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You need to take this seriously. the reason you should be concerned about these prices in relation to their 2008 crisis prices is because the countermeasure th
by nimbius 5y ago
You need to take this seriously.
the reason you should be concerned about these prices in relation to their 2008 crisis prices is because the countermeasure that resulted in 2008 relief --Quantitative Easing-- cannot be used again because we effectively never quit using it to prop up the last decade of commercial market performance.
https://en.wikipedia.org/wiki/Quantitative_easing#US_QE4 https://en.wikipedia.org/wiki/Quantitative_easing#US_QE4
the Federal reserve also has no leverage to modify the prime interest rate to combat this inflation, as it already sits near-zero and the fed funds rate has been agreed to stay at under a quarter of a percent. modifying any interest rates in 2021 would blow up the corporate credit bubble, so the fed is mostly just bloviating about "transient inflation" to no ones real entertainment.
https://en.wikipedia.org/wiki/Corporate_debt_bubble https://en.wikipedia.org/wiki/Corporate_debt_bubble
finally, the bond buyback taper the Federal reserve has been touting since July 2021 but too terrified to implement is effectively meaningless as its not set to end until next July at the earliest, effectively allowing uncorrected inflation to continue another eight months. the fed hasnt announced any further countermeasures after this...they just assume a bond taper will coincide with the purported end of covid and surge of consumer confidence which never manifested in 2021. Instead the supply chain continued to fail and vaccine targets were never met.
Id conject the level of wishful thinking driving fed policy at this point should be enough to tenure Powells resignation sometime in March. the only thing combatting stagflation at this point is corporations like Amazon who know if they dont do something about real wages in the absence of effective federal policy it will start to reflect on their earnings reports, and even they seem recalcitrant to take any real steps unless the union comes a knockin.'
- throwawaygh 5y ago> the Federal reserve also has no leverage to modify the prime interest rate to combat this inflation, as it already sits near-zero ...huh? If you want to lower inflation you'd typically raise interest rates... (These sorts of stupid-simple mistakes are pretty typical from inflation fearmongers in threads like this one... a lot of words that make it sounds like they know what they're talking about but sprinkled with incredible tells like this one.)
- kesselvon 5y agoYou can tell they're fresh because there was a big fear of inflation because of quantitative easing. Thinking of QE as a solution to inflation is really something else.
- anm89 5y agoRight but with massive debts and a fairly weak economy that is show signs of continuing to slow, this is exactly why the Fed is between a rock and a hard place. The smart mmoney is on rates staying low for a long time which shows you just how powerless the Fed is right now. They would LOVE to raise rates. They can't.
- littlestymaar 5y agoThey will raise it as soon as inflation goes up, even if it cause the entire economy to struggle. Volker did exactly that in the early 80s.
- anm89 5y ago> They will raise it as soon as inflation goes up Yoy 6% for october. Inflation is already up. What are they waiting for? 10%? 15%? Also Powell isn't Volker by a long shot. I don't recall the Volker pivot because a few traders weren't having a good day.
- littlestymaar 5y ago> Yoy 6% for october. Inflation is already up. What are they waiting for? 10%? 15%? You realize that this figure was only calculated a few days ago, right? What reaction time do you expect?
- anm89 5y agoSo then you want to go on the record and say you think they will raise rates at the next on FOMC meeting?
- starkd 5y agoNot sure how Amazon can "step in" and raise wages will somehow save this. Earlier raises in the minimum wage have been largely erased by inflation already. Another round of raises just pushes prices up more.
- throwawaygh 5y agoMore to the point, raising wages (caused by union contracts that pegged wages to inflation) was the root cause of 70s stagflation. OP is horribly confused about basically everything, and to the extent that he's correct about some conclusions it's entirely by accident.