Inflation Scaremongering

tjohn said:

Drummerboy always struggles with being one of the few high-information citizens conversing with us lower-information citizens.

Without that struggle, we wouldn’t have been gifted the euphonious term “chart sophistry.”

FWIW, the Fed's job isn't to ONLY try to keep a lid on inflation. It's also to minimize unemployment. The 2% inflation target is essentially arbitrary, and a question for right now is -- should the Fed raise rates further to squeeze inflation down to 2% from 3% and risk a recession that shrinks economic growth and throws millions of people out of work?  Or can we live with 3% inflation and not disrupt the economy?

Sure, persistent 9% inflation would have been unsustainable. But is getting from 3% to 2% inflation worth causing regular people economic hardship?

DaveSchmidt said:

ml1 said:

not a fan of charts that don't base the vertical axis at 0

I intended those charts to show direction, not degree.

Bad axes are one of my chart pet peeves, though that doesn't always mean they have to base at 0. In a temperature chart, for instance, in most cases it wouldn't make sense to have the y axis base at 0 degrees F.

Those FRED charts are kind of mixed -- I don't think the "Personal Conumption Per Capita" would be better if the Y axis started at 0 (indeed, that would squish the data up to the top and make it hard to read), but a few of the others probably should. I suspect they're auto-generated and whatever program makes them is just going off the range of values. That points to another issue -- just like writing, data presentation generally benefits from a good editor willing to tweak the raw content to make it clearer (and one reason I expect the coming flood of AI-generated content, which will tempt newsrooms and other media to skimp on actual writers and editors, will lead to a lot of confusion).

Anyway, thanks for indulging this tangent.

tjohn said:

DaveSchmidt said:

drummerboy said:

your first sentence doesn't make much sense.

the second even less.

There’s never a lot that a thinking person can do with these empty dismissals of yours.

Drummerboy always struggles with being one of the few high-information citizens conversing with us lower-information citizens.

you have no idea what it takes to set the world straight. wears me out.

Smedley said:

High inflation and low fed funds rate -- Fed saw need to move quickly and decisively.

Db and DJT both whinge about high rates and say (often counterintuitively and nonsensically) that rates should be cut -- bedfellows on rates. Strange bedfellows, but bedfellows.

Not sure why either premise is difficult to understand.  But if you don't, as you would say -- I can't help you.  

The fact that rates were low did not spur the Fed to raise rates. The perceived cause of inflation vis a vis the state of the economy was the spur. That's why your first claim doesn't make sense. (to say nothing of the fact that there is just about no one who thought the Fed acted quickly. Most people who thought that the Fed should take action thought they waited too long. That's why the hikes were so aggressive. )

And did I complain that rates should be cut when Trump was complaining about them? No I did not. That's why your second claim makes no sense, as desperate as you would like it to be

Satisfied now?

https://finance.yahoo.com/news/federal-reserve-holds-interest-rates-at-22-year-high-signals-three-cuts-next-year-190138119.html

The Federal Reserve maintained its benchmark interest rate on Wednesday in a range of 5.25%-5.50%, the highest in 22 years, but signaled they will likely cut interest rates by a total of 75 basis points, or 0.75%, in the year ahead.

In September, the Fed's forecasts had suggested the central bank would cut interest rates by 0.50%. The Fed has moved in 25 basis point increments over the last year, indicating the central bank now expects to cut interest rates three times in 2024.

These projections come as the central bank now expects inflation to fall to 2.4% next year — down from 2.5% forecast in September — and drop further to 2.2% by 2025.

DaveSchmidt said:

Without that struggle, we wouldn’t have been gifted the euphonious term “chart sophistry.”

I thought it was an apt description of your attempt to show that the economy was not doing well when it is.

drummerboy said:

And did I complain that rates should be cut when Trump was complaining about them? No I did not. That's why your second claim makes no sense, as desperate as you would like it to be

Slicing the baloney mighty thin there, partner.

How so? Trump complained about rates pre-pandemic. I did not. Therefore your analogy fails. Accept that failure so we can move on. 

Db don't worry, you and Trump are still on the same page.

https://thehill.com/homenews/sunday-talk-shows/4208224-trump-interest-rates-too-high-people-cant-buy-homes/

drummerboy said:

How so? Trump complained about rates pre-pandemic. I did not. Therefore your analogy fails. Accept that failure so we can move on. 

You complained about interest rates in 2023, Trump complained about interest rates in 2023. Therefore my analogy succeeds.

I wouldn't be surprised if you complained about rates pre-pandemic either -- maybe sometime I'll take a look back and see. 

So you're saying higher loan rates for average consumers is a good thing? I thought we were trying to fight inflation.

ml1 said:

Sure, persistent 9% inflation would have been unsustainable. But is getting from 3% to 2% inflation worth causing regular people economic hardship?

Is anyone out there, including Powell or other Fed policymakers, suggesting that raising rates further to get down to 2 percent is a consideration? (Everything I’ve read or heard says only the threat of a flare-up of inflation again would put another increase on the table.)

drummerboy said:

I thought it was an apt description of your attempt to show that the economy was not doing well when it is.

Now you’re just lying. Clearly the attempt was to show that, contrary to your claim, there were signs that the economy (still growing!) has been slowing down.

But I still like “chart sophistry.”

DaveSchmidt said:

ml1 said:

Sure, persistent 9% inflation would have been unsustainable. But is getting from 3% to 2% inflation worth causing regular people economic hardship?

Is anyone out there, including Powell or other Fed policymakers, suggesting that raising rates further to get down to 2 percent is a consideration? (Everything I’ve read or heard says only the threat of a flare-up of inflation again would put another increase on the table.)

drummerboy said:

I thought it was an apt description of your attempt to show that the economy was not doing well when it is.

Now you’re just lying. Clearly the attempt was to show that, contrary to your claim, there were signs that the economy (still growing!) has been slowing down.

But I still like “chart sophistry.”

not cutting rates soon enough could also spur a recession. It is of course a balance but IMHO the Fed (and mainstream economic pundits) seem to have been prioritizing 2% inflation over employment for a long time. 

And I'm not aware of any good reason why the target has to be 2% and not 3% or 4%. Are you?

Rest assured I will NOT be removing my Zeedex for this thread, so please feel free to carry on without me while I investigate this strange giggle coming from Stooky Bill.

At 2%, prices double every 35 years, at 3%, 23 years, 4%, 17.5 years, 5%, 14 years.

Makes a pretty big difference.

ml1 said:

And I'm not aware of any good reason why the target has to be 2% and not 3% or 4%. Are you?

No, but I’m not aware of any good reason for 3% or 4%, either. I don’t even know why there has to be a target at all. Which isn’t surprising, since I’m not well versed in the pro and con arguments.

ridski said:

Rest assured I will NOT be removing my Zeedex for this thread, so please feel free to carry on without me while I investigate this strange giggle coming from Stooky Bill.

Cast puppetry.

drummerboy said:

So you're saying higher loan rates for average consumers is a good thing? I thought we were trying to fight inflation.

higher loan rates by themselves aren't good for average consumers, but if higher loan rates help bring down inflation, that's a good thing for average consumers. 

and at this point mostly I'm just having some fun with you as a progressive being allergic to agreeing with Trump on anything. If you agree(d) with him on rates, so what?  It doesn't make you a bad person, or wrong necessarily. But you're making like I'm insulting your ancestors.

Smedley said:

drummerboy said:

So you're saying higher loan rates for average consumers is a good thing? I thought we were trying to fight inflation.

higher loan rates by themselves aren't good for average consumers, but if higher loan rates help bring down inflation, that's a good thing for average consumers. 

and at this point mostly I'm just having some fun with you as a progressive being allergic to agreeing with Trump on anything. If you agree(d) with him on rates, so what?  It doesn't make you a bad person, or wrong necessarily. But you're making like I'm insulting your ancestors.

Yeah, and I'm having fun with you trying to put me in a corner where I'm not reflexively disagreeing with whatever position Trump happens to take.

But I could be lying.

DaveSchmidt said:

Now you’re just lying. Clearly the attempt was to show that, contrary to your claim, there were signs that the economy (still growing!) has been slowing down.

But I still like “chart sophistry.”

No, not lying. My overall point here is that the Fed is trying to weaken the economy so as to lower inflation, but it has failed to do so, implying that the Fed has had little if anything to do with lowering inflation.

I interpreted your charts as an attempt to show that they have in fact weakened the economy, implying that their rate hikes have been effective in lowering inflation. 

If, in fact, that was not your intent then I guess my interpretation was wrong.

drummerboy said:

No, not lying. My overall point here is that the Fed is trying to weaken the economy so as to lower inflation, but it has failed to do so, implying that the Fed has had little if anything to do with lowering inflation.

Now you’re just being obtuse for the fun of it. An economy that’s slowing down (“yes, while I erred in using the phrase ‘no slowing down’”) is an economy that’s weakening.

DaveSchmidt said:

drummerboy said:

No, not lying. My overall point here is that the Fed is trying to weaken the economy so as to lower inflation, but it has failed to do so, implying that the Fed has had little if anything to do with lowering inflation.

Now you’re just being obtuse for the fun of it. An economy that’s slowing down (“yes, while I erred in using the phrase ‘no slowing down’”) is an economy that’s weakening.

Visual representation of the current state of this thread - 

drummerboy said:

So is it your contention that the slowdown in some measures was

1. caused by the rate hikes and
2. the cause for inflation slowing down

Ultimately, that's all we're talking about here.

I leave the contending to you. It’s my understanding — even after reading your links and digesting your comments, in a discussion as harmless as it is indulgent — that the rate hikes had at least some role to play in the economic slowdown and the drop in inflation.

tjohn said:

At 2%, prices double every 35 years, at 3%, 23 years, 4%, 17.5 years, 5%, 14 years.

Makes a pretty big difference.

and at what rate do incomes double under those scenarios?

DaveSchmidt said:

No, but I’m not aware of any good reason for 3% or 4%, either. I don’t even know why there has to be a target at all. Which isn’t surprising, since I’m not well versed in the pro and con arguments.

yes. Pretty much the same point I'm  trying to make. What's the evidence for a hard inflation target? 

Apparently there isn't any. 

ml1 said:

yes. Pretty much the same point I'm trying to make. What's the evidence for a hard inflation target?

Apparently there isn't any.

Maybe there is. I’m not informed enough to decide either way, and Google searches didn’t suddenly make me so.

ml1 said:

DaveSchmidt said:

No, but I’m not aware of any good reason for 3% or 4%, either. I don’t even know why there has to be a target at all. Which isn’t surprising, since I’m not well versed in the pro and con arguments.

yes. Pretty much the same point I'm  trying to make. What's the evidence for a hard inflation target? 

Apparently there isn't any. 

There's not much, if any, evidence for the NAIRU either, which has helped to drive policy for many years.

Don't forget, this is Economics we're talking about here.

ml1 said:

tjohn said:

At 2%, prices double every 35 years, at 3%, 23 years, 4%, 17.5 years, 5%, 14 years.

Makes a pretty big difference.

and at what rate do incomes double under those scenarios?

Unfortunately, incomes have not kept up with inflation the past few years. That's one reason why the Fed needs to get inflation down. Companies are too greedy share the spoils with their workers.