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sadly my original nihilist prediction of 10%+ inflation by Q4 is starting to seem more meritous every month. the efforts to incept quantitative tightening as o

sadly my original nihilist prediction of 10%+ inflation by Q4 is starting to seem more meritous every month. the efforts to incept quantitative tightening as of April are...bad comedy. The federal reserves one quarter of one pecent increase of the prime interest rate is a performance art. it has absolutely no ability to control inflation in any context. The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. the honeymoon from last december of downplaying the issue as 'transient' inflation is over. Unchecked inflation and sky high gas prices have the very real potential to defenestrate whole sectors of the US economy predicated on summer travel and spending. other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. this isnt solely foreign policy to blame. its a QE addiction stretching all the way back to 2008 the fed has tried and failed to treat.

AnthonyMouse 5y ago
> other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. Neither of those fix it. Most people don't make minimum wage; the 25th percentile wage is already $15/hour and all of those people are paying higher prices. Which increase even more if you raise the minimum wage and require that cost increase to be priced into goods and services. Works projects reduce unemployment. Unemployment is already very low. That's not the problem so that's not the solution. > The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. The real solution is a little weird. There are two real problems. a) People can't afford consumer goods (short term). b) Asset bubble inflated by low interest rates (long term). It's actually the second one that contributes to the first. High housing prices etc. relative to wages increase real cost of living. But what do you want to do, pop the bubble by raising rates? What we need is for nominal asset prices to stay where they are but for interest rates to go up. So how do you keep the bubble from popping while raising interest rates? Put money into it from somewhere else. Send people checks. That will cause inflation to counteract the effect of higher interest rates on nominal asset prices, but this time the beneficiaries of the policy are the people who get the checks (i.e. everybody) instead of the holders of speculative assets. So nominal asset prices stay the same and nominal non-asset prices (consumer goods and wages) go up. But people have the checks to cover that in the short term and long term we finally get out of low interest rates and high housing costs relative to wages.

AnthonyMouse 5y ago

> other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. Neither of those fix it. Most people don't make minimum wage; the 25th percentile wage is already $15/hour and all of those people are paying higher prices. Which increase even more if you raise the minimum wage and require that cost increase to be priced into goods and services. Works projects reduce unemployment. Unemployment is already very low. That's not the problem so that's not the solution. > The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. The real solution is a little weird. There are two real problems. a) People can't afford consumer goods (short term). b) Asset bubble inflated by low interest rates (long term). It's actually the second one that contributes to the first. High housing prices etc. relative to wages increase real cost of living. But what do you want to do, pop the bubble by raising rates? What we need is for nominal asset prices to stay where they are but for interest rates to go up. So how do you keep the bubble from popping while raising interest rates? Put money into it from somewhere else. Send people checks. That will cause inflation to counteract the effect of higher interest rates on nominal asset prices, but this time the beneficiaries of the policy are the people who get the checks (i.e. everybody) instead of the holders of speculative assets. So nominal asset prices stay the same and nominal non-asset prices (consumer goods and wages) go up. But people have the checks to cover that in the short term and long term we finally get out of low interest rates and high housing costs relative to wages.