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The INFLATION Thread, aka “The Putin Price Hike” (4 Viewers)
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The Commish
Footballguy
Tough to take seriously comments like this when there is exactly ONE President in my lifetime who dumped trillions of dollars of deficit spending into "the best economy ever", printing of close to 20% of all our money in a single year and tariffs that did nothing but throw fuel on the "inflation bonfire" all during one term.
As for the migrant comments, ok? Wasn't talking about immigration.
Stoneworker
Footballguy
No. What @shadrapsaid is correct. Attached is the M2 money supply proving it.
Trump's money printing binge coincided exactly with the pandemic, not "the best economy ever." Each month of Biden's presidency has already surpassed Trump's highest month.
There is a fourth (and potentially recurring) stimulus already being petitioned for, plus $4 trillion in new packages with Infrastructure and Families Act.
So it is 100% true that Biden's administration has taken money printing to a new level.
https://tradingeconomics.com/united-states/money-supply-m2
Sand
Footballguy
We've already seen what a national UBI results in - a massive labor shortage. And an idle hands problem. Crime is through the roof.
The answer is to print more and give out more? Unreal.
The Commish
Footballguy
My main point was no President has ever dumped those three things on the economy over a single term. You conflate the deficit spending tax breaks in 2018 with the printing of money in 2020. He had to print significantly more money in 2020 because of those breaks. And we were told over and over and over on this very forum that period was "the best economy ever" which is exactly why I put it in quotes. I don't particularly agree and consistently pointed to a significant recession in the 2022-24 range because of it (that was before the pandemic though), but that's what we're told here. If you want to argue that the printing was necessary because of the pandemic, I'd agree much like I'd agree that we need to print money to pay for the infrastructure plans we so desperately need. What I won't agree with is the spending prior to that which had no real impact on anything other than lining the pockets of companies and the super rich. And I won't agree that the tariffs are helping this country in any meaningful way. Both those are a huge burden to this country and magnified greatly when strange events like this pandemic come to our doorstep and we aren't close to seeing the full impact of either of those choices yet IMO. There is more to come. It's just that someone else is having to deal with it.
Stoneworker
Footballguy
Don't disagree the tax breaks were a bad idea, but the modern era of money printing really started with the failure of Obama/Boehner to reach a grand bargain, and/or Bowles-Simpson.
From that point forward each successive administration has one-upped the previous one down the path of high inflation, currency devaluation, and eventual consequences of massive monetary reset. It's a foregone conclusion.
Stoneworker
Footballguy
Good article from Axios on GOP memo to House members tying Biden to inflation and comparing to Carter for purposes of 2022 midterms...
https://www.axios.com/house-republicans-memo-inflation-biden-economy-661449b2-6bae-4e00-86bc-77ed8e373291.html
https://www.axios.com/house-republicans-memo-inflation-biden-economy-661449b2-6bae-4e00-86bc-77ed8e373291.html
Godsbrother
Footballguy
Inflation in the 70s began before Carter. I am old enough to remember Gerald Ford's "Whip Inflation Now" slogan quite well.
He wasn't successful.
Godsbrother
Footballguy
Here is a link explaining the economic mess Ford inherited and then passed on to Carter due to the ineffectiveness of "WIN"
https://en.wikipedia.org/wiki/Whip_inflation_now#:~:text=Whip Inflation Now (WIN) was,by U.S. President Gerald Ford.
https://en.wikipedia.org/wiki/Whip_inflation_now#:~:text=Whip Inflation Now (WIN) was,by U.S. President Gerald Ford.
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The Commish
Footballguy
It's like people are forgetting about the tariffs and money printing....not to mention the coming out of a pandemic. But I can absolutely see some people buying what the GOP is trying to sell in that letter....they'll lap it up.
Stoneworker
Footballguy
Ford lost to Carter because he was Nixon's VP, not because of any economic policies.
Carter failed to tame the inflation he inherited, and in 1980 the voters punished him for it. They didn't care that Carter didn't cause it, nor that he actually was the one who appointed Volcker as Fed Chairman (who ultimately tamed inflation under Reagan).
In 2022 the majority of voters won't give a hoot about the decades-long chain of cause and effects. Only that inflation will have been eating in their pocketbooks for almost two years, and whether the guy in the Oval Office has solved it.
If not, the Dems will suffer and it will be a big-time winning issue for the GOP come midterm elections. Even moreso in 2024.
Shula-holic
Footballguy
That is true. A lot of that was simply because inflation is tough to reel in once it gets rolling. I think everyone knows we are putting inflationary pressures on our economy today and we really don't yet know what the extent of inflation will be once all the dust settles. My fear is we start something we can't just put back in the box easily. We've been gifted an extremely low inflationary environment for some time now. The bottom line is unless people are your age and older, or at least close to it, they can't remember a time where it was a cause of major concern in our economy and therefore have a pretty carefree attitude about it today. It's hard to recognize it as a problem when you haven't lived with it before.
The Commish
Footballguy
If by fear you mean reality. What we are seeing today started with events that happened a few years ago. Throw on events recently and it's like adding gas to the bonfire.
Shula-holic
Footballguy
Sure, we've had the pressure on ever since the 2007-2008 era. The problem is we never eased off the acceleration. What we are doing today, and proposing to do on magnitudes more, is an escalation of the forces that will come to bear on it. I think had the economy not been so poor from that original time period we would have seen it much earlier. The fact that we didn't shows how bad off the economy really was at that time. The problem is, it's not today and we are turning the spigots on full blast.
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fruity pebbles
Footballguy
Pretty much. Thing about inflation is that it becomes a self fulfilling prophecy. Even if enough people believe high inflation is coming than it will. People start making “future” purchases now in fear that items will get even more expensive in the future thus contributing to the inflationary factors.
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Stoneworker
Footballguy
This.Shula-holic said:
The Fed and the Biden administration is in between a rock and a hard place. If they raise interest rates before the 2022 midterms to tame inflation it will cause a recession and pop the Everything Bubble. Horrible politically. If they continue pumping fiscal stimulus into the economy to help those most affected by inflation, it will only throw more gas on the fire. Also horrible politically.
The genie is out of the bottle. So the Fed/Dems will continue to deny inflation exists and/or cling to the "transitory" narrative to avoid the inevitable and necessary economic reset.
Stoneworker
Footballguy
Yup. That is also rational behavior.fruity pebbles said:
Juxtatarot
Footballguy
Coming out of a pandemic makes a recession extremely unlikely. What quarters before November 2022 are you expecting to be down?
MTskibum
Footballguy
China is taking measures to fight inflation.
https://www.scmp.com/economy/global-economy/article/3134218/china-vows-curb-inflation-risks-tackling-malicious
https://www.scmp.com/economy/global-economy/article/3134218/china-vows-curb-inflation-risks-tackling-malicious
MTskibum
Footballguy
European union is fighting inflation.
https://www.reuters.com/article/eurozone-economy-indicator-idUSL8N2MS2VI
https://www.reuters.com/article/eurozone-economy-indicator-idUSL8N2MS2VI
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MTskibum
Footballguy
If our current inflation was caused by printing money how come it is effecting every major economy in the world and not just the US?
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Stoneworker
Footballguy
Most likely a recession would be event-driven caused by a sharp rise in interest rates either Fed- or market-initiated. Or another 2013-esque taper tantrum popping the massive current asset bubbles.
Exact timing of course impossible to predict so won't fall into that trap. But all the conditions are there within 2-3 years and we got a glimpse earlier this year when the 10-year spiked to almost 2 percent.
With ZIRP the Fed has zero ammunition left to stave off recession like they had with the pandemic or other potential Black Swan events (geopolitical this time?). Only fiscal stimulus and that just pours gas on the inflationary fire.
fruity pebbles
Footballguy
They are printing vast quantities of money as well and the world economy is based off the dollar.
MTskibum
Footballguy
I disagree, I think it is all demand and supply driven.
There is significantly more demand due to people having saved up money over the last year and significantly less supply due to various factors such as chip factory fires, freezing in epoxy production facilities, etc.
MTskibum
Footballguy
It is not just consumers doing the panic buying, corporations are a much larger cause of demand driven inflation.
https://www.bloomberg.com/news/articles/2021-05-17/inflation-rate-2021-and-shortages-companies-panic-buying-as-supplies-run-short
A year ago, as the pandemic ravaged country after country and economies shuddered, consumers were the ones panic-buying. Today, on the rebound, it’s companies furiously trying to stock up.
Mattress producers to car manufacturers to aluminum foil makers are buying more material than they need to survive the breakneck speed at which demand for goods is recovering and assuage that primal fear of running out. The frenzy is pushing supply chains to the brink of seizing up. Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent memory, raising concern that a supercharged global economy will stoke inflation.
https://www.bloomberg.com/news/articles/2021-05-17/inflation-rate-2021-and-shortages-companies-panic-buying-as-supplies-run-short
A year ago, as the pandemic ravaged country after country and economies shuddered, consumers were the ones panic-buying. Today, on the rebound, it’s companies furiously trying to stock up.
Mattress producers to car manufacturers to aluminum foil makers are buying more material than they need to survive the breakneck speed at which demand for goods is recovering and assuage that primal fear of running out. The frenzy is pushing supply chains to the brink of seizing up. Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent memory, raising concern that a supercharged global economy will stoke inflation.
MTskibum
Footballguy
Stoneworker
Footballguy
According to Milton Friedman (and the St. Louis Fed), “Inflation is always and everywhere a monetary phenomenon.” In other words, inflation occurs because there is too much money available to buy the same amount of goods and services produced in the economy.
https://www.stlouisfed.org/on-the-economy/2014/september/what-does-money-velocity-tell-us-about-low-inflation-in-the-us
quick-hands
Footballguy
The need to soak up dollars. Volcker did it with 17% interest rates. We cant do that with a 28 trillion debt. Call off any additional spending.
And we dont want a reset. We do not want a reset. A reset is not something we want.
Letting the dollar lose its reserve currency. Catastrophic. The republic wont survive a reset intact.
Terminalxylem
Footballguy
Not really. While I have a decent idea where you want to assign blame, how do you account for the economic impact and recovery from a once-in-a-lifetime pandemic?
Shula-holic
Footballguy
Terminalxylem
Footballguy
You might surmise I disagree regarding individual impact on climate change, and man’s collective ability to influence climate.
But to be clear, I’m not particularly worried about catastrophic changes to either the economy or climate. And I’m certainly not fearful of starving.
Terminalxylem
Footballguy
Just about anything is possible, but total collapse of the US economy is highly, highly unlikely, I’ll agree.
DocHolliday
Footballguy
Inflation is unavoidable at this point. It’s just a matter of how much. Unfortunately, wages won’t be able to keep up with the inflation either.
E Street Brat
Footballguy
Yep.Jayrod said:
It's the same bailout every time, The numbers just keep getting bigger.
fruity pebbles
Footballguy
They never do. The wealthy love inflation.DocHolliday said:
The devastation of interest rates being at even 5% would be something we haven't seen in our lifetime. So many homeowners are stretched beyond belief
Caveman33
Footballguy
Who exactly can't afford high speed internet?
A few days ago I went to a chill spot in the park to eat my (purchased) lunch. There was a guy already in the spot. Our backpacks were about equal, his jeans were in better shape than my khakis and his iphone and tablet were nicer than my free phone. Aside from him missing more teeth, I appeared to be the homeless one. He said he had a free place nearby but he didn't like "the energy there" so he was planning to return to living on the street.
The working poor who don't take advantage of all the government programs have it worse than anyone, in my opinion. But even among these folks, we can probably find discretionary spending that could have covered high speed internet.
I'm rooting for inflation to cause major disruption to our economy and the status quo. I want it to occur while I am still able to perform labor, as that sort of work will always add value. Most people want to work, we derive satisfaction and fulfillment out of staying active. But as more people like myself become familiar with benefits, there will be more who decide to make it a permanent way of life.
I think there have been studies showing this selfish attitude increasing in society. I see it in every group, rich or poor. 40% of soldiers who served after 2001 are claiming disability. The VA spends more on these monthly disability checks than they do on actual medical care, and the VA system is clogged with vets exaggerating their ailments in order to increase their disability percentage. The military has required classes on maximizing your percentage. Everyone is in on the scam and encourages everyone else to get theirs as well. But some of those same people will be quick to negatively judge welfare recipients.
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Sand
Footballguy
In this case, however, through the Fed and through policy, we have decided that inflation is the answer. There's no other way to put it. From ZIRP in Obama's terms to the massive bailout bills (and the continued ZIRP now, despite all evidence that we need to deflate), we see this policy going forward.
The govt. mouthpieces may scream about wage inequality, wealth inequality, and massively increasing cost of living, but they have instituted it and fostered it.
So: Become an owner, not a renter.
McBokonon
Footballguy
The Fed Isn’t Printing As Much Money As You Think
Interesting read and something I didn’t know. The summary discusses this scary chart that I mainly see crypto hawks and “conservatives” who suddenly started caring about inflation again in November share all over social media.
Basically, a large part of that sudden upward move was when the Fed removed the six withdrawal limit on savings accounts when Covid hit. Savings accounts are measured using M2 while checking and other accounts are measured with M1 (which this graphic shows.) When the six withdrawal limit was removed, savings accounts suddenly became “checking” accounts and were then measured using M1, which is part of that illustrated explosion upwards.
I’m not saying this doesn’t mean there’s no inflation risk so save your strawman. Just sharing something that can explain a large (80%) portion of this graphic/data.
Interesting read and something I didn’t know. The summary discusses this scary chart that I mainly see crypto hawks and “conservatives” who suddenly started caring about inflation again in November share all over social media.
Basically, a large part of that sudden upward move was when the Fed removed the six withdrawal limit on savings accounts when Covid hit. Savings accounts are measured using M2 while checking and other accounts are measured with M1 (which this graphic shows.) When the six withdrawal limit was removed, savings accounts suddenly became “checking” accounts and were then measured using M1, which is part of that illustrated explosion upwards.
I’m not saying this doesn’t mean there’s no inflation risk so save your strawman. Just sharing something that can explain a large (80%) portion of this graphic/data.
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Stoneworker
Footballguy
So what? Just use M2. You don't need to be a "conservative suddenly starting to care about inflation" to see it still exploded higher and doesn't change the conclusions one bit.
https://tradingeconomics.com/united-states/money-supply-m2
Shula-holic
Footballguy
Bingo. But when I was in high school, college, just out of college, 5% wasn't some astronomical number. It says a lot about where we are and how in the ditch our economy truly was following the financial crisis that inflation was held off this long with all the stimulus and artificially low rates we have had. We've been pretty fortunate so far, I fear that clock is running out.
Sand
Footballguy
Lots of yakking, but not much talk about what really matters. Here's what really matters:
Value of Dollar Plunging and it's Permanent. And we have folks in power who want to add 6T to drive this down even further. Boggles the mind.
Demand is spiking because of the reopening plus supply chains are stretched or disrupted. Of course there is inflation. The question is whether it is transitory like the Fed claims (or wishes). Who knows? I’ll add one other thought. The national debt has been spiraling (at $28 trillion now) but few are talking about that either. All of this feels like a time bomb.
Stoneworker
Footballguy
Lol. Can't believe a thing Powell says. He's already walking back his pound-the-fist "inflation is transitory!" BS and exchanging it for watered-down mumbo jumbo.
Quote today from the House hearing (0:42)...
I will say that these [inflation] effects have been...um....larger than we expected...and they may turn out to be.....um......more persistent than we expected.
https://www.youtube.com/watch?v=LjX070mhTBE
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Of course. Anyone with half a brain could see that. These guys are too smart for that. They knew all along what was coming. Didn’t want to jeopardize the $3 Trillion Dem Pork Bill aka “Infrastructure”
It's almost as if when you don't punish questionable and outright criminal behavior, but instead reward it with bonuses and bailouts, you get more of it?
Nonsense. I worked for one of those companies that was “bailed out”. It was a loan from the Government that was paid back in full with interest. And it kept the entire financial system in order. There are a lot of debatable things, but TARP was undeniably a huge success so matter how you look at it. The Government made money on it.
Shula-holic
Footballguy
That's admitting what anyone paying attention should already suspect. I think being able to characterize it as transitory is wishful thinking and honestly I wish he would get his wish. I'm afraid that we won't, we've put all kinds of stimulus in over the past 13 years or so and it's amazing it's taken this long. Hope in the end of my opinion is wrong because we will all be much better off if so.
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