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As Yellen said, the Fed was right about inflation - up until 2022 hit. We were in a vulnerable position, with an extended but not inherently problematic money s
by arcticbull 4y ago
As Yellen said, the Fed was right about inflation - up until 2022 hit. We were in a vulnerable position, with an extended but not inherently problematic money supply. What happened in 2022 was a mix of:
- an un-clean reopening where many states just dropped restrictions and let people go all of a sudden.
- combined with snarled supply chains.
- combined with a labor shortage.
And then on top of that:
- a war between a major oil exporter (Russia) and a major food exporter (Ukraine).
- COVID lockdowns in China making goods yet more scarce.
The Fed was in a tough spot but made good calls given the information available. Then the new stuff came in and all of a sudden we found ourselves in a pickle. The issue isn't IMO inherently too much money, it's suddenly too little supply.
All the Fed can do is nuke demand. We will not have a good time.
- twblalock 4y agoThe elephant in the room is that the Fed had been juicing the economy with QE and low interest rates since the 2008 crisis, and did not stop after that crisis ended despite having a decade to do so.
- blockwriter 4y agoWhat do you mean by un-clean reopening? Do you think policies ostensibly meant for favorable public health health outcomes should have been partially or selectively maintained for purely economic reasons? The former motivation was suspect in the extreme, while the latter is entirely inhumane.
- arcticbull 4y agoI think that going from entirely locked down to entirely open with no intermediate steps in a lot of cases led to a glut of demand chasing a dearth of supply, especially in travel and leisure. This is more an observation, and I don't know if there was a so-called 'clean' re-opening possible.