Inflation Woes: Dark Powell Rises

[Joij21]

Well it looks like inflation is persistent now. So much for people's previous guestimates of it being transitory. Jerome Powell of the Fed is now raising interest rates, and other central banks are following suit in order to achieve currency parity with the dollar to offset economic woes via global trade inflated commodity prices.

Personally with inflation over 8% I believe he must raise the interest rate to 10%. Don't care if it causes a major recession, this will come back to bite us on the butt harder if the the whole system is not quashed now. Crushing the market is the only way to increase efficiency and get business to orient itself away from the irresponsible quick and easy money generating methods of the past ten years. It's time people feel the burn and get back to hard work, employment, and increased productivity. No more cutting corners, no more embezzlement, no more COVID handout scams, no more crypto, no more nepotism, no more insider ponzi schemes, no more work from home, no more nfts, no more free coffee and perks at the office, no more company payed vacations. Learn to make money the old fashioned way, strong work ethic, no debts.

 

[Joij21]

 

[stinkubus]

What exactly do you think is going to happen? Americans are not going to volunteer for reindustrialization.

Hiking rates has nothing to do with getting people back to "real" work, anyway. The Fed takes these actions because inflation is most harmful those who already hold large quantities of cash and own lots of debt, i.e. the banks.

 

[Joij21]

What exactly do you think is going to happen? Americans are not going to volunteer for reindustrialization.

Hiking rates has nothing to do with getting people back to "real" work, anyway. The Fed takes these actions because inflation is most harmful those who already hold large quantities of cash and own lots of debt, i.e. the banks.

I never said anything about industrialization nor do I think that's the goal. But I think what he is doing is getting rid of the waste and ineffectiveness within the economy. Basically killing off weak startups and those with weak financials.

Inflation is harmful for regular people too. Believe it or not inflation is actually good for banks, it allows more money to slosh around and manipulate for profit. A lower interest rate is also more profitable for the banks because then they are not obligated to give as much of a portion of their gains back to the Fed.

Nevertheless I don't believe he'll go too far, eventually collateral damage will build up and the interest rate will be paused at 2.5%-3%. Recession is inevitable.

 

[Kaitzilla]

As far as I've heard 5% is the upper limit.

Any further tightening can be done by shrinking the balance sheet at a faster pace.

 

[Joij21]

Actually maybe it will be 5%. I just checked and we're already at 3% now. So unless he holds right now (which I doubt) that will probably be the target.

It could change if he gets backlash from either the Biden administration or Congress. Not sure if that will exactly happen but midterms are this November so it's not like it won't happen. I think Elizabeth Warren has already criticized Powell.

 

[Aiken_Drumn]

It's all about Dark Brandon now. He holds the keys.

 

[innonimatu]

What exactly do you think is going to happen? Americans are not going to volunteer for reindustrialization.

Hiking rates has nothing to do with getting people back to "real" work, anyway. The Fed takes these actions because inflation is most harmful those who already hold large quantities of cash and own lots of debt, i.e. the banks.

Very true.
For the US or Western Europe (or Germany in particular for that matter, now that the US blew its cheap energy lifelink) to re-industrialize it would need either to abandon foreign trade and go FULL protectionist, or to have a competitive cost advantage. To have that advantage it would need to "euthanize" its financial sector sucking rents from everyone. Reduce the cost of housing, education, health care which all have been financialized. And Europe is further at a disadvantage in that (unlike the US) it lacks native cheap energy resources. Going back to coal is possible for some countries, and they're trying to, but that is not the cheapest energy.

There is no industrial policy. No political willingness to kill the financial rentiers. Instead governments remain fully owned by those interests.

Interest rate hikes will not end inflation. Wages can't go firther down because "the economy" already depends on debt and interst rate hikes hamper that.- In my guess central bankers in Europe are desperate to keep rates low, but stuck in that the Federal Reserve isn't reversing yet. And won't for a few more months. The spanish clown who pretends to talk for "Europe" has been so scared as to dare try to blame the US policy over the coming disaster in Europe. When finally exposed publicly in the inescapable consequences of their long years of incompetence and short-sighted selfishness this upper crust of crap that rules us all will fall back on attacking each other.

 

[Zardnaar]

Very true.
For the US or Western Europe (or Germany in particular for that matter, now that the US blew its cheap energy lifelink) to re-industrialize it would need either to abandon foreign trade and go FULL protectionist, or to have a competitive cost advantage. To have that advantage it would need to "euthanize" its financial sector sucking rents from everyone. Reduce the cost of housing, education, health care which all have been fictionalized. And Europe is further at a disadvantage in that (unlike the US) it lacks native cheap energy resources. Going back to coal is possible for some countries, and they're trying to, but that is not the cheapest energy.

There is no industrial policy. No political willingness to kill the financial rentiers. Instead governments remain fully owned by those interests.

Interest rate hikes will not end inflation. Wages can't go firther down because "the economy" already depends on debt and interst rate hikes hamper that.- In my guess central bankers in Europe are desperate to keep rates low, but stuck in that the Federal Reserve isn't reversing yet. And won't for a few more months. The spanish clown who pretends to talk for "Europe" has been so scared as to dare try to blame the US policy over the coming disaster in Europe. When finally exposed publicly in the inescapable consequences of their long years of incompetence and short-sighted selfishness this upper crust of crap that rules us all will fall back on attacking each other.

You could sell whatever you take for good money.

Your predictions so far have had a fairly miserable success rate.

 

[innonimatu]

I'm not good on the timing, always assume reason will impose itself quicker than it does. The outcomes though...

How did the "liberation" of Libya turn out?
Is "Assad gone"?
And who is actually running out of weapons in this current stupid war?
Did "the vaccines" made you immune to covid?

People will believe what they are told to believe. And then pretend to forget all about it when later - much later - it turns out all wrong.


On the inflation issue, this guy has a good rant I'm going to quote. I know that opposing interest rate hikes is for him a self-serving move by a professional financial leech who is looking at redced gains with higher interest rades causing asset prices to fall. But he does happen to be exactly right on this piece. It's a war on labour, to put down the uppity plebs who were showing a reduction in deference to their betters... to maintain their social position of power over those below the upper class are quite willing to take considerable paper losses. And the manegarial classes are even willing to suffer some little hardships. Not everyone in those groups but most, they do act as Polanyi explained long ago.

They cannot say any of these things out loud in plain terms. But what they want, what they need, is a horsehockytier situation for the bottom of the income distribution in order to preserve the advantages of the professional and managerial classes who ran the pre-pandemic establishment. It’s not pleasant to admit out loud. No politician or authority figure wants this included in the talking points. It’s not exactly an applause line.
We have to fight the War on Inflation, the story goes, because it is going to hurt the lower income people in our society most. Never mind that the lower income people are actually the biggest beneficiaries of the current labor shortage.

 

[Ziggy Stardust]

I'm not good on the timing, always assume reason will impose itself quicker than it does. The outcomes though...

Did "the vaccines" made you immune to covid?

People will believe what they are told to believe. And then pretend to forget all about it when later - much later - it turns out all wrong.

 

[Gorbles]

Did "the vaccines" made you immune to covid?

Did dinosaurs actually fly around in planes?

(the joke here is I'm questioning a claim that wasn't ever made)

 

[El_Machinae]

The earliest immunity talk that I heard was from people who were suggesting catching the disease on purpose, isolating, and then being immune for life. This was well before the Zeitgeist started distinguishing immunity from resistance in the common parlance. It's very easy to search my previous posts for herd immunity, to see at least what I was thinking about. Of course, if you quote me, I will nitpick in order to show that I've been 100% right the whole time. So it's more for my self reflection

When I look back through my postings, I definitely see hope of herd immunity being possible through vaccination. And I definitely have posts warning people about not being too optimistic about slowing the spread sufficiently through vaccination, where it switched from being a community benefit to more of a personal benefit. We clung to optimism (and thus justifying mandates). I still don't think that zero covid was possible, but I also didn't perceive a sufficient tonal shift in people when the vaccines were more disappointing than we expected.

A person doesn't need to have a good success rate to make useful predictions, because having a different viewpoint allows people to pivot against those predictions. I think the cleanest example is economists making predictions, wherein making the prediction they allow people to proactively respond against it, and thus neutralize it. People's tolerance for type 1 and type 2 errors amongst their political allies versus political opponents is going to be function of bias. Your own Henny Pennies get endless coddling.

Plus when your predictions turn out to be wrong, you can either rewrite history in your own mind so that you were right the whole time, or look at the counterpoints to see if they were more correct than you on some instances.

 

[Gorbles]

I'm pretty sure "hoping for herd immunity" reads differently to "vaccines make you immune", but that could just be on me.

 

[Hygro]

Well it looks like inflation is persistent now. So much for people's previous guestimates of it being transitory. Jerome Powell of the Fed is now raising interest rates, and other central banks are following suit in order to achieve currency parity with the dollar to offset economic woes via global trade inflated commodity prices.

Personally with inflation over 8% I believe he must raise the interest rate to 10%. Don't care if it causes a major recession, this will come back to bite us on the butt harder if the the whole system is not quashed now. Crushing the market is the only way to increase efficiency and get business to orient itself away from the irresponsible quick and easy money generating methods of the past ten years. It's time people feel the burn and get back to hard work, employment, and increased productivity. No more cutting corners, no more embezzlement, no more COVID handout scams, no more crypto, no more nepotism, no more insider ponzi schemes, no more work from home, no more nfts, no more free coffee and perks at the office, no more company payed vacations. Learn to make money the old fashioned way, strong work ethic, no debts.

This is the same mindset that gave us the Great Depression for no reason.

You're upset at crypto, anxious at inflation, so you think increasing our collective poverty more through greater unemployment is better than the amount of poverty reflected (not caused) by the inflation. Let's destroy peoples livelihoods and crush peoples dreams to get a number that doesn't matter under control. Inflation at 10%, wages up 9%, or inflation at 3%, wages up 0%... if you kept your job. You're insane.

The poverty causing the inflation won't get fixed by stopping the inflation with high interest rates. Anyone been reading my posts knows that a "transitory" supply shock inflation episode takes a couple years to unwind, after the supply shock has ended.

Until China comes online or we build their industrial capacity back here in the USA, the supply shock continues.

Furthermore, every person you unemploy reduces aggregate supply.


here's wage growth against inflation (up like 20% since pre pandemic btw)



You would send that number negative to kill inflation, even though the fear of that number being negative is why inflation makes you anxious.

 

[El_Machinae]

You seriously need to stop touting average wage increases due to inflation, especially if they're minor. I know the counterfactual is hypothetical unemployment, but when everyone is being affected by inflation and only some people are getting wage increases, you're ignoring a lot of the people being hurt. Plus, of course, everyone whose savings strategy depended on lower inflation.

Of course, there's no way a 'supply shock' can be anything but hard on people. Like, with less stuff to go around ... there's going to be pain. But we also need people/businesses to be declaring bankruptcy or else this top-down money is only moving wealth upwards.

 

[Hygro]

The real wage gains are due to increased bargaining power with unemployment below 4%. People in Portland are making double what they were 10 years ago for retail jobs. You can get $20/hour in places that used to be paying min wage. This only happens because of a tight labor market.

A bunch of you are confusing inflation with more money. Inflation isn't causing the wage increases, and the wage increases aren't causing the inflation.

"Ignoring the people being hurt"... the /r/antiwork crowd doesn't complain about inflation, /r/wallstreetbets thinks it's a world ending crisis.

Who are these people "everyone whose savings strategy depended on lower inflation"? Fixed income retirees? That's not a saving strategy, and they're rising with prices.

Meanwhile unemployment hurts all the same people but more. In addition to the acute pain of those who have no income/only unemployment insurance, the pain is spread out:
a) total incomes are down so earnings are down so incomes are down etc.
b) when someone doesn't have a job and they... don't just die, someone is footing their bill.

Furthermore, a recession to end supply side inflation means you don't get to spend your way out of it or you end up where you started, so we're looking at a human toll worse than what we're used to in recession. We're looking at a recession absent stimulus, which, if the goal is to crush inflation, must be maintained until the supply returns, which requires investment, which is inflationary.

None of this makes sense and "think of the savers"... it's all a lie. Gas is hitting over $7 and traffic is just as bad, no one cares. For the majority the inflation itself is pure numbers anxiety and not knowing the boundaries of macroeconomic phenomena.

 

[El_Machinae]

"Mac, you're dumb. The problem you're describing is all in your head."
No, it's real people that I know. Mollifying them with counterfactuals just doesn't work. I do have to spend more time untangling the inflationary Central Bank policies from the Global Supply Shock, I'll admit.


"I've seen a 10% decrease in my effective wage because of inflation?"
"Okay, but be grateful that you have a job and if you just had a bit more hustle, you could negotiate a better wage! Just get more hustle!"
I might as well tell people just to get a better job if minimum wage is too low. Even if it's true, it ignores that the people least capable of it are also the most likely to be the ones suffering.


As I said, I think we overly trumpet the benefits of high inflation without acknowledging that there are real effects felt at the regressive level. Heck, even COLA bumps for those on government programs occur well-after the price increase. I know declaring 'a few months' as "well-after", but poverty and lost spending power is felt day-to-day. If the COLA brings you back to even, then you're worse off in the months that you had less spending power.

For the majority the inflation itself is pure numbers anxiety and not knowing the boundaries of macroeconomic phenomena.

Wut. No, it's the stress of rebalancing your basket of goods to even somewhat approximate the official numbers while literally being able to afford less. WTF, man. Are the 'majority' of people in your life not actually living near the edge of their incomes with limited bargaining power?
No disagreement that this is all about the lack of Goods and Services supplies these days (and requires breaking partisan assumptions), but without retasking people into actually making stuff for other people, any low-productivity mal-employment is just prolonging the problem.

 

[Hygro]

Take joij as the example. This man is willing to be poorer not to have inflation, and his complaint is other people getting rich off crypto.

Here's the other thing, you're talking about "hustle". However, for the first time since the late 90s the numbers are going up passively, and not because of inflation. This started before the pandemic, with unemployment getting close to 3%. Wages are going up because there's a labor shortage. Indeed, the only way wages go up is to maintain a good position for labor to bargain, and low unemployment is the best way to ensure a strong labor position.

The people you are saying won't hustle are the exact type of person most hurt in a high unemployment situation. They need hustle to get a job in scarcity, they don't need hustle now. And if they want pay bumps, now is the only time they won't need hustle.

The irony is, if we crush aggregate demand through unemployment while the supply constraint continues to exist, we're crushing the negotiating power people currently have to have their wages keep up with those prices. So we crush wages, some time goes by, we artificially hold back inflation, but there was still inflation after the crushed wages only this time worse.

The inflation complaints are insane, move this to the appropriate thread.

 

[Joij21]

The inflation complaints are insane, move this to the appropriate thread.

I don't think so. Especially not with the Fed now deliberately saying inflation is a problem and no longer transitory. Are you seriously going to contest a bunch of experts with PHDs?