterful IMO.
https://www.federalreserve.gov/newsevents/speech/powell20220826a.htm
Smedley said:
The Fed sucked in 2H 2021 when they sat on their hands like simps as inflation rose to 4-5%. But they've found religion. This speech was masterful IMO.
https://www.federalreserve.gov/newsevents/speech/powell20220826a.htm
Exactly. They've found religion.
That's the problem.
drummerboy said:
Exactly. They've found religion.
That's the problem.
My understanding is that the 2% inflation goal is entirely arbitrary. It could just as easily be 3%. Or 4%. Or some other number.
So much of what passes for economic expertise looks a lot like voodoo to a non-economist like myself.
https://www.washingtonpost.com/opinions/2022/10/22/congress-biden-fight-inflation/
This is a pretty good op-ed (which I’m sure the progressive cognoscenti deems 100% wrong).
Smedley said:
https://www.washingtonpost.com/opinions/2022/10/22/congress-biden-fight-inflation/
This is a pretty good op-ed (which I’m sure the progressive cognoscenti deems 100% wrong).
well, I read a bit and found this:
Which brings us to the big thing Mr. Biden and the Democratic Congress
did wrong: In March 2021, with post-pandemic labor shortages and
supply-chain issues still constraining production, they goosed demand a
bit too much in the deficit-financed American Rescue Plan, which was
necessary, but at $1.9 trillion, too big.
There is little evidence that this inflation is demand driven; the ARP effect has long, long worn off anyway, and inflation hasn't relented.
Why should I read more when they start off with this false premise?
drummerboy said:
well, I read a bit and found this:
Which brings us to the big thing Mr. Biden and the Democratic Congress
did wrong: In March 2021, with post-pandemic labor shortages and
supply-chain issues still constraining production, they goosed demand a
bit too much in the deficit-financed American Rescue Plan, which was
necessary, but at $1.9 trillion, too big.There is little evidence that this inflation is demand driven; the ARP effect has long, long worn off anyway, and inflation hasn't relented.
Why should I read more when they start off with this false premise?
some people are always looking for a reason to slam spending that goes to regular working people.
ml1 said:
some people are always looking for a reason to slam spending that goes to regular working people.
Its never ending. The constant lies and misrepresentations by Republicans and conservatives talking heads. That the American Rescue plan caused inflation.
What about the rest of the world which didn't have the rescue plan? Republican politicians know this but they'll push the lie anyway knowing full well their base's lack of critical thinking.
Credible reports say inflation is 30% to 60% demand driven. Even the low end 30% number is substantial if you ask me.
as to your second point, it’s well-established within economic circles that inflation feeds on itself. So today’s inflation is as much caused by yesterday’s inflation as anything else. And yesterday’s inflation was fueled by extraordinarily accommodative monetary policy and ginormous fiscal stimulus.
ml1 said:
drummerboy said:
well, I read a bit and found this:
Which brings us to the big thing Mr. Biden and the Democratic Congress
did wrong: In March 2021, with post-pandemic labor shortages and
supply-chain issues still constraining production, they goosed demand a
bit too much in the deficit-financed American Rescue Plan, which was
necessary, but at $1.9 trillion, too big.There is little evidence that this inflation is demand driven; the ARP effect has long, long worn off anyway, and inflation hasn't relented.
Why should I read more when they start off with this false premise?
some people are always looking for a reason to slam spending that goes to regular working people.
I continue to be surprised that you guys, progressives, are so blasé about inflation, when it's an established fact that inflation hits regular working people hardest.
DB's previous comment that 8% inflation is NBD...tell that to some of the people in this article.
https://www.nytimes.com/2022/08/08/business/economy/inflation-jobs-economy.html
Smedley said:
Credible reports say inflation is 30% to 60% demand driven. Even the low end 30% number is substantial if you ask me.
as to your second point, it’s well-established within economic circles that inflation feeds on itself. So today’s inflation is as much caused by yesterday’s inflation as anything else. And yesterday’s inflation was fueled by extraordinarily accommodative monetary policy and ginormous fiscal stimulus.
I guess the NY Fed should talk to the SF Fed, because they're not on the same page.
Smedley said:
ml1 said:
drummerboy said:
well, I read a bit and found this:
Which brings us to the big thing Mr. Biden and the Democratic Congress
did wrong: In March 2021, with post-pandemic labor shortages and
supply-chain issues still constraining production, they goosed demand a
bit too much in the deficit-financed American Rescue Plan, which was
necessary, but at $1.9 trillion, too big.There is little evidence that this inflation is demand driven; the ARP effect has long, long worn off anyway, and inflation hasn't relented.
Why should I read more when they start off with this false premise?
some people are always looking for a reason to slam spending that goes to regular working people.
I continue to be surprised that you guys, progressives, are so blasé about inflation, when it's an established fact that inflation hits regular working people hardest.
DB's previous comment that 8% inflation is NBD...tell that to some of the people in this article.
https://www.nytimes.com/2022/08/08/business/economy/inflation-jobs-economy.html
Did I say NBD? No I did not.
I said "8% inflation is not exactly catastrophic".
And it isn't, but it makes for good news stories.
You don't see many news stories about the millions of jobs created.
Smedley said:
I continue to be surprised that you guys, progressives, are so blasé about inflation, when it's an established fact that inflation hits regular working people hardest.
DB's previous comment that 8% inflation is NBD...tell that to some of the people in this article.
https://www.nytimes.com/2022/08/08/business/economy/inflation-jobs-economy.html
what in that comment you quoted led you to that conclusion?
but it's important to keep in mind that if the Fed engineers a recession who is likely to lose their jobs. There are some things worse for working folks than inflation, as bad as it might be for them.
drummerboy said:
Smedley said:
ml1 said:
drummerboy said:
well, I read a bit and found this:
Which brings us to the big thing Mr. Biden and the Democratic Congress
did wrong: In March 2021, with post-pandemic labor shortages and
supply-chain issues still constraining production, they goosed demand a
bit too much in the deficit-financed American Rescue Plan, which was
necessary, but at $1.9 trillion, too big.There is little evidence that this inflation is demand driven; the ARP effect has long, long worn off anyway, and inflation hasn't relented.
Why should I read more when they start off with this false premise?
some people are always looking for a reason to slam spending that goes to regular working people.
I continue to be surprised that you guys, progressives, are so blasé about inflation, when it's an established fact that inflation hits regular working people hardest.
DB's previous comment that 8% inflation is NBD...tell that to some of the people in this article.
https://www.nytimes.com/2022/08/08/business/economy/inflation-jobs-economy.html
Did I say NBD? No I did not.
I said "8% inflation is not exactly catastrophic".
And it isn't, but it makes for good news stories.
You don't see many news stories about the millions of jobs created.
Pardon me for thinking “not exactly catastrophic” was reasonably equivalent to “no big deal”.
Okay, so you think 8% inflation is a big deal. Good to know.
ml1 said:
Smedley said:
I continue to be surprised that you guys, progressives, are so blasé about inflation, when it's an established fact that inflation hits regular working people hardest.
DB's previous comment that 8% inflation is NBD...tell that to some of the people in this article.
https://www.nytimes.com/2022/08/08/business/economy/inflation-jobs-economy.html
what in that comment you quoted led you to that conclusion?
but it's important to keep in mind that if the Fed engineers a recession who is likely to lose their jobs. There are some things worse for working folks than inflation, as bad as it might be for them.
It’s a long-term pattern of pooh-poohing inflation.
The media sensationalizes inflation. Manchin or anyone else who even raises inflation as a concern is a GOP ghoul. No elected leader shall be held accountable in any way shape or form for high inflation. Fed shouldn’t be raising rates. Etc etc.
Smedley said:
It’s a long-term pattern of pooh-poohing inflation.
The media sensationalizes inflation. Manchin or anyone else who even raises inflation as a concern is a GOP ghoul. No elected leader shall be held accountable in any way shape or form for high inflation. Fed shouldn’t be raising rates. Etc etc.
The media has sensationalized inflation. As for the rest of it, I'd like to see you quote any posts of mine that made those statements.
Smedley said:
ml1 said:
Smedley said:
I continue to be surprised that you guys, progressives, are so blasé about inflation, when it's an established fact that inflation hits regular working people hardest.
DB's previous comment that 8% inflation is NBD...tell that to some of the people in this article.
https://www.nytimes.com/2022/08/08/business/economy/inflation-jobs-economy.html
what in that comment you quoted led you to that conclusion?
but it's important to keep in mind that if the Fed engineers a recession who is likely to lose their jobs. There are some things worse for working folks than inflation, as bad as it might be for them.
It’s a long-term pattern of pooh-poohing inflation.
The media sensationalizes inflation. Manchin or anyone else who even raises inflation as a concern is a GOP ghoul. No elected leader shall be held accountable in any way shape or form for high inflation. Fed shouldn’t be raising rates. Etc etc.
Nothing in that last paragraph is "pooh-poohing" inflation.
The media has sensationalized inflation. It's all they talk about. As stated earlier, 8% inflation is not a catastrophe.
Manchin doesn't know sh!t about the causes of inflation. He's literally a moron, besides being a corrupt one.
Who do you want to hold accountable? And are they also accountable for the inflation that is affecting the rest of the world? (And please, don't tell us that we export inflation.) Most of inflation in the US is being caused by profit-taking and supply-chain issues. Is Biden responsible for that?
The Fed shouldn't be raising rates because it's not 1980.
Longstanding economic theory holds that expansionary monetary policy and stimulative fiscal policy are causes of inflation. in 2020-21 we had a period of expansionary monetary policy and stimulative fiscal policy -- both on steroids -- and inflation followed. Surprise!
It's amazing how you can turn centuries of economic theory on its head with your own alternative theories. All the while wholly disregarding the FRB estimates that our current inflation is 30-60% demand-caused. But nope, it's all price gouging and supply chain and 0% the result of policy.
Smedley said:
Centuries of economic theory hold that expansionary monetary policy and stimulative fiscal policy are causes of inflation. in 2020-21 we had a period of expansionary monetary policy and stimulative fiscal policy -- both on steroids -- and inflation followed. Surprise!
It's amazing how you can turn centuries of economic theory on its head with your own alternative theories. All the while wholly disregarding the FRB estimates that our current inflation is 30-60% demand-caused. But nope, it's all price gouging and supply chain and 0% the result of policy.
"Centuries of economic theory"?
I can't go any further after that statement.
drummerboy said:
Smedley said:
Centuries of economic theory hold that expansionary monetary policy and stimulative fiscal policy are causes of inflation. in 2020-21 we had a period of expansionary monetary policy and stimulative fiscal policy -- both on steroids -- and inflation followed. Surprise!
It's amazing how you can turn centuries of economic theory on its head with your own alternative theories. All the while wholly disregarding the FRB estimates that our current inflation is 30-60% demand-caused. But nope, it's all price gouging and supply chain and 0% the result of policy.
"Centuries of economic theory"?
I can't go any further after that statement.
OK, change "Centuries of economic theory" to "Longstanding economic theory." Can you go any further?
Smedley said:
drummerboy said:
Smedley said:
Centuries of economic theory hold that expansionary monetary policy and stimulative fiscal policy are causes of inflation. in 2020-21 we had a period of expansionary monetary policy and stimulative fiscal policy -- both on steroids -- and inflation followed. Surprise!
It's amazing how you can turn centuries of economic theory on its head with your own alternative theories. All the while wholly disregarding the FRB estimates that our current inflation is 30-60% demand-caused. But nope, it's all price gouging and supply chain and 0% the result of policy.
"Centuries of economic theory"?
I can't go any further after that statement.
OK, change "Centuries of economic theory" to "Longstanding economic theory." Can you go any further?
There are many studies that show that the effect of demand on the inflation are a lot less than the NY Fed said. Even the SF Fed says this.
The effects of the ARP have long,long since gone away. What explains inflation today?
What explains inflation around the world? US stimulus?
What exactly are rate increases targeting?
Why are corporate profits breaking records in this environment?
drummerboy said:
Smedley said:
drummerboy said:
Smedley said:
Centuries of economic theory hold that expansionary monetary policy and stimulative fiscal policy are causes of inflation. in 2020-21 we had a period of expansionary monetary policy and stimulative fiscal policy -- both on steroids -- and inflation followed. Surprise!
It's amazing how you can turn centuries of economic theory on its head with your own alternative theories. All the while wholly disregarding the FRB estimates that our current inflation is 30-60% demand-caused. But nope, it's all price gouging and supply chain and 0% the result of policy.
"Centuries of economic theory"?
I can't go any further after that statement.
OK, change "Centuries of economic theory" to "Longstanding economic theory." Can you go any further?
There are many studies that show that the effect of demand on the inflation are a lot less than the NY Fed said. Even the SF Fed says this.
The effects of the ARP have long,long since gone away. What explains inflation today?
What explains inflation around the world? US stimulus?
What exactly are rate increases targeting?
Why are corporate profits breaking records in this environment?
There are many studies that show that the effect of demand on the inflation are a lot less than the NY Fed said. Even the SF Fed says this.
-The low estimate of the two is 30% which you continue to ignore. Even that number is significant and a lot greater than 0%.
The effects of the ARP have long,long since gone away. What explains inflation today?
-Inflation feeds on itself which has been mentioned before and you continue to disregard. So to an extent, today's inflation is a result of yesterday's inflation which was partly caused by monetary and fiscal policy. Also, even with recent increases, the Fed funds rates (3-3.25%) is still low by historical standards and hardly restrictive. And rate increases take time to have an impact, so the job markets, housing, overall demand etc. have remained pretty strong. So to date, little has changed except the fed moving from extraordinarily accommodative policy, ie free money, to a more neutral rate. Why would little change stop inflation?
What explains inflation around the world? US stimulus?
-Partly. And their own stimulus and free-money monetary policies. And Covid-related supply chain stuff.
What exactly are rate increases targeting?
-The idea is to make the cost of borrowing more expensive which will reduce economic activity which will reduce aggregate demand which will bring down inflation.
Why are corporate profits breaking records in this environment?
-I think corporate price gouging has contributed a small amount to inflation but it's not a significant contributor. I've seen no credible report that convincingly shows corporations are driving inflation.
Record breaking profits amidst an inflationary environment.
Nothing to see here...
the point I've made many times is that even if 30% of the past years inflation is indeed due to COVID relief spending it was a price we needed to pay. The alternative would almost certainly have been a great deal of real suffering for tens of millions of people. Losing their homes, going hungry, businesses that didn't survive. Again, sometimes there are worse outcomes than inflation.
ml1 said:
the point I've made many times is that even if 30% of the past years inflation is indeed due to COVID relief spending it was a price we needed to pay. The alternative would almost certainly have been a great deal of real suffering for tens of millions of people. Losing their homes, going hungry, businesses that didn't survive. Again, sometimes there are worse outcomes than inflation.
yes
ml1 said:
the point I've made many times is that even if 30% of the past years inflation is indeed due to COVID relief spending it was a price we needed to pay. The alternative would almost certainly have been a great deal of real suffering for tens of millions of people. Losing their homes, going hungry, businesses that didn't survive. Again, sometimes there are worse outcomes than inflation.
How about if it was 60% (which was the other FRB estimate)?
You know I would agree with you, iff today was the last page of this novel. But it's not. Most likely we're a ways away from resolving this inflationary situation. Maybe inflation is brought down to 2-3% without too much pain. Or maybe it's a long and drawn-out mud fight that results in a severe recession and causes just the kind of suffering you describe, in spades.
So IMO it's very possible that the consequences of inflation prove worse than the consequences of not opening the spigots on fiscal and monetary policy in 2020-21 would have been.
Smedley said:
ml1 said:
the point I've made many times is that even if 30% of the past years inflation is indeed due to COVID relief spending it was a price we needed to pay. The alternative would almost certainly have been a great deal of real suffering for tens of millions of people. Losing their homes, going hungry, businesses that didn't survive. Again, sometimes there are worse outcomes than inflation.
How about if it was 60% (which was the other FRB estimate)?
You know I would agree with you, iff today was the last page of this novel. But it's not. Most likely we're a ways away from resolving this inflationary situation. Maybe inflation is brought down to 2-3% without too much pain. Or maybe it's a long and drawn-out mud fight that results in a severe recession and causes just the kind of suffering you describe, in spades.
So IMO it's very possible that the consequences of inflation prove worse than the consequences of not opening the spigots on fiscal and monetary policy in 2020-21 would have been.
You're really missing the point.
The ARP can't possibly be having an inflationary effect anymore. Yet inflation remains.
Something is going on, and it's not simple demand pressure. But the Fed has exactly one tool to fight inflation, regardless of whether it makes sense or not.
No debate with db is complete without the de rigueur "you're really missing the point".
If I had a nickel for every point I've really missed on here...well, I wouldn't have much purchasing power because of inflation.
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