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.
Correct. And while I’m guessing Claudia is not a supplysider, we can help by making more things (chips, cellphones, drugs, cars, lawn furniture, etc) in this country, like China successfully did the last several decades, increase our energy supplies to match our economic growth (no one can show how all these alternative energies get there, so it has to be more hydrocarbons and nuclear) while accepting the increases in CO2 and slight temp increases that plants and productive agriculture worldwide needs to feed the world. I am optimistic as Americans we must and can do this!
Precisely. It’s complete garbage to blame the excuses. It’s not COVID. COVID was a always a mild flu. It’s shutting the economy down. It’s expanding the money supply in a foolish fashion. It’s the end of another debt-based monetary system in the same manner they always expire (in about the same amount of time as usual). COVID & PUTIN! Please.
Mrs. Sham is in a difficult position. On one hand she is parroting the same talking points the Fed protectionist have been trained to, on the other she is arguing against the Feds moves. She's even gone as far as to make up new mandates like defending Democracy.
There was relatively little "shut down." Most (wasn't there study that said 6/7) of the response to COVID was voluntary behavior. Even public decisions like closing schools (too much and too long) was demand driven.
I think it is important to distinguish what the errors were and where they lay. I would say that public health professionals did not provide individuals and policy makers with the constantly changing information on the epidemiological benefits of different kinds of behaviors/policies that would have permitted said individuals and policy makers to make present value maximizing, net of costs that only the individuals/policy makers (not the CDC), decisions. Even if they had done so, there is no guarantee that the decisions would in fact have been net present value maximizing.
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?
June 2018 policy was still too tight. Both 5 ye and 10 year TIPS were below target and employment was by no stretch of the imagination being maximized.
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.
Correct. And while I’m guessing Claudia is not a supplysider, we can help by making more things (chips, cellphones, drugs, cars, lawn furniture, etc) in this country, like China successfully did the last several decades, increase our energy supplies to match our economic growth (no one can show how all these alternative energies get there, so it has to be more hydrocarbons and nuclear) while accepting the increases in CO2 and slight temp increases that plants and productive agriculture worldwide needs to feed the world. I am optimistic as Americans we must and can do this!
Yes
Precisely. It’s complete garbage to blame the excuses. It’s not COVID. COVID was a always a mild flu. It’s shutting the economy down. It’s expanding the money supply in a foolish fashion. It’s the end of another debt-based monetary system in the same manner they always expire (in about the same amount of time as usual). COVID & PUTIN! Please.
it killed over one million Americans. more than gave their lives in all US wars. it's disgusting what you say.
Lol, right…. Think about it in economist terms. Was it worth the cost? No. The payments continue yet.
I am an American first.
Mrs. Sham is in a difficult position. On one hand she is parroting the same talking points the Fed protectionist have been trained to, on the other she is arguing against the Feds moves. She's even gone as far as to make up new mandates like defending Democracy.
I am not a sham. grow up.
Whatever you say.
Happy you agree.
There was relatively little "shut down." Most (wasn't there study that said 6/7) of the response to COVID was voluntary behavior. Even public decisions like closing schools (too much and too long) was demand driven.
Are you arguing that because the propaganda worked the consequences of the result aren't valid? Mental Jiu Jitsu Black Belt.
I think it is important to distinguish what the errors were and where they lay. I would say that public health professionals did not provide individuals and policy makers with the constantly changing information on the epidemiological benefits of different kinds of behaviors/policies that would have permitted said individuals and policy makers to make present value maximizing, net of costs that only the individuals/policy makers (not the CDC), decisions. Even if they had done so, there is no guarantee that the decisions would in fact have been net present value maximizing.
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.
I defend democracy, as an American.
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?
June 2018 policy was still too tight. Both 5 ye and 10 year TIPS were below target and employment was by no stretch of the imagination being maximized.