The Fed begins to tighten monetary policy. The central bank chief said the U.S. economy no longer needs aggressive stimulus, according to The Wall Street Journal. He expects supply-chain bottlenecks to ease this year, which could help bring down inflation.
"The central bank will use its tools to prevent higher inflation from becoming entrenched."
The stock market turned higher Tuesday and extended gains as the Senate held its confirmation hearing for Jerome Powell's expected second term as Fed chief.
Quite a different story from the bbs shit producer, who became an expert by google searches, and stayed at a Holiday Inn Express over the weekend. He doesn't understand economic policy. He is good at writing in BIG letters and different Fonts. He doesn't understand the word "entrenched." His habits are a clone of his supreme leader.
BYEDON 2020
- VitaMan
- 01-11-2022, 12:10 PM
- Tiny
- 01-16-2022, 02:14 PM
Here are excerpts from a couple of articles that take a contrary view. Sargent is a Nobel Prize winner in economics.
Both sides have good arguments. But what the majority of economics whizzes, including Larry Summers, Captain Midnight and Lusty Lad, appear to agree on is that Biden's American Rescue Plan fanned the flames of inflation. The $1.9 trillion stimulus when we were well into the recovery was way overdone.
What Inflation Costs Workers
The Biden-Powell price increases reduced real wages by 2.4% in 2021.
By The Editorial Board
American workers can be grateful for small favors. They finally received a raise in December, even if it was only 0.1% after inflation. At least that beats the decline of 2.4% in real wages over the entire year. That’s how much inflation has eroded the American standard of living and how it turned 2021 into a lost year for the average worker.
The Labor Department said Wednesday that the consumer-price index rose 0.5% in December, or 7% in the last year. That’s the highest annual rate since 1982, when Paul Volcker was trying to wring inflation out of the economy with Ronald Reagan’s political support. The current inflation has caught the Federal Reserve and Biden Administration entirely by surprise, and they’re still not sure what to do about it other than to blame someone else.
It’s important to understand what a policy and intellectual failure this inflation represents for the Keynesians who are in charge of current economic policy. The Biden Administration and Federal Reserve flooded the economy with money in 2021 even as the recovery from the Covid recession was long over.
Fed Chairman Jerome Powell became a cheerleader for the $1.9 trillion March spending spree, on top of about $4 trillion in Covid relief Congress spent in 2020. The central bank also declined to withdraw its extraordinary monetary support, despite clear signs of incipient inflation. When critics began to warn of excess monetary growth and price increases, the sages at the Fed and White House dismissed it as “transitory” and said don’t worry, be happy. As late as July President Biden said, “There’s nobody suggesting there’s unchecked inflation on the way—no serious economist.”
The failure is reminiscent of the 1970s, when the Keynesians also ran the economy but had no explanation for the inflation that took off, or for the stagflation that later set in as that awful decade rolled on. They blamed corporations, rolled out Whip Inflation Now buttons, and imposed price controls. Only at the end of the decade, after inflation became a political liability for Democrats, did Jimmy Carter appoint Volcker to the Fed.
Mr. Biden is still in denial. His statement Wednesday took solace in the 0.5% monthly increase in December since it was down from the previous two months. “Today’s report—which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling—demonstrates that we are making progress in slowing the rate of price increases,” he said.
But core prices without food and energy actually increased from the pace of the previous month. And energy prices have begun to rise again after a decline late in 2021. The oil price is above $82 a barrel, with the share prices of oil-and-gas stocks rising in anticipation of higher prices to come. Mr. Biden’s main policy response is to blame businesses for making a profit and claim that even more federal spending will reduce prices. He and his policy advisers are floundering.
Mr. Biden has even reappointed Mr. Powell for another four-year term as Fed chairman, a triumph of hope over inflation experience. The Fed chief is at long last signaling the faster withdrawal of monetary stimulus. But real interest rates will remain negative for all of 2022 even if the Fed raises rates by the 1.5 percentage points it is now forecasting. The danger is that this pace won’t be fast enough to control inflation, and the Fed will have to raise rates higher and sooner.
The price of all this is being paid by middle-class workers, not by the political class. Inflation increases government tax revenue as nominal GDP and corporate profits soar. Many government programs are indexed for inflation, but wage earners lack the same protection. Higher nominal wages move more taxpayers more quickly into higher tax brackets even if their real standard of living declines.
https://www.wsj.com/articles/what-in...es-11642016349
The Market Is Too Serene About Inflation
As in the early 1980s, new realities test the idea that interest rates reflect ‘rational expectations.’
By Thomas J. Sargent and William L. Silber
The interest rate on the 10-year U.S. Treasury note hovers around 1.75% while the annual rate of inflation nears 7%, suggesting that investors believe high inflation is temporary. Evidently the market expects the Federal Reserve will soon bring inflation back to within a narrow band centered on 2% a year, despite the surge in federal deficits and the central bank’s monetization of a large fraction of those deficits. Today’s low interest rates “forecast” low inflation, a “rational expectations” idea that now comforts the Fed. But the central bank shouldn’t feel too complacent.
The Fed confronted a similar situation in the early 1980s, but in reverse. Chairman Paul Volcker convinced his colleagues on the Federal Open Market Committee to raise short-term interest rates to extinguish double-digit U.S. inflation and the associated double-digit long-term interest rates. Volcker and the FOMC had promised in public that measures to tighten money and credit weren’t one-time actions but part of a permanent strategy to arrest inflation. They reasoned that once the market understood the FOMC meant business, long-term interest rates would quickly fall to reflect the prospective decline in inflation implied by the FOMC’s strategy. They were in for a nasty surprise.
Long-term interest rates didn’t decline quickly. The 10-year Treasury note averaged 11.5% in 1980 and rose above that level in 1984, despite a decline in the rate of inflation from more than 12% in 1980 to less than 4% in 1984. The failure of interest rates to reflect the new monetary reality deeply troubled Volcker and the FOMC. One member complained during internal discussions early on about long-term interest rates going “up instead of coming down.” The market seemed not to believe that the Fed would stick to its guns, and instead put its money on the view that the same forces that caused the 1970s Fed to fuel high inflation would make the Volcker-led FOMC do the same. Investors refused to believe that a new monetary regime had arrived with Volcker, betting that policy would revert back to past behavior.
Volcker’s imperfect credibility probably raised the cost of stamping out the 1970s inflation. If the market had more quickly understood Volcker’s persistence as an inflation fighter, the recessions of the early 1980s wouldn’t have been so deep. In addition, the “rational expectations’’ theory that long-term interest rates provide good forecasts of average inflation would have worked better. Instead, interest rates remained too high for too long as predictors of inflation. It was 1986 before the 10-year note rate averaged in single digits.
We worry that today’s situation is the flip side of the Volcker experience. Forty years of price stability have given breathing room to today’s Federal Reserve, but U.S. interest rates could again provide erroneous forecasts of inflation. Most market participants have apparently played down the possibility that we are in a new monetary and fiscal regime, one in which policy makers don’t worry enough about large deficits and excessive money creation and new purposes like addressing climate change distract the Fed from inflation.
https://www.wsj.com/articles/the-mar...ty-11641933266
Both sides have good arguments. But what the majority of economics whizzes, including Larry Summers, Captain Midnight and Lusty Lad, appear to agree on is that Biden's American Rescue Plan fanned the flames of inflation. The $1.9 trillion stimulus when we were well into the recovery was way overdone.
What Inflation Costs Workers
The Biden-Powell price increases reduced real wages by 2.4% in 2021.
By The Editorial Board
American workers can be grateful for small favors. They finally received a raise in December, even if it was only 0.1% after inflation. At least that beats the decline of 2.4% in real wages over the entire year. That’s how much inflation has eroded the American standard of living and how it turned 2021 into a lost year for the average worker.
The Labor Department said Wednesday that the consumer-price index rose 0.5% in December, or 7% in the last year. That’s the highest annual rate since 1982, when Paul Volcker was trying to wring inflation out of the economy with Ronald Reagan’s political support. The current inflation has caught the Federal Reserve and Biden Administration entirely by surprise, and they’re still not sure what to do about it other than to blame someone else.
It’s important to understand what a policy and intellectual failure this inflation represents for the Keynesians who are in charge of current economic policy. The Biden Administration and Federal Reserve flooded the economy with money in 2021 even as the recovery from the Covid recession was long over.
Fed Chairman Jerome Powell became a cheerleader for the $1.9 trillion March spending spree, on top of about $4 trillion in Covid relief Congress spent in 2020. The central bank also declined to withdraw its extraordinary monetary support, despite clear signs of incipient inflation. When critics began to warn of excess monetary growth and price increases, the sages at the Fed and White House dismissed it as “transitory” and said don’t worry, be happy. As late as July President Biden said, “There’s nobody suggesting there’s unchecked inflation on the way—no serious economist.”
The failure is reminiscent of the 1970s, when the Keynesians also ran the economy but had no explanation for the inflation that took off, or for the stagflation that later set in as that awful decade rolled on. They blamed corporations, rolled out Whip Inflation Now buttons, and imposed price controls. Only at the end of the decade, after inflation became a political liability for Democrats, did Jimmy Carter appoint Volcker to the Fed.
Mr. Biden is still in denial. His statement Wednesday took solace in the 0.5% monthly increase in December since it was down from the previous two months. “Today’s report—which shows a meaningful reduction in headline inflation over last month, with gas prices and food prices falling—demonstrates that we are making progress in slowing the rate of price increases,” he said.
But core prices without food and energy actually increased from the pace of the previous month. And energy prices have begun to rise again after a decline late in 2021. The oil price is above $82 a barrel, with the share prices of oil-and-gas stocks rising in anticipation of higher prices to come. Mr. Biden’s main policy response is to blame businesses for making a profit and claim that even more federal spending will reduce prices. He and his policy advisers are floundering.
Mr. Biden has even reappointed Mr. Powell for another four-year term as Fed chairman, a triumph of hope over inflation experience. The Fed chief is at long last signaling the faster withdrawal of monetary stimulus. But real interest rates will remain negative for all of 2022 even if the Fed raises rates by the 1.5 percentage points it is now forecasting. The danger is that this pace won’t be fast enough to control inflation, and the Fed will have to raise rates higher and sooner.
The price of all this is being paid by middle-class workers, not by the political class. Inflation increases government tax revenue as nominal GDP and corporate profits soar. Many government programs are indexed for inflation, but wage earners lack the same protection. Higher nominal wages move more taxpayers more quickly into higher tax brackets even if their real standard of living declines.
https://www.wsj.com/articles/what-in...es-11642016349
The Market Is Too Serene About Inflation
As in the early 1980s, new realities test the idea that interest rates reflect ‘rational expectations.’
By Thomas J. Sargent and William L. Silber
The interest rate on the 10-year U.S. Treasury note hovers around 1.75% while the annual rate of inflation nears 7%, suggesting that investors believe high inflation is temporary. Evidently the market expects the Federal Reserve will soon bring inflation back to within a narrow band centered on 2% a year, despite the surge in federal deficits and the central bank’s monetization of a large fraction of those deficits. Today’s low interest rates “forecast” low inflation, a “rational expectations” idea that now comforts the Fed. But the central bank shouldn’t feel too complacent.
The Fed confronted a similar situation in the early 1980s, but in reverse. Chairman Paul Volcker convinced his colleagues on the Federal Open Market Committee to raise short-term interest rates to extinguish double-digit U.S. inflation and the associated double-digit long-term interest rates. Volcker and the FOMC had promised in public that measures to tighten money and credit weren’t one-time actions but part of a permanent strategy to arrest inflation. They reasoned that once the market understood the FOMC meant business, long-term interest rates would quickly fall to reflect the prospective decline in inflation implied by the FOMC’s strategy. They were in for a nasty surprise.
Long-term interest rates didn’t decline quickly. The 10-year Treasury note averaged 11.5% in 1980 and rose above that level in 1984, despite a decline in the rate of inflation from more than 12% in 1980 to less than 4% in 1984. The failure of interest rates to reflect the new monetary reality deeply troubled Volcker and the FOMC. One member complained during internal discussions early on about long-term interest rates going “up instead of coming down.” The market seemed not to believe that the Fed would stick to its guns, and instead put its money on the view that the same forces that caused the 1970s Fed to fuel high inflation would make the Volcker-led FOMC do the same. Investors refused to believe that a new monetary regime had arrived with Volcker, betting that policy would revert back to past behavior.
Volcker’s imperfect credibility probably raised the cost of stamping out the 1970s inflation. If the market had more quickly understood Volcker’s persistence as an inflation fighter, the recessions of the early 1980s wouldn’t have been so deep. In addition, the “rational expectations’’ theory that long-term interest rates provide good forecasts of average inflation would have worked better. Instead, interest rates remained too high for too long as predictors of inflation. It was 1986 before the 10-year note rate averaged in single digits.
We worry that today’s situation is the flip side of the Volcker experience. Forty years of price stability have given breathing room to today’s Federal Reserve, but U.S. interest rates could again provide erroneous forecasts of inflation. Most market participants have apparently played down the possibility that we are in a new monetary and fiscal regime, one in which policy makers don’t worry enough about large deficits and excessive money creation and new purposes like addressing climate change distract the Fed from inflation.
https://www.wsj.com/articles/the-mar...ty-11641933266
- bb1961
- 01-16-2022, 02:23 PM
Don't get him started on FACTS...he and his "FED" bringing down unemployment and somehow this disasterous inflation is completely ass backwards!!
He's in a rage right now.
He's in a rage right now.
- VitaMan
- 01-16-2022, 02:57 PM
It's another opinion piece.
Latest unemployment figures are at 3.9%. Steadily declining during the Biden administration.
Too bad the member above is unable to process that.
A member that has been on TILT for far too long.
Now he has even tried to imitate that.
Latest unemployment figures are at 3.9%. Steadily declining during the Biden administration.
Too bad the member above is unable to process that.
A member that has been on TILT for far too long.
Now he has even tried to imitate that.
- bb1961
- 01-16-2022, 03:35 PM
It's another opinion piece.As I said before your memory is very short.
Latest unemployment figures are at 3.9%. Steadily declining during the Biden administration.
Too bad the member above is unable to process that.
A member that has been on TILT for far too long.
Now he has even tried to imitate that. Originally Posted by VitaMan
Like I said before MILLIONS of people were being paid not work...that is why inflation is what it is now and I know that is beyond your comprehension. Tiny shows you FACTS and now to you he has become an outcast also...anybody that disagrees with you and shows you FACTS in ALWAYS wrong to you. Again I will posts the FACTS about your misguided nonsense about why unemployment was high and why inflation is what it is now. GIVING AWAY "FREE" MONEY NOT TO WORK...
Paying People Not to Work Is Not an Economic Stimulus
.By Stephen MooreJuly 28, 2020
Paying People Not to Work Is Not an Economic Stimulus
Back in 2009, Nancy Pelosi infamously declared the best way to revive the economy was to dole out ever more generous food stamps and unemployment benefits. The more people collecting welfare the better. At the time, this notion seemed laughable. Now this economic illiteracy seems to have become a conventional wisdom.
This was a headline in the New York Times recently: "End of $600 Unemployment Bonus Could Push Millions Past the Brink."
Here was the lead on the "news" piece: "When millions of Americans began losing their jobs in March, the federal government stepped in with a life preserver: $600 a week in extra unemployment benefits to allow workers to pay rent and buy groceries, and to cushion the economy.
"With economic conditions again deteriorating, that life preserver will disappear within days if Congress doesn't act to extend it. That could prompt a wave of evictions and inflict more financial harm on millions of Americans while further damaging the economy."
These benefits are not a "life preserver," but a job-killer. A study for the Committee to Unleash Prosperity by University of Chicago economist Casey Mulligan estimated 10 million fewer Americans working by the end of the year, thus killing any chance of a "V-shaped recovery."
Perhaps that's why Pelosi is so adamant about the policy remaining in place. This would mean a high unemployment rate in November when voters go to the polls. How convenient for Pelosi and Joe Biden.
Incidentally, there are now some 5 million unfilled jobs in the U.S. today -- near an all-time high. This is a weird predicament we are in. Even with some 25 million unemployed Americans, employers are hanging "Help Wanted" signs in the windows.
Here's why. Under the Pelosi policy, 5 out of 6 unemployed workers are getting paid more NOT to work than to return to the job, according to the Congressional Budget Office. We estimate that most workers who earn $30 or less are financially better off staying off the job -- even as the economy improves. Many workers can get twice as much for staying unemployed. Workers are supposed to lose unemployment benefits if they are offered a job and don't take it. But workers know how to game the system. They can pretend to be sick, and employers are loath to bring a contagious worker back in the office or factory.
Employers are now telling me that to get workers back on a construction crew, on a factory line or in a restaurant, they won't work unless they get paid cash of, say, $100 or $200 a shift so they can still collect the unemployment benefits. The Economist magazine recently wrote that the extra unemployment benefits are doing more harm than good. Liberal groups are marching in the streets for another six months of these payments.
This policy is what I have long-called economic bimboism. Somehow, magically, if I pay my kid who gets up, mows lawns and works hard 40 hours a week, and I pay my other son even more money for staying home and playing computer games, this strategy is going to lead to more work effort in the Moore household. I assure you it won't.
Paying people not to work is no way to expand economic output, more jobs and more prosperity. By this warped logic, we should start paying unemployed workers $5,000 a week, and we will really have a rip-roaring recovery.
This is not just lousy economics; it also violates basic principles of fairness. Think of a construction company with 100 employees laid off. They are all offered their jobs back a month later, but only 50 come back to work. Under the Pelosi scheme, the 50 that work hard get less money than the ones who stay home and watch TV. The suckers here are the ones who return to the job.
- bambino
- 01-16-2022, 03:46 PM
Fuck this, I wanna know the “real” story how VM became wealthy on an overnight trade.
- bb1961
- 01-16-2022, 04:12 PM
He could be a member of congress...that insider trading can be a goldmine.
- bambino
- 01-16-2022, 04:21 PM
- Yssup Rider
- 01-16-2022, 04:27 PM
- bambino
- 01-16-2022, 04:41 PM
- the_real_Barleycorn
- 01-17-2022, 04:54 AM
It's another opinion piece.An opinion piece by someone who knows something about the topic and not you. And what you know about figuring out unemployment could fill a septic tank.
Latest unemployment figures are at 3.9%. Steadily declining during the Biden administration.
Too bad the member above is unable to process that.
A member that has been on TILT for far too long.
Now he has even tried to imitate that. Originally Posted by VitaMan
- LexusLover
- 01-17-2022, 08:48 AM
An opinion piece by someone who knows something about the topic and not you. And what you know about figuring out unemployment could fill a septic tank. Originally Posted by the_real_BarleycornSave some room for what he knows about:
1. "the vaccines"!
2. "the law"
3. educating young people
4. U.S. history
5. _______________
6. the next topic mentioned