The past three years have been miserable. And we are coming out of the clouds. The soft landing is getting real. Nothing is guaranteed, but wow, we could pull this off.
Thank you for being the only economist outside of the MMT community who knew inflation was a supply issue, proved it with facts and pushed back against those who wanted to blame it on the spending. This is greatly appreciated.
Except that the broken supply chains and energy prices up due to the war in Ukraine are two things the fed has no control over. Disinflation occurred in spite of the fed not because of them. Not a false dichotomy at all. Do better son.
You got that right. He told Obama to side with the banks and to flip a fish (too-small stimulus package) to the public, prolonging a recession that hurt millions of Americans. It’s galling to watch Jaimie Diamond self-appoint himself as a spokesperson for income inequality. These people have no conscience.
While the initial inflation caused by supply disruption was transitory, the situation was used by many corporations to pad prices beyond inflation in pursuit of windfall profits. Their strategy was largely successful to the detriment of people. Do we have the political will to put in place checks on windfall profit taking in the future? To counter the optimism of a soft-landing, could the middle east situation be brewing into a new supply disruption with global shipping imacts. https://youtu.be/J_YVJ-W-QYE?si=ugNBD-kQ9wGeZ10a
Though they did more than necessary, they should have raised rates in 2022. And the asset purchases should have stopped in 2020 after markets stabilized. Quantitative easing/tightening caused more harm than good.
It is looking better, though the continued delay in starting to cut is still a risk. And while giving the Fed credit for what it has done, let's remember, that IS its job: target inflation with high employment.
BTW I think we should refer to success as "cruising speed" :)
Agree with you but everything costs 30 percent more and wage inflation is real . Lack of energy supply could also be an issue in the future . Financing the govt another issue . I’m not ready to say things are back to normal yet
You deserve your victory lap. I don't like the "soft landing" analogy, though -- the economy doesn't stop in the way a plane does when it lands; it keeps on going. It might be better to think of it as "emerges from turbulence."
Love it: "We have not landed the plane softly yet, but we will next year. My definition of a soft landing is 2% inflation (or within spitting distance and unemployment around 4% (preferably below). We can see the runway."
The plane is clearly descending smoothly! One concern I keep having is whether the landing lane (runway) itself is clear, that there are no obstacles to punch holes in the tires. After all Russia-Ukraine, Hamas-Israeli, China-Taiwan issues, and our own persistent gloom and anxiety about the upcoming elections, all of these have not gone away. In addition, are we sure the Fed's rate hikes have no delayed (lagged) effects, i.e., we have seen the total effect of monetary policy? Keeping fingers crossed still.
Investors are buying up homes around the country driving up the price of homes. The Fed is only making the situation worse by increasing interest rates. This had nothing to do with the small checks handed to average middle- and low-income people. It was the large checks handed out to businesses and Wall Street speculation.
I completely agree that the 2008 to 2019 economy was not normal. The very low interest rates caused many distortions and the painfully slow recovery was hard on far too many people. I appreciate your perspective here.
Thank you for being the only economist outside of the MMT community who knew inflation was a supply issue, proved it with facts and pushed back against those who wanted to blame it on the spending. This is greatly appreciated.
Sort of a false dichotomy. Supply side issues required the Fed to engineer over target inflation.
Except that the broken supply chains and energy prices up due to the war in Ukraine are two things the fed has no control over. Disinflation occurred in spite of the fed not because of them. Not a false dichotomy at all. Do better son.
You got that right. He told Obama to side with the banks and to flip a fish (too-small stimulus package) to the public, prolonging a recession that hurt millions of Americans. It’s galling to watch Jaimie Diamond self-appoint himself as a spokesperson for income inequality. These people have no conscience.
While the initial inflation caused by supply disruption was transitory, the situation was used by many corporations to pad prices beyond inflation in pursuit of windfall profits. Their strategy was largely successful to the detriment of people. Do we have the political will to put in place checks on windfall profit taking in the future? To counter the optimism of a soft-landing, could the middle east situation be brewing into a new supply disruption with global shipping imacts. https://youtu.be/J_YVJ-W-QYE?si=ugNBD-kQ9wGeZ10a
Why Does Anyone Listen to Larry Summers Redux
Perhaps Summers serves as a foil for the applied/policy economists who’ve been right the past 20 years?
Because Summers works for big business.
Fed is causing pain for housing and autos. When will they wake up and cut rates.
Should the Fed of raised rates at all?
Though they did more than necessary, they should have raised rates in 2022. And the asset purchases should have stopped in 2020 after markets stabilized. Quantitative easing/tightening caused more harm than good.
Probably unnecessary, if Mosler is to be believed.
It is looking better, though the continued delay in starting to cut is still a risk. And while giving the Fed credit for what it has done, let's remember, that IS its job: target inflation with high employment.
BTW I think we should refer to success as "cruising speed" :)
Fed had little to do with reducing inflation.
Yep, Sahm even said that herself. These people are clueless.
Agree with you but everything costs 30 percent more and wage inflation is real . Lack of energy supply could also be an issue in the future . Financing the govt another issue . I’m not ready to say things are back to normal yet
If your "normal" is to expect the price level to return to pre-pandemic levels, we'll need at least one recession, probably more.
You are right about the government needing to drastically reduce deficits to free resources for investment.
You deserve your victory lap. I don't like the "soft landing" analogy, though -- the economy doesn't stop in the way a plane does when it lands; it keeps on going. It might be better to think of it as "emerges from turbulence."
Love it: "We have not landed the plane softly yet, but we will next year. My definition of a soft landing is 2% inflation (or within spitting distance and unemployment around 4% (preferably below). We can see the runway."
The plane is clearly descending smoothly! One concern I keep having is whether the landing lane (runway) itself is clear, that there are no obstacles to punch holes in the tires. After all Russia-Ukraine, Hamas-Israeli, China-Taiwan issues, and our own persistent gloom and anxiety about the upcoming elections, all of these have not gone away. In addition, are we sure the Fed's rate hikes have no delayed (lagged) effects, i.e., we have seen the total effect of monetary policy? Keeping fingers crossed still.
Investors are buying up homes around the country driving up the price of homes. The Fed is only making the situation worse by increasing interest rates. This had nothing to do with the small checks handed to average middle- and low-income people. It was the large checks handed out to businesses and Wall Street speculation.
I completely agree that the 2008 to 2019 economy was not normal. The very low interest rates caused many distortions and the painfully slow recovery was hard on far too many people. I appreciate your perspective here.