This weekend, Joe Weisenthal asked the following question: A year ago, there was a lot of debate about whether Biden’s checks at the start of his administration had caused the inflation. Where do people stand on that right now? My swift reply: In today’s post, I back it up. I pulled together my ‘top ten’ posts. The fiscal relief to families, workers, and small businesses was successful. There was no recession, and inflation is coming back down. We are not out of the woods, but it’s very clear that’s where we are headed. I told you that all along.
I wish Biden’s DOJ would go after private equity’s monopolistic power in the residential real estate market. That would help bring down home prices and rents that is the main inflation problem now.
Sorry that today was awful. I hope tomorrow is much, much better. Please take care of yourself. You're doing an absolutely essential public service with your blog.
I hope that the knowledge that many of us value the education you provide will buoy your spirits at least a little.
Wow, you laid out the case for your views and it is very impressive. The lack of focus on (the ongoing) COVID effect on world economy is bizarre. In my opinion, the societal denial of the threat it still poses, a barely submerged psychic wound, is part of the underlying negative vibe despite the good numbers.
Unfortunately, the "inflation because of stimulus, never do that again" story is now firmly embedded in the minds of most elite pundits, impervious to the facts. All you can do is continue to pound the facts while they pound the table.
Central bank tries to fight Consumer price inflation with placebo 'medicine' of credit inflation. The idea is making loans (home, auto, creditcard etc) expensive so as to attenuate consumer demand in goods & services area & curtail investment (business loans). If we see the big picture, rate hikes is like shifting pain in legs to pain in arms. The real factors behind inflation are complex and still not fully understood though some prominent factors like supply chain disruptions are readily recognizable. The sellers inflation theory also has merits during pandemic disruption when firms collectively saw opportunity to raise prices.
Mainstream macro has instrumental view of their theories. No matter if their theories are absurd, as long as they can be fit into a narrative, they remain valid. I still see people like Noah Smith boasting how 'rate hikes solved the inflation problem'. BTW, Krugman is sincere enough to admit that rate hikes were supposed to solve inflation problem through raising unemployment (which never happened). So mainstream macro's instrumental view has failed once again but still some people are hanging onto it.
Moving onto next macro picture. I am observing how long Fed drags on with higher rates & how it affects the disparity between credit inflation & consumer inflation. If wages stagnate while consumer debt burden rises in high rate environment, how will it affect growth.
You can lead a horse to water but you can't make him drink it. Other economists and especially politicians will stick to their beliefs and hate on the spending that got us out of a recession in the first place its unfortunate but it is what it is. We can use more people like Claudia that will actually stick up for American families and present the facts about the state of the economy and inflation.
Since #ThePowellMemos managed 2 UNDO the Protective Regs of the New Deal, but this time the Oligarchs planned for the TAKEOVER OF THE MEDIA & LOOPHOLES 4 Wall Street, while Main Street is losing more & More businesses, jobs, savings, assets, etc & as MAIN STREET experiences a 1930s style 2ND GREAT DEPRESION! I think you all need some NEW ANALYTICAL TOOLS, cause we Non- investors, think U R full of it!
Great look back at some of your best writings and analysis of the US economy. Congrats!
I wonder if you are planning to do a similar review of the IRA act. Perhaps it is too soon to measure progress and end results because these are longer term investments into infrastructure and clean energy. I remain very curious and consider the IRA to be absolutely crucial to ensuring the U.S.' global leader position. Cheers!
Great Predictions.
My POV, inflation was exaggerated due to corporate greed, not supply chain issues.
Inflation in China and Japan was 2 to 3%, and they also had supply chain issues, but not the West's rapacious lust for profits.
Claudia. You were right. You are right.
1. Please don’t ever stop
2. You need a platform and voice (even more than you have already)
3. Thank you
We need you at the helm.
Corporate profits are still 50 percent higher than pre-Covid. If they would return to “normal”, many prices would come down.
The stimulus worked and was necessary. Your read was right. If people don't appreciate that, it's largely because we can't imagine counterfactuals.
I wish Biden’s DOJ would go after private equity’s monopolistic power in the residential real estate market. That would help bring down home prices and rents that is the main inflation problem now.
Good job Claudia. I’ve enjoyed reading your posts. Keep it up!
Sorry that today was awful. I hope tomorrow is much, much better. Please take care of yourself. You're doing an absolutely essential public service with your blog.
I hope that the knowledge that many of us value the education you provide will buoy your spirits at least a little.
Wow, you laid out the case for your views and it is very impressive. The lack of focus on (the ongoing) COVID effect on world economy is bizarre. In my opinion, the societal denial of the threat it still poses, a barely submerged psychic wound, is part of the underlying negative vibe despite the good numbers.
Unfortunately, the "inflation because of stimulus, never do that again" story is now firmly embedded in the minds of most elite pundits, impervious to the facts. All you can do is continue to pound the facts while they pound the table.
I help plan an economic conference every year in the Pacific Northwest. How do I contact you about potential keynote?
And another excellent summary!
“We are not out of the woods, but it’s very clear that’s where we are headed. I told you that all along.”
So, where do you think we are headed? Are you in the camp that says we are going to have inflation contained to below 2% without a recession?
Central bank tries to fight Consumer price inflation with placebo 'medicine' of credit inflation. The idea is making loans (home, auto, creditcard etc) expensive so as to attenuate consumer demand in goods & services area & curtail investment (business loans). If we see the big picture, rate hikes is like shifting pain in legs to pain in arms. The real factors behind inflation are complex and still not fully understood though some prominent factors like supply chain disruptions are readily recognizable. The sellers inflation theory also has merits during pandemic disruption when firms collectively saw opportunity to raise prices.
Mainstream macro has instrumental view of their theories. No matter if their theories are absurd, as long as they can be fit into a narrative, they remain valid. I still see people like Noah Smith boasting how 'rate hikes solved the inflation problem'. BTW, Krugman is sincere enough to admit that rate hikes were supposed to solve inflation problem through raising unemployment (which never happened). So mainstream macro's instrumental view has failed once again but still some people are hanging onto it.
Moving onto next macro picture. I am observing how long Fed drags on with higher rates & how it affects the disparity between credit inflation & consumer inflation. If wages stagnate while consumer debt burden rises in high rate environment, how will it affect growth.
You can lead a horse to water but you can't make him drink it. Other economists and especially politicians will stick to their beliefs and hate on the spending that got us out of a recession in the first place its unfortunate but it is what it is. We can use more people like Claudia that will actually stick up for American families and present the facts about the state of the economy and inflation.
Great post, Claudia!
Since #ThePowellMemos managed 2 UNDO the Protective Regs of the New Deal, but this time the Oligarchs planned for the TAKEOVER OF THE MEDIA & LOOPHOLES 4 Wall Street, while Main Street is losing more & More businesses, jobs, savings, assets, etc & as MAIN STREET experiences a 1930s style 2ND GREAT DEPRESION! I think you all need some NEW ANALYTICAL TOOLS, cause we Non- investors, think U R full of it!
Great look back at some of your best writings and analysis of the US economy. Congrats!
I wonder if you are planning to do a similar review of the IRA act. Perhaps it is too soon to measure progress and end results because these are longer term investments into infrastructure and clean energy. I remain very curious and consider the IRA to be absolutely crucial to ensuring the U.S.' global leader position. Cheers!