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Serious question: is Powell just bad at his job or what? Doesn't everyone and their mom's knew high inflation was coming when they shut down the economy, send p

Serious question: is Powell just bad at his job or what? Doesn't everyone and their mom's knew high inflation was coming when they shut down the economy, send people checks to flip crypto and GME by running the money printer nonstop?

jimbob45 5y ago
- willcipriano 5y ago
  Inflation was long before Putin.
- BLKNSLVR 5y ago
  If they manage to get it back under control now, then we'll know if they could have gotten it under control post-pandemic. If not, we're all fucked anyway and not many people may care to research the answer to the question. This is why the timing of the invasion is, for want of a better word, "perfect" if you're someone who wants to watch the world burn (assuming that "the world" was primarily the Western World with its heaviest dependence upon "stuff"). As the pandemic appears to be easing, the interest rate hike (first step as a reaction to the inflation problem) a month away. The timing of the invasion was both exquisite and horrendous.
- legalcorrection 5y ago
  Also worth noting that no one expected the US to impose sanctions of this severity. Even a month ago, President Biden himself would not have thought we would react this way. But Twitter hysteria struck again and imposing harsher and harsher sanctions—and in the private sector, voluntarily withdrawing from the Russian economy even when sanctions did not require it—became a way to demonstrate your holiness. Rational calculation and self-preservation, out the window. We live in a Twitter world order now. You can tell this was unplanned because back in January, with the invasion looming, US officials said (even if they did not completely mean it) that sanctions would be narrowly targeted to hurt the Russian elite but not the common people. Now, the explicit goal of the sanctions is to cripple the Russian economy and cause mass suffering sufficient to collapse support for the Russian government. If this was the plan all along, we would have said so. Deterrence only works if the other guy sees it coming.
  - KerrAvon 5y ago
    What did you expect the west to do in this situation? Let Putin get on with it unscathed? This is the rational alternative to World War III.
    - legalcorrection 5y ago
      The announced US policy was yes, to let Russia as a whole mostly get away with it, but to hit the Russian elite specifically with very harsh but specifically targeted sanctions. The red line was NATO territory + de facto NATO members like Finland, not Ukraine.
olliej 5y ago
Inflation has been rampant for years, it's been hidden as inflation measures inexplicably don't include cost of housing, it also doesn't include the massive subsidies provided to industries that are poorly managed like US agriculture. Finally, the claims that massive price increases were due to inflation would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. Your claim also doesn't explain how inflation didn't balloon in countries that provided actual financial support to people - the US had two payments of next to nothing, most other countries provided continuous support, even those with far less per-capita income.
- jml7c5 5y ago
  >Finally, the claims that massive price increases were due to inflation You have this backwards. Inflation (via CPI) is based on price changes, it doesn't cause them. >would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. This is exactly what you'd expect when there is low supply and high demand.
  - randomdata 5y ago
    Inflation is the decline in value of the currency. CPI is how we normally attempt to measure inflation since asking "How much will you pay for a dollar today?" will not yield a useful answer. You are right that the measuring is done in hindsight. But the decline in value of the currency is responsible for prices rising to compensate.
    - pmontra 5y ago
      The value of a currency can decrease compared to other currencies but prices can stay the same inside a country. What happens is that you have less of everything especially for goods that depend on trade with other countries.
      - 5y ago
dehrmann 5y ago
The Fed's target in 2019 was 2%. 7% is high, but if it weren't for Russia and decreased in 2022, I'd argue they did a decent job. They had no idea how big of a hole lockdowns left and the price increases from supply chain issues would cause. They overshot their target, but they also wanted to overshoot rather than undershoot. Congress and public policy is where the ball was dropped. Most of the Europe did a better job maintaining work stability by distributing subsidies through employers rather than cash to individuals. It meant that when lockdowns eased, workers were ready.
- runeks 5y ago
  > The Fed's target in 2019 was 2%. 7% is high, but if it weren't for Russia and decreased in 2022, I'd argue they did a decent job. This is “broken clock” logic. The only argument behind giving the Fed credit for the 7% rise in prices is “they’ve been trying really hard to do so”.
jjeaff 5y ago
No, that's a facile understanding of how the economy and fiscal policy works. A large portion of inflation is still likely to be due to complex supply issues rather than simply everyone getting some extra cash. There is also the fact that spending on services has shifted to goods and hasn't fully shifted back. It is likely once supply chains finally catch up and spending shifts back to services and travel that much of the upward price pressure will be relieved. And of course, those are just a few factors, there are countless more factors that make the whole situation far more complicated than anyone could possibly account for.
- acchow 5y ago
  The handing out money to consumers doesn’t help. If the the extra money can be absorbed (economy can produce enough to meet demand), that’s fine and the economy just grows. But there were supply chain hiccups holding back the production capacity of the economy. So here we are.
  - nostromo 5y ago
    Exactly right. Demand was induced with money printing. Supply was restricted with lockdowns. When demand outstrips supply, prices rise.
    - jjeaff 5y ago
      More money supply likely accounts for some increase in demand. But the lockdowns themselves likely had more effect on demand than more cash. People need or want more things when they travel less and have fewer services to consume. When behavior changes in large ways, demand shifts to different things. Printing more cash didn't drive demand for n95 masks. It also didn't drive demand for things like flour and many other commodities. With the exception of those in extreme poverty, most people didn't run out and buy more toilet paper and flour because they got a stimulus check.
  - AnthonyMouse 5y ago
    That's ignoring the global nature of the supply chain. If supply is constrained and you give money to your own people, they may bid up prices some, but not by the entire amount because mostly what they're doing is using the money to outbid people in other countries. Which also means your people get more of the stuff. This cancels out if everybody does it, but not everybody can do it. The increase in demand from people having more money may also make it economical to increase supply faster and alleviate the shortfall sooner.
MaxHoppersGhost 5y ago
Yes he is. We’ve been printing absurd amounts of money for years praying inflation didn’t show up in meaningful indicators and now that it shows up it’s some big surprise. We should have been raising rates the last 8 years or so instead of juicing the economy and stock market nonstop.
- pmontra 5y ago
  If you print a trillion and give it only to me, there is no much inflation because what could I possibly buy much more than I do? Not bread or gas. It will go in financial products and market indexes will grow. If you give $1000 to 1 M people then you start having inflation because those money go into shops. This is the lesson from the last 15 years.
- blitzar 5y ago
  > We’ve been printing absurd amounts of money for years praying inflation didn’t show up in meaningful indicators and now that it shows up it’s some big surprise They have been praying for inflation - it is the intended outcome of the policy and it has taken 23 years for it to happen. What they wanted was inflation in wages, assets, goods, services, productivity and growth. Inflate away the notional value of debt. What they got was gamestonk, crypto, stagnant wages, gig economy and antiwork.
nwah1 5y ago
The Fed can't monetize the debt unless there is debt to monetize. The checks all came from Congress. But there was simultaneous easy money policy for years, in contradiction to the Taylor Rule. This deviation from that rule was going on for years before Powell, but he continued it for years, all throughout a prolonged economic boom. Instead of counter-cyclical policy, this is pro-cyclical policy. And resulted in the misallocation you noted, for which Congress is even more to blame.
refurb 5y ago
During the monetary expansion post-2008, I recall listening to a number of experts basically predict exactly what's happening today - "the problem with expanding the money supply is that by the time you realize you need to pull back, it's too late and there will be a ton of political pressure to wait just a bit longer".

jimbob45 5y ago

willcipriano 5y ago
Inflation was long before Putin.
BLKNSLVR 5y ago
If they manage to get it back under control now, then we'll know if they could have gotten it under control post-pandemic. If not, we're all fucked anyway and not many people may care to research the answer to the question. This is why the timing of the invasion is, for want of a better word, "perfect" if you're someone who wants to watch the world burn (assuming that "the world" was primarily the Western World with its heaviest dependence upon "stuff"). As the pandemic appears to be easing, the interest rate hike (first step as a reaction to the inflation problem) a month away. The timing of the invasion was both exquisite and horrendous.
legalcorrection 5y ago
Also worth noting that no one expected the US to impose sanctions of this severity. Even a month ago, President Biden himself would not have thought we would react this way. But Twitter hysteria struck again and imposing harsher and harsher sanctions—and in the private sector, voluntarily withdrawing from the Russian economy even when sanctions did not require it—became a way to demonstrate your holiness. Rational calculation and self-preservation, out the window. We live in a Twitter world order now. You can tell this was unplanned because back in January, with the invasion looming, US officials said (even if they did not completely mean it) that sanctions would be narrowly targeted to hurt the Russian elite but not the common people. Now, the explicit goal of the sanctions is to cripple the Russian economy and cause mass suffering sufficient to collapse support for the Russian government. If this was the plan all along, we would have said so. Deterrence only works if the other guy sees it coming.
- KerrAvon 5y ago
  What did you expect the west to do in this situation? Let Putin get on with it unscathed? This is the rational alternative to World War III.
  - legalcorrection 5y ago
    The announced US policy was yes, to let Russia as a whole mostly get away with it, but to hit the Russian elite specifically with very harsh but specifically targeted sanctions. The red line was NATO territory + de facto NATO members like Finland, not Ukraine.

olliej 5y ago

Inflation has been rampant for years, it's been hidden as inflation measures inexplicably don't include cost of housing, it also doesn't include the massive subsidies provided to industries that are poorly managed like US agriculture. Finally, the claims that massive price increases were due to inflation would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. Your claim also doesn't explain how inflation didn't balloon in countries that provided actual financial support to people - the US had two payments of next to nothing, most other countries provided continuous support, even those with far less per-capita income.

jml7c5 5y ago
>Finally, the claims that massive price increases were due to inflation You have this backwards. Inflation (via CPI) is based on price changes, it doesn't cause them. >would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. This is exactly what you'd expect when there is low supply and high demand.
- randomdata 5y ago
  Inflation is the decline in value of the currency. CPI is how we normally attempt to measure inflation since asking "How much will you pay for a dollar today?" will not yield a useful answer. You are right that the measuring is done in hindsight. But the decline in value of the currency is responsible for prices rising to compensate.
  - pmontra 5y ago
    The value of a currency can decrease compared to other currencies but prices can stay the same inside a country. What happens is that you have less of everything especially for goods that depend on trade with other countries.
    - 5y ago

dehrmann 5y ago

The Fed's target in 2019 was 2%. 7% is high, but if it weren't for Russia and decreased in 2022, I'd argue they did a decent job. They had no idea how big of a hole lockdowns left and the price increases from supply chain issues would cause. They overshot their target, but they also wanted to overshoot rather than undershoot. Congress and public policy is where the ball was dropped. Most of the Europe did a better job maintaining work stability by distributing subsidies through employers rather than cash to individuals. It meant that when lockdowns eased, workers were ready.

runeks 5y ago
> The Fed's target in 2019 was 2%. 7% is high, but if it weren't for Russia and decreased in 2022, I'd argue they did a decent job. This is “broken clock” logic. The only argument behind giving the Fed credit for the 7% rise in prices is “they’ve been trying really hard to do so”.

jjeaff 5y ago

No, that's a facile understanding of how the economy and fiscal policy works. A large portion of inflation is still likely to be due to complex supply issues rather than simply everyone getting some extra cash. There is also the fact that spending on services has shifted to goods and hasn't fully shifted back. It is likely once supply chains finally catch up and spending shifts back to services and travel that much of the upward price pressure will be relieved. And of course, those are just a few factors, there are countless more factors that make the whole situation far more complicated than anyone could possibly account for.

acchow 5y ago
The handing out money to consumers doesn’t help. If the the extra money can be absorbed (economy can produce enough to meet demand), that’s fine and the economy just grows. But there were supply chain hiccups holding back the production capacity of the economy. So here we are.
- nostromo 5y ago
  Exactly right. Demand was induced with money printing. Supply was restricted with lockdowns. When demand outstrips supply, prices rise.
  - jjeaff 5y ago
    More money supply likely accounts for some increase in demand. But the lockdowns themselves likely had more effect on demand than more cash. People need or want more things when they travel less and have fewer services to consume. When behavior changes in large ways, demand shifts to different things. Printing more cash didn't drive demand for n95 masks. It also didn't drive demand for things like flour and many other commodities. With the exception of those in extreme poverty, most people didn't run out and buy more toilet paper and flour because they got a stimulus check.
- AnthonyMouse 5y ago
  That's ignoring the global nature of the supply chain. If supply is constrained and you give money to your own people, they may bid up prices some, but not by the entire amount because mostly what they're doing is using the money to outbid people in other countries. Which also means your people get more of the stuff. This cancels out if everybody does it, but not everybody can do it. The increase in demand from people having more money may also make it economical to increase supply faster and alleviate the shortfall sooner.

MaxHoppersGhost 5y ago

Yes he is. We’ve been printing absurd amounts of money for years praying inflation didn’t show up in meaningful indicators and now that it shows up it’s some big surprise. We should have been raising rates the last 8 years or so instead of juicing the economy and stock market nonstop.

pmontra 5y ago
If you print a trillion and give it only to me, there is no much inflation because what could I possibly buy much more than I do? Not bread or gas. It will go in financial products and market indexes will grow. If you give $1000 to 1 M people then you start having inflation because those money go into shops. This is the lesson from the last 15 years.
blitzar 5y ago
> We’ve been printing absurd amounts of money for years praying inflation didn’t show up in meaningful indicators and now that it shows up it’s some big surprise They have been praying for inflation - it is the intended outcome of the policy and it has taken 23 years for it to happen. What they wanted was inflation in wages, assets, goods, services, productivity and growth. Inflate away the notional value of debt. What they got was gamestonk, crypto, stagnant wages, gig economy and antiwork.

nwah1 5y ago

The Fed can't monetize the debt unless there is debt to monetize. The checks all came from Congress. But there was simultaneous easy money policy for years, in contradiction to the Taylor Rule. This deviation from that rule was going on for years before Powell, but he continued it for years, all throughout a prolonged economic boom. Instead of counter-cyclical policy, this is pro-cyclical policy. And resulted in the misallocation you noted, for which Congress is even more to blame.

refurb 5y ago

During the monetary expansion post-2008, I recall listening to a number of experts basically predict exactly what's happening today - "the problem with expanding the money supply is that by the time you realize you need to pull back, it's too late and there will be a ton of political pressure to wait just a bit longer".