Everything every president since Ike has promoted has been inflationary. That’s because in a Global Debt Ponzi (AKA GDP) you either inflate or borrow to spend or you die. I’ve always laughed about how most of what we call Gross Domestic Product is actually consumption spending. Yes you heard right. They count going out to eat at a restaurant an act of “production”.
oee
2 years ago
Kevin Warsh is the last person who should be giving advise. He was a the creation of the housing bubble. He was either an idiot for not spotting it or he was complicit in the corruption and did not want do anything about it.
He was insisting that inflation was a problem in…2008.
kiers
2 years ago
Barn door closes after Horse Bolted. Inflation curtailed after cementing bubble valuation……see a pattern here!
JeffD
2 years ago
You forgot to mention that the FHFA raised the conforming loan limit by 18% this month, which is directly and irresponsibly inflationary. Home loans are the largest vehicle for credit expansion.
RonJ
2 years ago
Speaking of Central Banks: “NATO Chief Among Candidates For Top Norwegian Central Bank Position
Also in the running for the central bank position are a number of students and retirees, as well as a bus driver and a baker.”
Tony Bennett
2 years ago
A little more than an hour before FOMC announcement … needless to say Members are on the phone now with their brokers finalizing trades…
it’s a PREREQUISITE for top job at Fed! IF you have the skills to goose-talk your portfolio then you have the skills to lie on TV to conform market expectations…same skillset. By this thinking, Kaplan would’ve made an EXCELLENT Fed chief based on how much insider trading he goose-talked.
Not to go too far out on limb for folks I generally despise, but the primary driver of inflation has been the pandemic, and I don’t blame the Fed for that.
If you wanted to point a finger, you could point it at Biden and Trump, who gave away a trillion bucks and lit the fire….but frankly, I’m not sure my business would have survived without bailouts, and so I’m not so inclined to rant on ether one of them…for that, at least.
I guess with my crystal ball and 20/20 hindsight I’d say that the lockdowns hurt the economy more than they helped save lives…but nobody knew that when COVID hit town.
They may not have in early 2020. But it’s now the end of 2021 so it’s a full 2 years now with NO end in sight. Things still aren’t close to being open like they were in 2019 in about half the states and a large part of the world.
So while you can give them a pass for the first 6 months of 2020, you absolutely can’t give them a pass for the last 18 months. We already knew the death rate and infection rates by that point and they are essentially unchanged. Shutting down the entire world economy has been a massive mistake the past 18 months, one that will be studied by future generations as a ‘what not to do’ case study.
“but the primary driver of inflation has been the pandemic, and I don’t blame the Fed for that.”
…
Say what? I’ll give you the massive fiscal stimulus + loan forbearance + rent moratoriums + supply chain back ups as key drivers, but you have to include Federal Reserve front and center. Since February 2020 Federal Reserve has increased balance sheet nearly $4.5 trillion while allowing extremely loose credit conditions.
They had all of 2021 to nip inflation if they so chose. Instead they stood idly by parroting “transitory”. Chickens came home to roost.
ALL of that…..every bit of it, had EVERYTHING to do with the pandemic, That was the Fed’s rationale for keeping credit eased, and they said so. ALL the stimulus was because of COVID.
Those of you in the Fourth Estate can play the blame game all you want, but I live and work on Main Street. These accommodative policies were generally good for us mom & pops. I am sorry that so much had to go to corporate greedheads…..admittedly they got the lions share. But they always do when bailouts happen.
You are correct that they could have tightened sooner, but then they couldn’t inflate away the debt. They always lie about inflation, which is ALWAYS desired by central banks and their government toadies. I’d say that Mr. Powell is probably fairly still pleased with the way things are working out.
“ALL of that…..every bit of it, had EVERYTHING to do with the pandemic, That was the Fed’s rationale for keeping credit eased, and they said so. ALL the stimulus was because of COVID.”
It all had to do with the government response, not the pandemic. Trump announced HCQ on March 19, noting Dr. Zelenko’s letter.
HCQ was obstructed by the public health agencies not because it didn’t work, but because the public health agency agenda was mass vaccination and HCQ would have obstructed that agenda.
Everyone should watch Joe Rogan’s interview with Dr. McCullough. I posted a clip from it yesterday.
This has been the first time that Main Street has been bailed out along with the nobles and the peasants like it. Now that it has happened once you can’t In the next crisis refuse to bail out Main Street while bailing out the top 1%. Politically it will be everyone or no one. The top 1% have lost their exclusivity when it comes to handouts and that is a very uncomfortable position for them. Sure their net worth has gone up but it is paper wealth and not cash flow wealth. I am still thinking through the implications of it all but I think we have reached a turning point.
In my state they shut down, but then re-opened a month later. The economic director in charge of making that decision is a customer. He got death threats, and his home picketed when he ordered the shut-down. He got death threats, and his home picketed when he re-opened it. People on both sides are crazy. All that said, my business has gone up and down with cases for the last year and a half, until recently. Now there is a case surge, but my business is no longer seeing an effect.
What can I conclude from that? First, that with or without shut-downs, businesses would have been effected. It’s easy to say, if not for the shutdown, business would have been normal, but it’s not true. Second, people are tired of covid, and they are going to do what they are going to do at this point, cases or no cases.
I’m not eating any crow. I’m eating the prime rib the inflation asset multiplier brought me for the last 18 months…..
Full disclosure, my energy portfolio is down 9%. But when the outlook is 5-7 years, it’s just another buying opportunity for real value. Of course I wouldn’t touch the meme stocks or even the 5 last NASDAQ leaders. But Canadian O&G explorers awash in FCF? No problem.
Crows aren’t good to eat but pigeons are delicious.
Tony Bennett
2 years ago
“Inflation is a choice. It’s a choice for which the Fed is chiefly responsible.”
…
Obviously. To anyone with a clue. Which precludes ANYONE in DC. Outside of Manchin not a soul in Washington willing to PUBLICLY call out the Federal Reserve.
Mercy, we had Elizabeth Warren calling on Department of Justice to investigate high price of turkeys prior to Thanksgiving. Pathetic.
KidHorn
2 years ago
I blame the FED for bubbles in the stock/bond/real estate markets, but not the current price inflation. Our economy is supply constrained due to covid hangovers. Not because of a huge increase in demand over pre-covid levels. The FED has been printing since 2007, but we’ve only recently had high price inflation.
Steve_R
2 years ago
John Oliver addresses the 340 million dollar a year, anti Union busting industry, what a hoot. link to youtube.com
People who get rich doing something valuable, whether that be by writing Pagerank or a song; have no more in common with leeches “making money” off their Fed-pumped-up houses and “portfolios”, nor with ambulance chasers shaking down productive others; than they do with common burglars.
The latter dregs, always try insisting the dividing line goes between “the rich” and “the poor.” In some desperate “I’m with those guys” attempt at pretending some illiterate mediocrity like themselves “making money on Wall Street” has anything, whatsoever, in common with Page, Brin and McCartney. While, in reality, the divide goes between those who produce more than they consume/control (aka who put more in than they take out), and those who produce nothing but consume/control a lot. The latter being the ones benefitting from, and making up excuses for, the existence of central banks and their redistribution-via-bubble-blowing.
The old Robber Barons actually produced something. The new Robber Barons are all marketing and accounting. The investor class will eventually run out of other peoples money. The tone arm will be lifted from the phonograph record and the music will stop. People will be scambling for chairs but their won’t be enough for everyone to sit down. Asset sellers will seek cash in a falling market but there will not be enough buyers so asset prices will drop. As always there will be those who try and catch a falling knife and buy the dip: and then it dips more. The Mal-investment in this bubble will hamper real economic growth as usual. People will be forced to live within their means instead of living within their leverage capacity.
How about Zine El Abidine Ben Ali the former dictator of Tunisia who fled relatively early in the Arab Spring.
Jackula
2 years ago
I think maybe a few week wait to see if omicron slows the economy at all then its the panic brakes if it doesn’t. With rents rising 17% and CPI at almost 7% real inflation is well over 10%. Folks are gonna be screaming to remove any and all politicians in control at the federal level. Who is gonna win out? The folks that own the assets who’s prices are inflating? Or the masses that will be crushed by this inflation? I don’t remember Jimmy Carter being a very popular president when this happened last time. I’m not sure this inflationary episode is gonna be all that transitory at this point. The reality is continually inflating asset prices are making wealth inequality dramatically worse, increasing political instability, and completely screwing the capable members of the ascendent generation without familial wealth.
I disagree. Doesn’t seem to be killing people any faster than we’re used to. Just has better transmission and a scarier name.
Time will tell…
Casual_Observer2020
2 years ago
By the way Warsh doesn’t realize the system would have crashed if the Fed didn’t keep the bond market alive. What exactly does he think would have transpired with the dollar if half the buyers didn’t show up to the bond auction. I’ve been saying for nearly a decade we are Japan. Monetization is the only way forward. But none of this started in 2020. It started down this path long before then. You could argue it was in 2009 when the Fed expanded its balance sheet permanently as the buyer of last resort for all kinds of assets. The clansing cannot occur because the crises would be far worse without higher asset prices even at the expense of some inflation.
“By the way Warsh doesn’t realize the system would have crashed if the Fed didn’t keep the bond market alive.”
…
Poppycock.
The bulk of my financial paper has been in the long bond … for years. You have it completely backwards. Federal Reserve propping up the stock market. Not the bond market.
They would have had to raise interest rates on the bonds to attract buyers. This would have benefited savers rather than speculators. It would have created an investment alternative to stocks and real estate.
Casual_Observer2020
2 years ago
Of course the year over year numbers are ugly. Inflation was baked I’m after covid relief and PPP were passed in 2020. The Fed went overboard to prevent another deflationary crash like 2009. That would have been far worse to deal with. One or two rate hikes is all the Fed needs to do in 2022 to cool off inflation. The job market is not weak. I agree the Fed went overboard this time and acted too quickly if anything. The problems started before 2019 though in the corporate bond market. The last time the Fed tried to remove the punch bowl in December 2017 or 2018 the market went south big time. The Fed has enabled these traders to drive the policy. So it makes you wonder who is really in charge.
It shocks me how CHEAP the pols are. You can buy the SENATE of a $23 Trillion dollar economy, for the 4 year term of ANY prez, for…..$300mn (51 senator from the majority party x $6mn each for 4 year term, those boys are “YOURS” to play with!).
$300 million and you get a block on prez impeachments, a block on legislation, a direct hand in which judges get jobs, international treaties, how great is Murica!
TexasTim65
2 years ago
We’ve arrived at the finger pointing stage. This is also known as stage 2 (Anger) in the Kubler-Ross 5 stages of grief (over letting the inflation genie out of the bottle).
The show is just getting started so I hope everyone has their plans in place because stage 3-5 is gonna be bad.
When you can buy a senator for 100k or less, the rich are in charge.