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A daring new tack in fed apologism: everything is transitory. Guys—don’t worry about the heat emanating from our sun; it’s only a multi-billion year transitory

A daring new tack in fed apologism: everything is transitory. Guys—don’t worry about the heat emanating from our sun; it’s only a multi-billion year transitory phase!

thatguy0900 5y ago
The fed may find themselves transitory at some point.
downrightmike 5y ago
Give it a few billion years it will both cool down AND wipe out the inner planets. Win WIn.
draw_down 5y ago
Exactly. How shameless can you get.
xapata 5y ago
What are we trying to optimize for anyway, low inflation or high growth? If policy manages to have sustained high growth, why do we care about inflation?
- mym1990 5y ago
  The policy changes the more one of those things swings to the extreme. Ultimately growth should be moderated...despite what some believe, high growth all the time is not a good thing.
  - xapata 5y ago
    Indeed, the question is how fast is too fast. Right now, the supply problems seem to be dead weight loss, but those are causing inflation and aren't a symptom of it. We should worry when people start hoarding in warehouses, and then only to the extent that we think it's truly a waste and not a reasonable precaution to avoid, say, a toilet paper panic. Purchasing power for the bulk of the US population had been falling since the 70's. We called it low inflation, but that's more from the perspective of an employer than an employee. It seems the low employment rate has finally resulted in purchasing power increases. If prices go up a little as well, I don't mind. Reprinting menus isn't hard.
- jiocrag 5y ago
  Because inflation’s effects are uneven. On the plus-ish side: -Optically better revenue and profits for companies (albeit fundamentally similar or worse because of increased supplier prices), -better fixed income returns (again though, relative; and bond prices themselves decline), and -(historically) equity appreciation. On the negative-ish side: -wage increases tend to lag and underperform inflation, so people who earn their income primarily via wages suffer, at least in the near term. -capital gets a lot more expensive if the fed raises rates. While equities generally increase during times of inflation, there can be huge downdrafts as valuation models adjust to the increased cost of capital. Given where the market is trading right now on a virtually any valuation basis vs previous fed hike cycles, things could get really ugly for a while. (*none of above is investment advice. Good chance it’s all proven totally wrong, actually, given how unprecedented market and economic behavior has been over the past decade)
  - xapata 5y ago
    If economic growth were held constant, one would obviously prefer low (but positive) inflation. However, if there's a trade-off between the two, we'd still want to optimize for the goals of long-term growth and low employment, and to some extent equality. Controlled inflation is a means to an end, not an end in itself.

A daring new tack in fed apologism: everything is transitory. Guys—don’t worry about the heat emanating from our sun; it’s only a multi-billion year transitory phase!

thatguy0900 5y ago

The fed may find themselves transitory at some point.

downrightmike 5y ago

Give it a few billion years it will both cool down AND wipe out the inner planets. Win WIn.

draw_down 5y ago

Exactly. How shameless can you get.

xapata 5y ago

What are we trying to optimize for anyway, low inflation or high growth? If policy manages to have sustained high growth, why do we care about inflation?

mym1990 5y ago
The policy changes the more one of those things swings to the extreme. Ultimately growth should be moderated...despite what some believe, high growth all the time is not a good thing.
- xapata 5y ago
  Indeed, the question is how fast is too fast. Right now, the supply problems seem to be dead weight loss, but those are causing inflation and aren't a symptom of it. We should worry when people start hoarding in warehouses, and then only to the extent that we think it's truly a waste and not a reasonable precaution to avoid, say, a toilet paper panic. Purchasing power for the bulk of the US population had been falling since the 70's. We called it low inflation, but that's more from the perspective of an employer than an employee. It seems the low employment rate has finally resulted in purchasing power increases. If prices go up a little as well, I don't mind. Reprinting menus isn't hard.
jiocrag 5y ago
Because inflation’s effects are uneven. On the plus-ish side: -Optically better revenue and profits for companies (albeit fundamentally similar or worse because of increased supplier prices), -better fixed income returns (again though, relative; and bond prices themselves decline), and -(historically) equity appreciation. On the negative-ish side: -wage increases tend to lag and underperform inflation, so people who earn their income primarily via wages suffer, at least in the near term. -capital gets a lot more expensive if the fed raises rates. While equities generally increase during times of inflation, there can be huge downdrafts as valuation models adjust to the increased cost of capital. Given where the market is trading right now on a virtually any valuation basis vs previous fed hike cycles, things could get really ugly for a while. (*none of above is investment advice. Good chance it’s all proven totally wrong, actually, given how unprecedented market and economic behavior has been over the past decade)
- xapata 5y ago
  If economic growth were held constant, one would obviously prefer low (but positive) inflation. However, if there's a trade-off between the two, we'd still want to optimize for the goals of long-term growth and low employment, and to some extent equality. Controlled inflation is a means to an end, not an end in itself.