I think you missed the point of my reference to 2008. It had nothing to do with a comparison to today.
As I've said numerous times, this is not something the Fed can fix. They had a plan to wind down bond buying and slowly raise rates to unwind their actions since 2008. I'm fine with them continuing on that part. But right now, they are panicking over this inflation problem and treating it like a monetary problem issue and that's not what it is. They've managed to go 13 years navigating adding liquidity into the system without creating inflation - that didn't suddenly change here. But they are trying to fix it as though they caused this. Again, it all goes back to supply chains. As I said in the previous post, this issue has to be solved with time, the private sector, and maybe other government intervention to get supply chains moving. The Fed crashing demand is not the fix because demand is not the problem (unlike typical monetary-policy-induced-inflation of the past). The economy is not overheating - it's correcting from the Covid hell, but that's exactly what you want. It's just that our just-in-time supply chains haven't been able to adjust for numerous reasons no one ever planned for.
the Fed's charter is to manage inflation and employment it's too bad that you don't understand that it is a monetary problem. you conveniently omitted to mention Biden multi-trillion infrastructure bill their position is that inflation is no longer transitory, it is their job to fix this monetary problem. tapering and rate hike are the correct moves
Would it be wrong to suggest the reason for killing the word 'transitory' is because inflation has been adjusted permanently in day to day living? If inflation does become transitory at this point, the deflationist will come out to play as the economy cools off.
But the pace it's going back to pre-pandemic level is hot and fast. I think few expected it would recover THIS fast. That adds pressure to inflation. I think the Fed has revised upward growth for 2021 (+50% if I remember correctly) and strong growth for 2022 and 2023. I'm seeing that many of the central banks are already looking at or raising interest rate. Might be a yo-yo effect over the next few years...
I don't think that's quite right, but it's really a matter of linguistics. When the Fed uses the word transitory, they mean that the pressures causing the inflation will go away and then the associated inflation will go away. The problem here is that it's taking longer for those pressures (supply chain) to go away, so people are griping. Powell said it in his testimony: “We tend to use [transitory] to mean that it won’t leave a permanent mark in the form of higher inflation,” Fed Chairman Jerome Powell said during a congressional hearing on Tuesday. “I think it’s probably a good time to retire that word and try to explain more clearly what we mean.” The real problem was just the language they used, not what they meant. I think that's correct - once supply chain pressures subside, inflation will subside. But you're right - if the Fed does things to slow the economy, and then the supply pressures subside independently, you've created a new possibly deflationary problem (or at least passed their inflation target on the downside). That's part of why I'm an advocate that they keep working on what they control and they really just have to wait out the supply side pressures, as sucky as it is. It's just a side effect of the chaos of shuttering an economy for many months - getting it back online isn't a smooth process and it's going to cause lots of ripples.
The pace might be faster than expected, but the overall growth isn't out of line with the trend. So based on this (a few months old), the economy has the theoretical capacity to handle current demand and more, and that demand isn't unreasonable overall. It's just that supply chains contracted dramatically during the shutdown and hasn't ramped up again. Rental cars, for example - all the major rental agencies sold parts of their fleets to save cash; now they aren't buying them back quickly enough because used car prices have skyrocketed. Why? Because there's not enough parts due to chip shortages for new cars. But ideally, we want supply ramping up to meet demand in this scenario rather than slashing demand to meet supply. Both would fix inflation, but we know supply can get higher because it was just 2 years ago; and lowering demand means creating a recession.
Yes correct. But if a policy won't actually fix a problem, then it's not a good policy. Well of course I did - it's not the cause of this. Inflation started rising a year ago, long before the Biden bill came into affect, and very little of that money has been spent. When we look at inflation rates, its Year-over-Year, but the monthly rises started a while back. Back in June, the comps included a lot of months from mid-2020 when things were shut down, so inflation rates looked lower but the monthly rates were aleady going up. Now the comps are Nov 2020 to Nov 2021 so they include all the month where inflation began going up, so it looks worse. But this started well before Biden's bill. Now, as the economy keeps opening, the supply crunch is getting worse, certainly. But the data shows this wasn't by a trillion dollar bill that mostly won't be spent for many years. If you really believe its a monetary problem - it's not - then the larger culprit would be the $4T in bipartisan spending in 2020, most of which was actually immediately injected into the economy. Nonsense. Their change in not using "transitory" was one primarily of verbiage because people didn't like it. They still agree its a supply chain issue. Again, monetary policy won't fix a lack of chips being produced in factories in other parts of the world. Monetary policy won't fix ports being backlogged due to a lack of drivers or people who can unload the containers. There's a global mess of supply chains right now and the only solution to that will be time.
Inflation started rising a year ago, [/QUOTE] add to it the BBB, multi-trillion fiscal spending in the coming yrs, and the persistent wage growth, the correct move is to taper and then rate hikes thank you for corroborating that the correct move is to taper and then rate hikes
Coming from the business world I would say the goal needs to be growth in order to catch up to spending that has occurred under Trump (Tax cuts are the same thing IMO), and with the Covid relief bills (I won't assume anything with BBB yet). That's why I think the Infrastructure bill is smarter right now than people give it credit for regardless of what happens with BBB. It's very hard to see there NOT being some real good job growth in certain sectors from that bill alone. However the real key to growth and wealth over the next 20 years that STARTS NOW is in energy. The big deal with the Paris Climate Accord wasn't really about curbing emissions as much as it was creating a platform for negotiating multinational ecofriendly power grids for developing countries as well as revamping existing power infrastructure. The need for it via climate change is just the catalyst. So BBB and BIFF really are solid bills that lay some groundwork for the investment that we need to battle not just climate but our debt problem, but we might need a bit more that involves the private sector and dare I say it.... big oil and gas to invest more in carbon capture technology that takes back more carbon than we emit. If we develop the technology that is going to be the number 1 demanded import over the next 20 years, we'll be poised to grow far beyond the debt we've accrued. The death nail will be allowing the debt and inflation rises to occur while becoming less and less competitive in the new energy market.
We went through a V shape crash and recovery. In the great recession, we went through a quick collapse but much slower recovery. The fed didn't raise rate until we reached pre-great-recession level. Here, the Fed is looking at raising rate in 2022 and 2023. They have indicated that they think this level of high inflation will solve on its own (claiming it's a supply chain issue). With that claim, isn't the Fed really thinking of tapering down the recovery so that it doesn't overshoot? It's the news that perhaps tied the Fed potential hikes to today's inflation when it's more likely wanting to slowly remove the stimulus since we are reaching pre-pandemic economic and employment level. The tricky part is the timing and I suspect that because of how quickly the economy has crashed and recovered, it will be a bit bouncy before it settles back to a more regular boom/bust cycles.
An excuse or a genuine belief is all the same I guess. Major, have you ever thought for a moment that contentment with the moderate status quo (read not too great for many) is one of the reasons for say Trump.
Think of it more like the Titanic. Structural flaws that should have prevented a complete disaster that wasn't reveal until years later. The government is telling us the economy is an unsinkable ship and everyone is either partying with their massive equity/speculation gains or asleep has the helm. We now clearly see the iceberg looming on the horizon but we think we can steer the massive economy from a massive collision. In the mean time, "it will be a bit bouncy before it settles back to a more regular boom/bust cycles". The rest is history. Currently we have three outcomes; A bad outcome. A even worst outcome. Or a really really bad outcome. There are no good outcomes.
I wouldn't say just the gov. Pretty much all economists don't see a Titanic situation here. I personally am not educated enough in this area to comment but I'm all ears and would love to hear more about why you believe this?
Biden never supported full forgiveness. 10k was what he supported. Resuming payment has nothing to do if that will happen or not. Full forgiveness probably has a higher risk of driving more centrist away. Trump admin did jack for loan forgiveness and are against it, so will people really go there? It would be like shooting yourself in the foot to relieve your anger (which, it seems, is not that uncommon of a thing).
I guess that's true if you don't believe in the rule of law. If Biden legitimately thinks he doesn't have the authority to forgive debt himself, you think he should anyway? Have you ever thought for a moment that extreme progressiveness is a turnoff in a majority of districts in a gerrymandered country and cost the Democrats their margin in the House and ability to do anything in the Senate? Moderate Democrats with Obama and Biden have won national elections and gotten transformative changes accomplished. Progressives have yet to win sustainable majorities anywhere outside of their very blue districts and got blown out in key races in a year where a contented moderate got elected President. You can keep fighting the fight to yell and scream and get nothing done. I prefer the people that are actually impacting people's lives. And no, Trump wasn't a result of contented moderates. He was the result of a horrible Democratic candidate that had no authenticity and a lot of baggage from 20 years in the national spotlight and some bad luck in losing several states by less than 1%.
