8 ms·

Janet Yellen admits she was wrong about inflation being transitory

59 points by donsupreme 4y ago

1-6 4y ago
People can be wrong all the time but did she at least provide a post mortem of how her data was so off?
- mrandish 4y ago
  I know, right? It would be nice to see some evidence of an ability to update priors based on new evidence from experience. Yet they keep repeating the same mistakes.
- throwaway9870 4y ago
  From what I read, she didn't anticipate the variants and didn't anticipate the war in Ukraine. The latter I understand, the former less so. I am curious what was she anticipating? Every goes great? Sometimes I wonder if a system engineer would not be a lot better this type of thing?
ganoushoreilly 4y ago
What I don't understand is how they're using prescription drug prices as a key lever for Inflation? I'm all for reducing their prices and that's a good thing, but come on, prescriptions make up a minuscule part of the economic issues that are driving inflation. First and foremost, Price gouging across industries is self fullfilling the inflation fears, meanwhile record profits of 2x or more are being had (looking at you tyson).
- legitster 4y ago
  Price gouging is not really a thing - it's entirely in the eye of the beholder. If you can sell something at a price, then that's its price. (And I would much prefer Tyson raising prices than leaving shelves bare.) For the same reason we wouldn't blame deflation on Memorial Day sales, we shouldn't really blame price increases for inflation. The price increases are the inflation.
  - softcactus 4y ago
    Price gouging is definitely a thing when you have a captive consumer base or inelastic demand. How much are you willing to pay for a bottle of water in the desert?
    - aidenn0 4y ago
      Price gouging is only a thing when you have both inelastic demand and a monopoly (which is why patented products like prescription drugs can be price gouging). If someone is charging $1M per bottle for water in the desert, then pretty quickly a dozen more water sellers are going to make tracks for the desert.
    - weezin 4y ago
      Well, knowing I'm going to the desert I'm going to bring water. Just like how I eat before going to the airport because of the prices. That doesn't map to prescription drug prices, but it does for most things. What you described is more arbitrage than price gouging.
bwb 4y ago
Nobody knew… she thought it was x at an early stage… it was y.
scohesc 4y ago
It's crazy how the cycle of human ignorance just keeps repeating itself. "Inflation isn't happening, you're just spreading misinformation! Everything is fine!" "Inflation might be happening, but if it is, it'll only be transitory and not as bad as our detractors suppose it will be!" "Inflation is happening, it's transitory, it'll be over soon!" "Inflation is happening, it's not transitory, and we don't know how long it'll last." "How do we start looking at fixing this inflation problem? Spend more money!" The economic power of the individual in small, tighter-knit communities/countries vs the influence and economic power of conglomerates competing in the global market is a David vs Goliath-tier battle that was lost a long time ago. Countries/businesses who survived by running lean, trying to keep things local, etc - have been priced out by the power of the global conglomerates and governments trying to get a piece of the pie. Inflation is such an insidious tax - it affects everything and just domino effects into absolute chaos if mismanaged. Your bank account is worth x% less. Your wages are technically worth x% less. Companies trying to stay afloat or maintain/exceed profits year over year will raise prices of their goods (store cost/"shrinkflation" of packaging) to try and lessen the blow of higher transportation costs, etc. Not sure what the solution is other than something similar to what the french did to their ruling class hundred of years ago - I don't condone violence at all, but it seems like it's getting to a tipping point where some bolt is going to finally shear or the last straw will land on the camel's back.
- throwaway5959 4y ago
  Curious where you live that things are so bad you think a violent revolution is necessary.
  - schainks 4y ago
    Question of when not if: https://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014 https://www.politico.com/magazine/story/2014/06/the-pitchfor...
  - trafficante 4y ago
    There’s definitely a burgeoning undercurrent of “no political solutions exist that can solve our problems”. It doesn’t seem exclusively limited to the “very online” folks: anecdotally I’ve had it expressed to me irl from people on both the right and the left here in Portland. Primarily the right but, since the abortion SCOTUS leak, the frequency from the left has increased tremendously. And if the federal government is truly facing actual questions of legitimacy from both sides, they seem to be doing all they can to make the problem worse. We needed a Transparency Board and instead got a Disinformation Board.
FollowingTheDao 4y ago
I have an economics degree. I left economics to teach American history and secondary education. Why did I leave economics? Because they’re all guessing. Let me repeat that, they are all guessing. The only people who know what’s going on in the economy have enough money to control the economy with all their money, like Buffet. Yellen has no idea what’s going on. Economist are constantly guessing and on the chance that they are right there heaped with praise, and when they’re wrong nothing happens. They keep their jobs to predict again.
- Clubber 4y ago
  Fund managers too. Anyone who proclaims to predict the future, whether it's an economist, a fund manager, or a tarot car reader, are mostly just salesmen.
- scotuswroteus 4y ago
  Yellen lost her job as Fed Chair. Most economists, in my experience, are guessing about how the political system works when it's right there for you on Wikipedia
legitster 4y ago
> “I think I was wrong then about the path that inflation would take,” she told CNN’s Wolf Blitzer. “There have been unanticipated and large shocks that have boosted energy and food prices, and supply bottlenecks that have affected our economy badly that I ... at the time, didn’t fully understand.” We put a bunch of money into the economy as a response to Covid. More money means prices go up. But we put in a fixed amount of money, so there should have been a fixed amount of inflation. The real explanation here is that there is less stuff! International trade is a hot mess right now and things are just literally more expensive because we have become materially poorer.
- deputymartin 4y ago
  Right, that is the other side of the inflation equation that is often overlooked; more money chasing less goods.
  - m-p-3 4y ago
    The classic supply and demand.
- jgalt212 4y ago
  This chart of M2 looks like the amount of money pumped into the economy was anything but a fixed amount. Unless, if you're talking about the first derivate of M2, then you could argue number is fixed. https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS
  - legitster 4y ago
    Sure. The government injected a bunch of money, but then banks took advantage of low interest rates and created money at a faster clip than the fed anticipated. The question is why they kept rates so low for so long, and the answer provided here is they didn't plan for a trade retraction.
  - michael1999 4y ago
    That's a great link. If you edit the graph and replace it with "Percent Change from Year Ago", you see the 2008 spike and recovery clearly, and the truly enormous spike starting at 2020. I'm surprised to see ~5% growth since Volker. That is higher than I'd expect. But if you add Real GDP to that chart, you can see the 2020 contraction was much larger than 2008, so the intervention was at least arguable. https://fred.stlouisfed.org/series/WM2NS#0 https://fred.stlouisfed.org/series/WM2NS#0
scotuswroteus 4y ago
I thought Jerome Powell was the one who said it. Edit: Yeah he was, so they both said it: https://reason.com/2022/05/19/jerome-powell-who-wildly-misjudged-inflation-is-overwhelmingly-reconfirmed-as-fed-chair/ https://reason.com/2022/05/19/jerome-powell-who-wildly-misju... Before I say all this, please please please don't be the guy who replies with fed nihilism. You're not cool or edgy just because you think the fed is hopelessly corrupted and its only role in American is to keep an asset/everything bubble inflated. Take that mess back to the comments under Joe Rogan's YouTube videos. Ok, so the key takehome for all of this, to me, is that by the end of this decade, we are going to be some serious Fed reform. The Biden team is trying to finesse something here that's unfinesseable. Right now, this pageantry is about Biden trying to find his footing with respect to the economic packages his party expects him to push forward in the run up to the midterms. In 2020, his party pulled out a few surprise wins in states like Georgia to win a thin majority in the Senate by promising people $2,000 checks as a Covid-stimulus. Now, he has to do something that makes good on that promise, and the likely best move is to find a way to forgive consumer debt. The thing is, if he does that and it pushes inflation in the wrong direction, he's going to come off like (even more of) a total klutz. So, he's trying to preempt the narrative out there that he's Jimmy Carter, Part 2: a one term, deeply religious but left-liberal president who was put into office after a menace was removed who fumbled his way into stagflation. He can't avoid that though. His op-ed in the WSJ this weekend illustrates the point: it's mid. Same with the milquetoast policies he's got Yellen up here selling: total mid. The concept is that policies his administration has already put into place are fighting inflation. As they say in D.C., that dog won't hunt. If Biden is already fighting inflation, why are there pictures of >$9 gas/gallon popping up in L.A.? Why is the price of chicken so high? What's worse for his political prospects is what's coming: he's going to keep pushing for stimulative spending/consumer debt relief. If he doesn't give economic benefits to his base to make good on that $2k promise, they will not show up for the midterm. That's the 2022 political reality. Here, to make way for more inflation-spurring policies, I imagine Yellen has to fall on the sword for the current state of inflation, even though she was the former Fed Chair, not the current one, and the current Fed Chair (Trump-appointed/Biden-Reappointed), whose independence Biden is supposedly respecting, Jerome Powell, is the one publicly branded with the "transitory" remark. I think that's Biden trying to give space to Powell to make it that much easier for his Fed to continue their 180-degree flip on whether to use their tools to fight inflation by cooling the economy. So far, Powell is publicly declaring that he's channeling the Carter-appointed Fed Chair Paul Volcker, who raised interest rates dramatically and beat back inflation in the early 80s. Biden is giving Powell room to Volckerize, and my bet is Biden hopes Powell will take his final form a month or two after the midterms, but not before. But all of this is just absurd theatre that's attempting to thread an unthreadable needle: the Fed helped to cause this bubble, and it needs to be reformed. If you've been following Powell's remarks over the last few months, he has moved from inflation is transitory TO it's time to increase the fed funds rate to hem in the economy through a "soft" landing TO it may not be a soft landing, but the landing will be "soft-ish." Why is Yellen the one to take the blame for that? She shouldn't. But what Biden needs Powell's Fed to do is continue to increase that rate by 50 basis point at each of the upcoming meetings, clear the Mortgage Backed Securities off its balance sheet, and then after the midterms amp the rate up ASAP by 75 basis points at a click or more, so that we can start that recession quickly then hopefully find our way toward something Biden can call a "recovery" by the time 2024 elections roll around. And the Fed isn't going to do that if there's overt pressure from the administration. I'm listening to Bernanke's latest book on audible (read by the same guy who reads WaPo David Ignatius's thriller novels), and he goes out of his way to decry any political pressure that elected officials apply to the Fed. But that doesn't mean the Fed isn't mindful that if it fails to exercise its "policy tools" in a way that seems reasonable to elect officials, those officials can yank that independence away. Between abolishing the filibuster, packing the Supreme Court, and rendering the Fed less independent, my money (ha) would be on the third option being the most palatable to the most amount of Americans as a way for Biden to make a bold mark on American institutions toward the end of his first term. Right now, there's a very careful dance. Biden will try to survive the midterms by arming the Ukranians, emphasizing background checks for guns, and forgiving debt. But after this is all over, and the way the federal government has twisted itself into knots to avoid reforming the fed all for naught, the fed is going to have to be reformed.
Gunax 4y ago
Admitting mistakes is a strength, and something we don't see enough of in public life.
eftychis 4y ago
I call BS. The Fed can do jack besides scare everyone. a) There is demand inelasticity on certain things like oil as the economy is in full swing. People need to drive to work, fly/ship for business, produce plastic/material, keep their business powered. There is some elastic demand sure, but given the state of savings, that is hard pressed already. b) Oil supply is not improving. There is OPEC+ that is making significant profits. Russia is making double profits from EU and India right now -- different conversation. It is a monopoly during war. [b') Ukraine is out of the picture with its natural gas opportunities for the next 5 year at least. Similarly, Greece.] c) Due to the scare for negative oil futures and the unpopularity due to the climate impact, smaller investment on new oil production experimental does not look promising. d) U.S. oil companies have clearly stated they are going to not alter their oil output in any way to drop favorable prices, they are going to pass their earnings to their investors. e) China, the supplier of the world, is experiencing significant issues and they are trying to stay afloat and not have a real estate and society collapse while keeping up with their zero covid policy. f) Shipping is experiencing issues continuously during these unstable times, including piracy -- https://www.msn.com/en-us/news/world/iran-urges-greece-to-cooperate-over-seized-ships-without-us-role/ar-AAXURyg https://www.msn.com/en-us/news/world/iran-urges-greece-to-co... https://www.ft.com/content/37bb01c2-8b54-45d4-a93c-215514092793 https://www.ft.com/content/37bb01c2-8b54-45d4-a93c-215514092... g) China, and other countries, is actually reducing interest rates faster than U.S. is increasing them. On items b-f Fed has zero power. By increasing interest rates hard, they are affecting (a) but due to inelasticity that means that the cure will certainly kill the patient. (g) might undo the actions of Fed and drive capital to real estate. Increasing rates might also actually increase housing prices and demand counterintuitively, as mortgages become harder to procure and recession forces people to sell, thus companies that buy houses in bulk in cash like Pretium get to gain a monopoly of the market and drive prices up.
- someguydave 4y ago
  interesting summary. It actually seems that if there is going to be a long process of reshoring manufactured goods it would make sense to keep rates as low as possible to support the long term investments needed
midislack 4y ago
Why would it have been transitory? We're printing (creating) money faster than ever before, a century's worth a year now. When an expert like this lies to your face while smirking and hitting you in the ribs with their elbow you don't have to pretend to believe them.
weezin 4y ago
I've been thinking recently. We are at near 4 years inflation in 1 year based on the fed's 2% gold standard. This question is mostly rhetorical, but is the target going to be negative to get us back on track? What do we do when we are this far off target, forgive and forget? I say mostly rhetorical because I think that rapid deflation would only be possible with an implosion.
kurupt213 4y ago
It’s not a mistake when you are lying. They were lying.
mk81 4y ago
happyjack 4y ago
This is probably the best comment thread I've seen on HN.

59 points by donsupreme 4y ago

1-6 4y ago

People can be wrong all the time but did she at least provide a post mortem of how her data was so off?

mrandish 4y ago
I know, right? It would be nice to see some evidence of an ability to update priors based on new evidence from experience. Yet they keep repeating the same mistakes.
throwaway9870 4y ago
From what I read, she didn't anticipate the variants and didn't anticipate the war in Ukraine. The latter I understand, the former less so. I am curious what was she anticipating? Every goes great? Sometimes I wonder if a system engineer would not be a lot better this type of thing?

ganoushoreilly 4y ago

What I don't understand is how they're using prescription drug prices as a key lever for Inflation? I'm all for reducing their prices and that's a good thing, but come on, prescriptions make up a minuscule part of the economic issues that are driving inflation. First and foremost, Price gouging across industries is self fullfilling the inflation fears, meanwhile record profits of 2x or more are being had (looking at you tyson).

legitster 4y ago
Price gouging is not really a thing - it's entirely in the eye of the beholder. If you can sell something at a price, then that's its price. (And I would much prefer Tyson raising prices than leaving shelves bare.) For the same reason we wouldn't blame deflation on Memorial Day sales, we shouldn't really blame price increases for inflation. The price increases are the inflation.
- softcactus 4y ago
  Price gouging is definitely a thing when you have a captive consumer base or inelastic demand. How much are you willing to pay for a bottle of water in the desert?
  - aidenn0 4y ago
    Price gouging is only a thing when you have both inelastic demand and a monopoly (which is why patented products like prescription drugs can be price gouging). If someone is charging $1M per bottle for water in the desert, then pretty quickly a dozen more water sellers are going to make tracks for the desert.
  - weezin 4y ago
    Well, knowing I'm going to the desert I'm going to bring water. Just like how I eat before going to the airport because of the prices. That doesn't map to prescription drug prices, but it does for most things. What you described is more arbitrage than price gouging.

bwb 4y ago

Nobody knew… she thought it was x at an early stage… it was y.

scohesc 4y ago

It's crazy how the cycle of human ignorance just keeps repeating itself. "Inflation isn't happening, you're just spreading misinformation! Everything is fine!" "Inflation might be happening, but if it is, it'll only be transitory and not as bad as our detractors suppose it will be!" "Inflation is happening, it's transitory, it'll be over soon!" "Inflation is happening, it's not transitory, and we don't know how long it'll last." "How do we start looking at fixing this inflation problem? Spend more money!" The economic power of the individual in small, tighter-knit communities/countries vs the influence and economic power of conglomerates competing in the global market is a David vs Goliath-tier battle that was lost a long time ago. Countries/businesses who survived by running lean, trying to keep things local, etc - have been priced out by the power of the global conglomerates and governments trying to get a piece of the pie. Inflation is such an insidious tax - it affects everything and just domino effects into absolute chaos if mismanaged. Your bank account is worth x% less. Your wages are technically worth x% less. Companies trying to stay afloat or maintain/exceed profits year over year will raise prices of their goods (store cost/"shrinkflation" of packaging) to try and lessen the blow of higher transportation costs, etc. Not sure what the solution is other than something similar to what the french did to their ruling class hundred of years ago - I don't condone violence at all, but it seems like it's getting to a tipping point where some bolt is going to finally shear or the last straw will land on the camel's back.

throwaway5959 4y ago
Curious where you live that things are so bad you think a violent revolution is necessary.
- schainks 4y ago
  Question of when not if: https://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014 https://www.politico.com/magazine/story/2014/06/the-pitchfor...
- trafficante 4y ago
  There’s definitely a burgeoning undercurrent of “no political solutions exist that can solve our problems”. It doesn’t seem exclusively limited to the “very online” folks: anecdotally I’ve had it expressed to me irl from people on both the right and the left here in Portland. Primarily the right but, since the abortion SCOTUS leak, the frequency from the left has increased tremendously. And if the federal government is truly facing actual questions of legitimacy from both sides, they seem to be doing all they can to make the problem worse. We needed a Transparency Board and instead got a Disinformation Board.

FollowingTheDao 4y ago

I have an economics degree. I left economics to teach American history and secondary education. Why did I leave economics? Because they’re all guessing. Let me repeat that, they are all guessing. The only people who know what’s going on in the economy have enough money to control the economy with all their money, like Buffet. Yellen has no idea what’s going on. Economist are constantly guessing and on the chance that they are right there heaped with praise, and when they’re wrong nothing happens. They keep their jobs to predict again.

Clubber 4y ago
Fund managers too. Anyone who proclaims to predict the future, whether it's an economist, a fund manager, or a tarot car reader, are mostly just salesmen.
scotuswroteus 4y ago
Yellen lost her job as Fed Chair. Most economists, in my experience, are guessing about how the political system works when it's right there for you on Wikipedia

legitster 4y ago

> “I think I was wrong then about the path that inflation would take,” she told CNN’s Wolf Blitzer. “There have been unanticipated and large shocks that have boosted energy and food prices, and supply bottlenecks that have affected our economy badly that I ... at the time, didn’t fully understand.” We put a bunch of money into the economy as a response to Covid. More money means prices go up. But we put in a fixed amount of money, so there should have been a fixed amount of inflation. The real explanation here is that there is less stuff! International trade is a hot mess right now and things are just literally more expensive because we have become materially poorer.

deputymartin 4y ago
Right, that is the other side of the inflation equation that is often overlooked; more money chasing less goods.
- m-p-3 4y ago
  The classic supply and demand.
jgalt212 4y ago
This chart of M2 looks like the amount of money pumped into the economy was anything but a fixed amount. Unless, if you're talking about the first derivate of M2, then you could argue number is fixed. https://fred.stlouisfed.org/series/WM2NS https://fred.stlouisfed.org/series/WM2NS
- legitster 4y ago
  Sure. The government injected a bunch of money, but then banks took advantage of low interest rates and created money at a faster clip than the fed anticipated. The question is why they kept rates so low for so long, and the answer provided here is they didn't plan for a trade retraction.
- michael1999 4y ago
  That's a great link. If you edit the graph and replace it with "Percent Change from Year Ago", you see the 2008 spike and recovery clearly, and the truly enormous spike starting at 2020. I'm surprised to see ~5% growth since Volker. That is higher than I'd expect. But if you add Real GDP to that chart, you can see the 2020 contraction was much larger than 2008, so the intervention was at least arguable. https://fred.stlouisfed.org/series/WM2NS#0 https://fred.stlouisfed.org/series/WM2NS#0

scotuswroteus 4y ago

I thought Jerome Powell was the one who said it. Edit: Yeah he was, so they both said it: https://reason.com/2022/05/19/jerome-powell-who-wildly-misjudged-inflation-is-overwhelmingly-reconfirmed-as-fed-chair/ https://reason.com/2022/05/19/jerome-powell-who-wildly-misju... Before I say all this, please please please don't be the guy who replies with fed nihilism. You're not cool or edgy just because you think the fed is hopelessly corrupted and its only role in American is to keep an asset/everything bubble inflated. Take that mess back to the comments under Joe Rogan's YouTube videos. Ok, so the key takehome for all of this, to me, is that by the end of this decade, we are going to be some serious Fed reform. The Biden team is trying to finesse something here that's unfinesseable. Right now, this pageantry is about Biden trying to find his footing with respect to the economic packages his party expects him to push forward in the run up to the midterms. In 2020, his party pulled out a few surprise wins in states like Georgia to win a thin majority in the Senate by promising people $2,000 checks as a Covid-stimulus. Now, he has to do something that makes good on that promise, and the likely best move is to find a way to forgive consumer debt. The thing is, if he does that and it pushes inflation in the wrong direction, he's going to come off like (even more of) a total klutz. So, he's trying to preempt the narrative out there that he's Jimmy Carter, Part 2: a one term, deeply religious but left-liberal president who was put into office after a menace was removed who fumbled his way into stagflation. He can't avoid that though. His op-ed in the WSJ this weekend illustrates the point: it's mid. Same with the milquetoast policies he's got Yellen up here selling: total mid. The concept is that policies his administration has already put into place are fighting inflation. As they say in D.C., that dog won't hunt. If Biden is already fighting inflation, why are there pictures of >$9 gas/gallon popping up in L.A.? Why is the price of chicken so high? What's worse for his political prospects is what's coming: he's going to keep pushing for stimulative spending/consumer debt relief. If he doesn't give economic benefits to his base to make good on that $2k promise, they will not show up for the midterm. That's the 2022 political reality. Here, to make way for more inflation-spurring policies, I imagine Yellen has to fall on the sword for the current state of inflation, even though she was the former Fed Chair, not the current one, and the current Fed Chair (Trump-appointed/Biden-Reappointed), whose independence Biden is supposedly respecting, Jerome Powell, is the one publicly branded with the "transitory" remark. I think that's Biden trying to give space to Powell to make it that much easier for his Fed to continue their 180-degree flip on whether to use their tools to fight inflation by cooling the economy. So far, Powell is publicly declaring that he's channeling the Carter-appointed Fed Chair Paul Volcker, who raised interest rates dramatically and beat back inflation in the early 80s. Biden is giving Powell room to Volckerize, and my bet is Biden hopes Powell will take his final form a month or two after the midterms, but not before. But all of this is just absurd theatre that's attempting to thread an unthreadable needle: the Fed helped to cause this bubble, and it needs to be reformed. If you've been following Powell's remarks over the last few months, he has moved from inflation is transitory TO it's time to increase the fed funds rate to hem in the economy through a "soft" landing TO it may not be a soft landing, but the landing will be "soft-ish." Why is Yellen the one to take the blame for that? She shouldn't. But what Biden needs Powell's Fed to do is continue to increase that rate by 50 basis point at each of the upcoming meetings, clear the Mortgage Backed Securities off its balance sheet, and then after the midterms amp the rate up ASAP by 75 basis points at a click or more, so that we can start that recession quickly then hopefully find our way toward something Biden can call a "recovery" by the time 2024 elections roll around. And the Fed isn't going to do that if there's overt pressure from the administration. I'm listening to Bernanke's latest book on audible (read by the same guy who reads WaPo David Ignatius's thriller novels), and he goes out of his way to decry any political pressure that elected officials apply to the Fed. But that doesn't mean the Fed isn't mindful that if it fails to exercise its "policy tools" in a way that seems reasonable to elect officials, those officials can yank that independence away. Between abolishing the filibuster, packing the Supreme Court, and rendering the Fed less independent, my money (ha) would be on the third option being the most palatable to the most amount of Americans as a way for Biden to make a bold mark on American institutions toward the end of his first term. Right now, there's a very careful dance. Biden will try to survive the midterms by arming the Ukranians, emphasizing background checks for guns, and forgiving debt. But after this is all over, and the way the federal government has twisted itself into knots to avoid reforming the fed all for naught, the fed is going to have to be reformed.

Gunax 4y ago

Admitting mistakes is a strength, and something we don't see enough of in public life.

eftychis 4y ago

I call BS. The Fed can do jack besides scare everyone. a) There is demand inelasticity on certain things like oil as the economy is in full swing. People need to drive to work, fly/ship for business, produce plastic/material, keep their business powered. There is some elastic demand sure, but given the state of savings, that is hard pressed already. b) Oil supply is not improving. There is OPEC+ that is making significant profits. Russia is making double profits from EU and India right now -- different conversation. It is a monopoly during war. [b') Ukraine is out of the picture with its natural gas opportunities for the next 5 year at least. Similarly, Greece.] c) Due to the scare for negative oil futures and the unpopularity due to the climate impact, smaller investment on new oil production experimental does not look promising. d) U.S. oil companies have clearly stated they are going to not alter their oil output in any way to drop favorable prices, they are going to pass their earnings to their investors. e) China, the supplier of the world, is experiencing significant issues and they are trying to stay afloat and not have a real estate and society collapse while keeping up with their zero covid policy. f) Shipping is experiencing issues continuously during these unstable times, including piracy -- https://www.msn.com/en-us/news/world/iran-urges-greece-to-cooperate-over-seized-ships-without-us-role/ar-AAXURyg https://www.msn.com/en-us/news/world/iran-urges-greece-to-co... https://www.ft.com/content/37bb01c2-8b54-45d4-a93c-215514092793 https://www.ft.com/content/37bb01c2-8b54-45d4-a93c-215514092... g) China, and other countries, is actually reducing interest rates faster than U.S. is increasing them. On items b-f Fed has zero power. By increasing interest rates hard, they are affecting (a) but due to inelasticity that means that the cure will certainly kill the patient. (g) might undo the actions of Fed and drive capital to real estate. Increasing rates might also actually increase housing prices and demand counterintuitively, as mortgages become harder to procure and recession forces people to sell, thus companies that buy houses in bulk in cash like Pretium get to gain a monopoly of the market and drive prices up.

someguydave 4y ago
interesting summary. It actually seems that if there is going to be a long process of reshoring manufactured goods it would make sense to keep rates as low as possible to support the long term investments needed

midislack 4y ago

Why would it have been transitory? We're printing (creating) money faster than ever before, a century's worth a year now. When an expert like this lies to your face while smirking and hitting you in the ribs with their elbow you don't have to pretend to believe them.

weezin 4y ago

I've been thinking recently. We are at near 4 years inflation in 1 year based on the fed's 2% gold standard. This question is mostly rhetorical, but is the target going to be negative to get us back on track? What do we do when we are this far off target, forgive and forget? I say mostly rhetorical because I think that rapid deflation would only be possible with an implosion.

kurupt213 4y ago

It’s not a mistake when you are lying. They were lying.

mk81 4y ago

happyjack 4y ago

This is probably the best comment thread I've seen on HN.