[HN Gopher] A key inflation measure rose to a 39-year high last ...
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A key inflation measure rose to a 39-year high last month
Author : pezzana
Score : 93 points
Date : 2021-12-10 14:05 UTC (8 hours ago)
(HTM) web link (lite.cnn.com)
(TXT) w3m dump (lite.cnn.com)
| melling wrote:
| Where do people find good discussions about the economy,
| investing, etc?
|
| Anyone taking a deeper dive into the Fed, global markets, QE,
| China, etc
|
| Btw, this was an interesting read:
|
| https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-...
| nprz wrote:
| Lyn Alden probably has some of the best commentary on the
| current state of the US economy. Would highly recommend
| checking out her blog if you're looking to learn more:
| https://www.lynalden.com/
| Nick87633 wrote:
| There is a lot of chaff but I find it here on HN, reddit
| (personal finance, investing, wall street bets, quality convos
| in other random subs), and a limited number of posters on
| Twitter (probably my least favorite place, bleh).
| jonnycomputer wrote:
| https://www.calculatedriskblog.com/
|
| https://econbrowser.com/
| bko wrote:
| From WSJ article:
|
| > Unlike in past recoveries, strong demand for goods such as
| autos, furniture and appliances has driven much of the inflation
| surge. Prices for services--such as for travel and recreation--
| have generally climbed much less with softer demand. The holiday
| season is likely exacerbating these dynamics, said Aneta
| Markowska, chief financial economist at Jefferies LLC.
|
| We're seeing crazy price growth without a rise in demand for
| services. But that'll likely change and fuel inflation further as
| covid restrictions are lifted.
|
| I still believe it is due to the large money printing by the Fed,
| a total of around 10 trillion disbursed for various programs. We
| saw inflation in nearly every asset class in our economy, blowing
| past pre-covid numbers, and now its coming to consumer prices. I
| just hope we have the political will to do something about it.
| Unemployment is very low and the Fed is still dragging their feet
| about maybe 1 or 2 potential raises next year and a slow
| unwinding of the trillions in assets its built up over the last
| year
| jyounker wrote:
| > I still believe it is due to the large money printing by the
| Fed, a total of around 10 trillion disbursed for various
| programs. W
|
| If the Fed's policy was responsible, then we'd see a divergence
| between inflation rates in European countries and the US. We
| don't though. European inflation rates (across the board)
| closely track what's happening in the US.
|
| What we do see is a similar demand reallocation in both
| portions of the world. Demand has shifted from services to
| goods, and that increased demand drives inflation.
| redwood wrote:
| Aligns with https://www.bridgewater.com/its-mostly-a-demand-
| shock-not-a-...
| redwood wrote:
| You could argue we've been engaging in a massive scale basic
| income for all Experiment!
| pjc50 wrote:
| > Consumer price inflation rose by 6.8% without seasonal
| adjustments over the 12 months ended November, the Bureau of
| Labor Statistics reported Friday.
|
| > Stripping out food and energy, the prices of which tend to be
| more volatile, inflation rose 4.9% over the same period -- the
| highest level since June 1991.
|
| This is high by recent standards but not too bad by 20th century
| standards. And at least this time wage inflation is happening as
| well.
|
| > Several categories saw significant price increases. Gas prices
| jumped 58.1% over the year ending in November, the biggest jump
| since April 1980.
|
| .. ah. Yeah, this is much more significant. Oil is up too: WTI
| about $40 at the end of last year to $70-80. As lots of places
| have found out, fossil fuels are cheap until they aren't.
|
| High oil prices are quite capable of causing inflation on their
| own.
| woodruffw wrote:
| The YoY metric for oil is slightly misleading, due to the chaos
| that was 2020's market[1].
|
| It was at 59.22 on this day in 2019, and now it's at 69.62.
| That's a significant increase, but it's not the eye-popping 2x
| jump that the YoY number suggests.
|
| Gas prices, on the other hand, are surprisingly divergent[2].
|
| [1]: https://fred.stlouisfed.org/series/DCOILWTICO
|
| [2]: https://fred.stlouisfed.org/series/GASREGW
| csours wrote:
| Inflation has been lower and more consistent over the last 39
| years (and especially over the last 20 years) than any time in
| history. If you live in the United States and you're my age or
| younger, you haven't had to worry about inflation for your whole
| adult working life.
|
| This doesn't make today's inflation acceptable, it just lets you
| know how much importance has been put on handling inflation up
| until now.
| nathias wrote:
| that's isn't saying much as the current monetary system only
| exists for 50 years
| SubiculumCode wrote:
| Well, I'd argue that inflation has been kept too low, placing
| burdens on debt-holders and lowering growth, which in my view
| contributed to the decimation of the middle class.
| csours wrote:
| I'm not qualified to assess that, but I do think that it's
| hard to balance the needs of wealthy people and wall street
| with the needs of main street; it's even harder if you don't
| try to do that balance
| dnautics wrote:
| you haven't been poor, have you? I have been, and I definitely
| worried about inflation. In the early aughts ratcheting prices
| really fucked me over on a 26k salary.
| csours wrote:
| I haven't been poor as an adult. I was definitely poor as a
| child.
|
| Inflation is different things to different people, just like
| unemployment numbers are different things to different people
| and communities. Unemployment may be low, but if you don't
| have a job, that doesn't matter.
|
| Yes, the top line inflation number can be very misleading for
| individual experiences.
| throwaway0a5e wrote:
| >Inflation has been lower and more consistent over the last 39
| years (and especially over the last 20 years) than any time in
| history.
|
| The entire 19th century would take issue with that statement.
|
| We've had about as much inflation since 1990, not including
| current pandemic related shenanigans, as they had in that
| entire century.
| mercy_dude wrote:
| For all the people in the "transitory camp" here are a few things
| I would like you to reconsider:
|
| - "underlying supply chain will go back normal" well the way I
| see it the container owners and everyone downstream have no
| incentives for doing so. [1]
|
| - China is facing water crisis among many other issues from
| energy crisis as well. If the main supplier of US faces crisis it
| will likely affect US as well. [2]
|
| - and many actually don't understand this, Fed actually has
| incentives to get inflation. For many years they spent time to
| get inflation and recently even accepted they will let it run
| beyond the benchmark 2%. Part of the argument is Fed currently
| has no leverage or tools left in an economic downturn given the
| amount of debt in the balance sheet. A mere 5% raise in interest
| rate would require interest payment equivalent of another US
| army. So rate hikes of any substantial measure is out of question
| without bankrupting US. The easiest way is to inflate the 40
| trillion debt away like they did post war in the 40s. [3]
|
| [1] https://medium.com/@ryan79z28/im-a-twenty-year-truck-
| driver-...
|
| [2] https://thehill.com/opinion/energy-
| environment/584266-americ...
|
| [3] https://www.lynalden.com/inflation/
| [deleted]
| jjcon wrote:
| > China is facing water crisis among many other issues from
| energy crisis as well. If the main supplier of US faces crisis
| it will likely affect US as well.
|
| China is only 14% of US trade (third place after mexico and
| Canada) - still a lot but not as big of a player as that sounds
| dnautics wrote:
| China is no longer the main supplier of the US (it still is a
| very large supplier), but otherwise spot on.
| jonnycomputer wrote:
| 1. Actual throughput in our ports is up over previous levels.
| Its demand that has increased, a combination of redistribution
| downwards (through better wages, government benefits) and pent
| up savings. There's already evidence savings are depleted for
| lower income households (as evidenced by increased credit card
| balances). 2. Perhaps you could explain why container owners
| have no incentive to increase their business volume. 3. The US
| systematically undershot its 2% inflation target for years. It
| acted more like an upper bound. Its good that its gone over.
| Just now we've overshot. But we've overshot by a fair margin.
| So I think they'll pull back as soon as any perceived softness
| of the real economy has gone away.
| mercy_dude wrote:
| > Perhaps you could explain why container owners have no
| incentive to increase their business volume.
|
| The article I linked does a fairly good job explaining it.
| Basically if you are a container owner, you can charge 10x
| the price for containers from Shanghai to Long Island, while
| the other way it's almost a loss since it's returning empty.
|
| The decline in ships waiting just offshore of Los
| Angeles/Long Beach continues to be touted as a sign that port
| congestion is easing -- despite the fact that the true number
| of waiting ships has not actually declined.
|
| https://twitter.com/typesfast/status/1466424994670518279
| Thrymr wrote:
| > 1. Actual throughput in our ports is up over previous
| levels.
|
| Not true in general. The port of Long Beach is down 5% year-
| on-year (the third month in a row that is down compared with
| 2020) [0].
|
| [0] https://gcaptain.com/amid-record-breaking-year-port-of-
| long-...
| conjecTech wrote:
| It's still up 25% from 2019 numbers:
| https://polb.com/business/port-statistics/#teus-
| archive-1995....
| gilbetron wrote:
| That link supports the premise, you just chose a specific
| timeframe which had a small decline, the overall levels for
| the year are a huge increase:
|
| "Through November, the Port of Long Beach has processed
| more than 8.6 million TEU, up over 18% from last year and
| already surpassing the annual record of 8.1 million TEUs
| set in 2020."
| dv_dt wrote:
| Demand is increased, but I suspect its inventory backfill
| from a very slow previous year overlaid with maintaining
| ongoing inventory flow.
| conjecTech wrote:
| Merchants don't usually _want_ to lower prices proactively, but
| it 's done all the time because they do not exist in a
| competitive vacuum.
|
| From inception, container shipping has been plagued by
| oversupply because of the economies of bigger and bigger boats.
| That was still true 3 years ago. Shipping businesses were going
| bankrupt left and right. It is a commodity good with a
| relatively low cost of entry. If the existing companies don't
| feel like lowering prices, others will step in and happily take
| their market share.
| bachmeier wrote:
| > Fed actually has incentives to get inflation
|
| Time's too valuable to get into a meaningless discussion about
| this, but they've had the same incentive for decades. Take a
| look at the inflation rate for the 30 years 1991-2020:
| https://fred.stlouisfed.org/series/CPIAUCSL#0
| SubiculumCode wrote:
| Post war was a pretty good time for Americans. Bring it on.
| mercy_dude wrote:
| Except US has also hollowed out manufacturing becoming
| increasingly dependent on rival China (even for defence
| equipments), has been increasingly losing its sphere of
| influence (both soft and hard - ask anyone in Africa who
| wields its soft power there China or US; or look at the
| Afghanistan fallout), and there is very little bipartisanship
| left while everyone is busy fighting cultural war.
|
| One can hope at least de globalization is a partial outcome
| of this post covid realignment if ever one.
| xwdv wrote:
| What if China and US teamed up in a war against some common
| super enemy?
| greedo wrote:
| The US is dependent on China for defense equipment? Can you
| provide any examples?
| mercy_dude wrote:
| https://www.defensenews.com/opinion/commentary/2021/06/28
| /no...
| greedo wrote:
| That article has zero mentions of China being a supplier,
| of either systems or components.
| Supermancho wrote:
| Chip fabrication.
| greedo wrote:
| Can you back this up with any links? If we banish Huawei
| from US infrastructure, I can't imagine the DoD signing
| off on any chips built in the PRC.
| ethbr0 wrote:
| We'll see how friendly Africa is to China, when
| infrastructure debt payments start getting tight.
| trcarney wrote:
| China doesn't care about the debt payments. It is about
| maintaining the relationships in Africa so the countries
| there will favor China over the US in trade deals for
| resources.
| q1w2 wrote:
| China is bringing nearly 25 1GW nuclear plants online over the
| next 5 years. They additionally have investments all over
| Africa for the export of natural resources like coal/oil. I
| really don't see them falling into crisis over energy.
| londons_explore wrote:
| 25GW really isn't much for a nation the size of China. 25GW
| is really just insurance against forgetting how to build them
| like most of the west has.
|
| 1000 GWatts... Now that would make a dent.
| mcs5280 wrote:
| The fed has chosen to bleed the poor and middle class to keep the
| government spending, housing and stock market bubbles going.
| SubiculumCode wrote:
| This is the opposite of what is happening. There has been a
| massive transfer of wealth and income to the middle and lower
| classes at a rate that exceeds inflation, and that I hope will
| lead to sustained growth of the middle class.
| Supermancho wrote:
| > This is the opposite of what is happening.
|
| This is _exactly_ what is happening. The motivations may be
| partly^ different, but the result is one of the wealth
| inequality gap growing.
|
| ^I'm not sure how it could be incidental, given the obvious
| consequences.
| bhelkey wrote:
| > a key measure of inflation climbed to a level not seen since
| June 1982.
|
| Am I missing something in the article? Which key measure?
|
| The only other time 1982 is measured in this article is the
| following:
|
| > Food prices in restaurants jumped 5.8%, the biggest rise since
| January 1982.
| laurensr wrote:
| I'm not an economic expert, but the rate at which new money was
| created in 2020 & 2021 is frightening:
| https://fred.stlouisfed.org/series/M1SL
| kbaker wrote:
| That M1 discontinuity at least has an explanation:
|
| https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...
|
| Still a lot of money being printed, but not 10s of Trillions.
| merpnderp wrote:
| Maybe 1/4th of that is regulation changes on m1 versus m2
| holdings, so just banks moving money around. But yes, they
| printed a crap ton of money.
| bryanlarsen wrote:
| The Fed had to choose between inflation and recession. They chose
| inflation, and made the right choice.
| kickout wrote:
| Care to explain why a recession is a better choice to
| inflation?
| kahrl wrote:
| He literally said the opposite.
| TedShiller wrote:
| They made a decision but it's not the right decision
| bryanlarsen wrote:
| You'd rather have a recession than inflation? Are you a
| pensioner? That's the only group that I think would benefit
| in that scenario.
| deburo wrote:
| A recession caused by the government stopping corporate
| activities. As soon as the restrictions would have been
| relaxed for good (and I think we can say that we're finally
| in the clear, even tough Omicron worries (I personally
| think it will be similar to Delta)), the economy would've
| restarted just as well.
| bitshiftfaced wrote:
| Check out the median CPI growth compared to long term trends:
| https://fred.stlouisfed.org/series/MEDCPIM158SFRBCLE
| acd wrote:
| Central banks has caused the inflation by lowering interest rate
| and creating record amounts of new debt.
| XIVMagnus wrote:
| I would love to understand why the fed hasn't increased interest
| rates to counter the rapid increase of inflation..?
|
| I remember learning some basic economics in 2019 about how the
| U.S. learned a valuable lesson from 2008. How they will never
| make the same mistakes of letting inflation go unchecked because
| they have tools to work against it. Yet inflation has rapidly
| scaled to 6.8% (reported). Also, I am keeping supply chain demand
| in mind but I don't think it excuses the fed's decision to not
| immediately start curbing high inflation rates. My guess is that
| people with money are profiting and want to continue profiting
| until it is no longer sustainable.
| SubiculumCode wrote:
| Lesson learned from 2008 was not fear ofinflation, it was fear
| of not injecting adequate money into a market after a downturn.
| I don't know what you're talking about.
| neffy wrote:
| It won't stop the inflation. When inflation is due to printing
| money, the only thing that can be done is to sit back and wait
| for it to work it's way through the system. All raising
| interest rates would do is trigger a rerun of the Savings and
| Loan Crisis, as the huge quantity of long term, fixed rate, low
| interest rate loans, is suddenly devalued by short term, high
| interest rate loans. (Which is probably going to happen anyway,
| because Central Bank control over interest rates can be more
| than slightly illusionary at times like this. (Lenders can work
| out inflationary devaluation rates just as well as anybody else
| can.)
|
| 2008 was a very different scenario, the money that was printed
| then was forced into a narrow loop within the financial system
| and just used to sanitise a lot of bad debt away from the
| banking system.
|
| In some sense, the eventual logic of the last 20 years of
| massive increases in the total amount of debt circulating, due
| to loan securitisation, was that that debt would have to be
| devalued to make it repayable. And here we are.
| XIVMagnus wrote:
| I appreciate you taking the time to explain why it wouldn't
| stop inflation! Thanks a lot!
| golemotron wrote:
| What do you make of the rumors that the Fed will start to
| hike interest rates next year?
| trcarney wrote:
| They won't, there will be too much political pressure for
| the president with the mid term elections coming for the
| fed to take the risk of raising rates. If they want to
| raise rates, they will do it in 2023 so the current regime
| can blame the fall out on, I'm assuming, the newly elected
| Republican Congress.
|
| I'm assuming the next cycle will be a huge win for
| Republicans for two reasons.
|
| 1) Things we saw in this last election. For example, a
| truck driver won in New Jersey against their senate
| president with a campaign budget of $153
|
| 2) Joe Biden's approval rating the the the high to mid 20's
| sharken wrote:
| It's interesting how the unpopular decisions are pushed
| back, but i think that's an accurate assessment of what
| will happen.
|
| Biden have just dipped below 40% approval rate and has a
| lot on his plate with the texan abortion law:
|
| https://fivethirtyeight.com/features/texass-abortion-law-
| is-...
| voisin wrote:
| > When inflation is due to printing money, the only thing
| that can be done is to sit back and wait for it to work it's
| way through the system.
|
| Source? This doesn't seem right to me at all.
| samspenc wrote:
| I suspect there is no source for this, but OP is just
| summarizing what the Fed is hoping will happen -- basically
| they have printed too much money but they don't want to
| raise interest rates either, so they are just going to sit
| back and wait for the excess money to flow through the
| system.
| [deleted]
| jonnycomputer wrote:
| https://econbrowser.com/archives/2021/11/so-you-want-to-
| be-a...
| jyounker wrote:
| Inflation in our circumstances isn't due to an increase in
| the money supply. Here's why:
|
| * Aggregate demands isn't too much different from before the
| pandemic. * Demand for services has fallen into the toilet. *
| Demand for goods has gone through the roof.
|
| This massive reallocation of resources from one portion of
| the economy to another has created a situation where demand
| for goods far outstrips supply. Therefore we have inflation.
| (Increases in food prices are caused congestion in the labor
| market.)
|
| This is not about US economic policy. You can see this by
| looking at inflation rates in Europe (and specifically
| Germany). These countries have very different economic
| policies than the US, but their inflation rates pretty much
| track what's happening in US. Therefore it is a common effect
| driving inflation in both places.
| anm89 wrote:
| I disagree with this. Powell could blow up the entire economy
| in about 5 seconds if he wanted to by saying rates will be 4%
| in June and inflation would be done tomorrow. Housing would
| tank, the stock market would tank, unemployment would sky
| rocket, wage growth would immediately stop and probably
| revert a bit. Inflation could have some ups and downs from
| there but I don't think it would average above 2.
|
| The problem is we can't raise rates without blowing up the
| economy, not that it wouldn't stop inflation. It doesn't
| matter how much money is in the system if you nuke velocity
| back to near zero.
|
| I'm talking in the medium term here. Because the response to
| this is in my mind literally a 10-20 trillion dollar stimulus
| package. THEN we will see inflation.
| unyttigfjelltol wrote:
| We're assuming the lever of markedly higher interest rates
| over a long period of time, generates in this tremendously
| complex economic machine, the output of lower consumer
| inflation. I'm not sure we'll see that lever pulled anytime
| soon, and if we do, I'm not confident it will work
| precisely as you describe.
|
| Asset price inflation will reverse. But that wasn't
| trickling back to consumer inflation anyway.
|
| Think of it this way. If you had 10x your annual salary to
| store somewhere, and the values of traditional stores of
| wealth (e.g., stocks, bonds, and real estate) were
| seriously stuck in reverse for the foreseeable future,
| where would you stash your value? Sardines? Bottles of
| wine?
|
| We forget how young modern finance is, basically since the
| 1970s. For the first 10 years of that era, both interest
| rates and consumer inflation increased in tandem. We've
| built a narrative around that correlation, but what if that
| narrative is incomplete?
| anm89 wrote:
| Because half of US companies and the US government itself as
| long as basically every pension and retirement fund are levered
| up either directly or indirectly to their eyeballs in cheap
| debt.
|
| Our entire system would quickly be insolvent at a rate that
| would have seemed low 20 years ago.
| pjc50 wrote:
| Well, they've written their reasons down:
| https://www.cnbc.com/2021/10/19/federal-reserve-powells-5-ke...
|
| Basically they can only control inflation in the future, and
| they believe the inflation we've just seen is a result of the
| one-off of the pandemic response. Given that the interest rate
| mechanism affects inflation by increasing unemployment and
| harming the economy, they don't want to do that until it's
| necessary.
|
| (I should note that it's theoretically possible to do inflation
| control by _fiscal_ policy, i.e. mop up some of the spare money
| by taxation, but that 's obviously not going to happen)
| dantheman wrote:
| Probably better to just reduce government spending than
| increase taxes.
| wbsss4412 wrote:
| Do you believe it is ever proper to raise taxes?
|
| I can't help but assume that this is a fairy dogmatic,
| rather than a nuanced response.
| throw0101a wrote:
| > I would love to understand why the fed hasn't increased
| interest rates to counter the rapid increase of inflation..?
|
| Will increased interest rates unclog ports and reduce
| transportation costs? Will it reduce gas prices? Will it shift
| spending from goods to services?
|
| It is necessary to look at the components of the CPI to see
| where the increases came from instead of looking at just the
| headlines.
| CrimpCity wrote:
| My understanding is that increasing interest rates would tame
| inflation however there will be a slight recession or dip since
| prices will fall and given the upcoming elections the powers
| that be want a VERY gradual uptick with minimal economic
| fallout. You're damned if you do and damned if you don't.
| myth_drannon wrote:
| Housing and Stock market bubbles will implode.
| voxadam wrote:
| If they're bubbles aren't they going to implode regardless?
| xwdv wrote:
| Bubbles don't have to implode. They can just reach a point
| where there's a long consolidation and things are sideways
| until reality fully rationalizes the bubble and it shrinks.
|
| This happens all the time with stocks. A stock could get
| very bubbly and reach an insane valuation to the point
| people think it will pop! But then it never does, instead
| it just stops rising and the underlying company eventually
| catches up to the valuation, until people think it's a good
| buy again and start pumping the price even higher to the
| next leg up. Eventually the stock can never truly pop and
| go back to the pre-bubble levels because in the time that
| has passed the company actually did become more valuable.
| sleepysysadmin wrote:
| >I would love to understand why the fed hasn't increased
| interest rates to counter the rapid increase of inflation..?
|
| Collapse of the underlying assets that they hold. Bailing out
| the housing market during the pandemic means the fed holds lots
| of housing market. The theory is that they will let the assets
| mature and then pull the money back out to come back to a
| balance. I'll tell you now, if you believe that's about to
| happen I've got a bridge to sell you. The US still hadn't done
| this the day before covid started. Covid is far worse.
|
| >I remember learning some basic economics in 2019 about how the
| U.S. learned a valuable lesson from 2008.
|
| The irony is that the financial crisis at least help the USA
| today. Compare this to other countries like Canada and we are
| far worse off than the USA during the financial crisis.
|
| >How they will never make the same mistakes of letting
| inflation go unchecked because they have tools to work against
| it.
|
| Those tools are maxed out.
|
| > Yet inflation has rapidly scaled to 6.8% (reported).
|
| The fed made the claim that they would run inflation hotter
| because they didnt hit target of 2% during covid. The problem?
| They had to act by now. They've past that threshold of coming
| to parity.
|
| >Also, I am keeping supply chain demand in mind but I don't
| think it excuses the fed's decision to not immediately start
| curbing high inflation rates. My guess is that people with
| money are profiting and want to continue profiting until it is
| no longer sustainable.
|
| The metric to look at was GDP. When GDP was 6.7%, inflation was
| at 5.4% or so. The big problem is that gdp dropped to 2.1% and
| recession metrics spiked.
|
| If the fed increases rates while gdp is dropping. recession is
| certain. It's too late for them to undo what they did bailing
| out the housing market. It would seem counterproductive to
| spend all this money to prevent housing from crashing just to
| let it crash anyway.
|
| So we're stuck. Inflation is going sky high. It looks to be
| about 40% locked in right now over the next few years.
|
| You thought minimum wage wasnt keeping up? This is literally
| everyone except the rich getting much poorer soon.
| long_time_gone wrote:
| Other data points worth noting:
|
| - Wages in the US increased 9.8% in October of 2021 over the
| same month in the previous year.
| https://tradingeconomics.com/united-states/wage-growth
|
| - The Estimate for Q4 GDP growth is 8.7%.
| https://www.atlantafed.org/cqer/research/gdpnow
| greedo wrote:
| Wait, you're predicting 40% inflation in the US over the next
| few years?
| hermitdev wrote:
| Not the person you're responding to, but 6.8% compounded
| over 4 years is 30%, at 5 years, you're at 39%...
| greedo wrote:
| Yes, but that's not what the parent was saying. They were
| clearly implying 40% YoY, which is beyond even zero hedge
| nonsense.
| XIVMagnus wrote:
| Thanks a lot for the explanation! I greatly appreciate you
| taking the time to break things down for me.
| sleepysysadmin wrote:
| >Thanks a lot for the explanation! I greatly appreciate you
| taking the time to break things down for me.
|
| It's a super complex issue that even the Fed probably has
| yet to understand. So I certainly don't as well. Many
| consequences could happen instead.
|
| Flipside, what just happened? The government effectively
| owns a huge portion of land again. Sure someone else is
| holding the title but really the government owns it. The
| banks/funds sold it to the government because they know
| they dont want to hold it.
|
| What does communism look like? The government owns
| everything.
| drdec wrote:
| > I would love to understand why the fed hasn't increased
| interest rates to counter the rapid increase of inflation..?
|
| One reason is that they are still purchasing assets in order to
| goose the economy. It doesn't make any sense to be revving the
| economy with one hand while tamping it down with the other plus
| the point of the buying is to artificially depress interest
| rates. IIRC at the last meeting they announced that they would
| accelerate the tapering down of asset purchases so that they
| would be done in March.
|
| They also like to move slowly which is why they don't just halt
| the asset purchases and start raising rates. They treat the
| economy with kid gloves so they don't break it (right or wrong,
| for better or for worse, that's how it goes).
| sealthedeal wrote:
| They cant raise interest rates. If they do it will be nominal.
| We have too much debt. If we raise interest rates we will
| bankrupt ourselves. Inflation helps us chip away at the debt .
| [deleted]
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