The global economy is deteriorating. It's time for the Fed to do the right thing: slow down or even better pause its interest rate hikes. It's going too big, too fast.
Only the US government can stop inflation because it’s policies are what caused it. Want to stop inflation? Then it’s necessary to remove the friction in the global economic system. Putin and and covid aren’t the seeds of inflation, the government policy response to them are.
It remains more than worrisome that economists will name the two largest recent disruptions in the worlds economy, COVID and the war in Ukraine, yet not outright advocate for peace as the sane solution. The US knows Ukraine cannot win a war against Russia, and should be facilitating peace, not arming them further. Only peace will bring the stability needed.
Just as the Fed is using the wrong tools to address inflation, the US is using the wrong tools to address the conflict in Europe.
First of all, if you use a picture with you wearing a mask at this stage, then I have a hard time trusting anything you say after it. I'm guessing Claudia has a liberal political bent as many of her points skew to CNN and MSNBC. Putin is the problem? I didn't hear anything about Biden is the problem with tanking US oil growth to overcome anything Putin possibly contributed. I could go on but you get the point.
Very interesting, many thanks. Could you share details of how you constructed the figure on durable consumption based on data from the UMich CSS? Specifically, I guess you use groupings of answers to question DURRN1 (Reasons for saying that now is a good/bad time to buy durable goods), and I would love to be able to replicate your graph. Many thanks.
"Don't want to see the world events that would make it happen."
What if Democrats do well in November? If they do, I'd expect there to be less pressure on the Fed from Washington to keep the foot on the brake.
Surely if there weren't as much political pressure "transitory" and "fiscal solutions" would still be the de jour Fedspeak. These are words they are no longer allowed to utter, but which haven't ceased to truthfully describe the situation.
Would love to hear more from Claudia about the fiscal solutions we need to rapidly address capacity challenges (faster than CHIPS act, Inflation Reduction Act, etc.); e.g. briefly changing the rules that govern certain supply chains, or setting up special contracting facilities to buffer prices.
Largely agree. I wish you had cited TIPS as a strong reason to pause.
Is the Fed making representations to Treasury about creating more, intermediate tenor, TIPS?
Above all, let's hope the Fed does not raise again just becasue it (mistakenly) said it would. Announcing values of policy instrument in advance is always bad.
Let me play devil's advocate for the moment and make an argument I don't actually believe in, but which I could see a somewhat more humane version of Larry Summers making.
The San Francisco Fed chart of 12-month percent change in total U.S. Personal Consumption Expenditures suggests that the *sum* of 'Demand driven' and 'Ambiguous' prices increases is now roughly twice what it was in, say, June 2018. Let's stipulate that what the Federal Reserve Board views as its main weapon against inflation -- raising policy interest rates -- is ineffective against 'Supply driven' price increases. Shouldn't the Fed then "do what it can" to tamp down the kind of price increases against which it thinks it can act?
Only the US government can stop inflation because it’s policies are what caused it. Want to stop inflation? Then it’s necessary to remove the friction in the global economic system. Putin and and covid aren’t the seeds of inflation, the government policy response to them are.
It remains more than worrisome that economists will name the two largest recent disruptions in the worlds economy, COVID and the war in Ukraine, yet not outright advocate for peace as the sane solution. The US knows Ukraine cannot win a war against Russia, and should be facilitating peace, not arming them further. Only peace will bring the stability needed.
Just as the Fed is using the wrong tools to address inflation, the US is using the wrong tools to address the conflict in Europe.
First of all, if you use a picture with you wearing a mask at this stage, then I have a hard time trusting anything you say after it. I'm guessing Claudia has a liberal political bent as many of her points skew to CNN and MSNBC. Putin is the problem? I didn't hear anything about Biden is the problem with tanking US oil growth to overcome anything Putin possibly contributed. I could go on but you get the point.
Very interesting, many thanks. Could you share details of how you constructed the figure on durable consumption based on data from the UMich CSS? Specifically, I guess you use groupings of answers to question DURRN1 (Reasons for saying that now is a good/bad time to buy durable goods), and I would love to be able to replicate your graph. Many thanks.
Only a corporate profit
"Margin squeeze"
By a larger VA share
going to wage labor
Can push real
Labor time
technical.innovation
Pass thru inflation must ve blocked however
By a corpirate level
mark up cap.
"Don't want to see the world events that would make it happen."
What if Democrats do well in November? If they do, I'd expect there to be less pressure on the Fed from Washington to keep the foot on the brake.
Surely if there weren't as much political pressure "transitory" and "fiscal solutions" would still be the de jour Fedspeak. These are words they are no longer allowed to utter, but which haven't ceased to truthfully describe the situation.
Would love to hear more from Claudia about the fiscal solutions we need to rapidly address capacity challenges (faster than CHIPS act, Inflation Reduction Act, etc.); e.g. briefly changing the rules that govern certain supply chains, or setting up special contracting facilities to buffer prices.
The right thing ? according to.....
Largely agree. I wish you had cited TIPS as a strong reason to pause.
Is the Fed making representations to Treasury about creating more, intermediate tenor, TIPS?
Above all, let's hope the Fed does not raise again just becasue it (mistakenly) said it would. Announcing values of policy instrument in advance is always bad.
Let me play devil's advocate for the moment and make an argument I don't actually believe in, but which I could see a somewhat more humane version of Larry Summers making.
The San Francisco Fed chart of 12-month percent change in total U.S. Personal Consumption Expenditures suggests that the *sum* of 'Demand driven' and 'Ambiguous' prices increases is now roughly twice what it was in, say, June 2018. Let's stipulate that what the Federal Reserve Board views as its main weapon against inflation -- raising policy interest rates -- is ineffective against 'Supply driven' price increases. Shouldn't the Fed then "do what it can" to tamp down the kind of price increases against which it thinks it can act?