3 ms·

seems so, although id argue the recession light came on in the cockpit sometime around late 2020...we just chose to ignore it. doubling down on 2010s speculat

seems so, although id argue the recession light came on in the cockpit sometime around late 2020...we just chose to ignore it. doubling down on 2010s speculative monetary policy of near negative interest is just wishful thinking, but directing relief grants to multibillion dollar industries was bad comedy. its really hard to imagine how the fed assumed 'free money' was a sober policy to drive one of the worlds largest economies on. the best we can hope for now is the student and automotive credit bubbles dont burst under the strain of half-percentage-point increases, which i suspect will continue throughout 2023 as inflation crests 15%.

qclibre22 4y ago
Congress and the previous and current administrations are also responsible for the "free money", not just the Fed. Lot of blame to go around.
slaw 4y ago
Is dollar going to stop being world reserve currency with 15% inflation?
- dr_faustus 4y ago
  Not if the rest of the world is at 30%…
- shagie 4y ago
  If we survived the economics of the 80s, we can survive the 2020s. Next, pick a country and its inflation rate. The Euro? https://www.nytimes.com/2022/07/01/business/eurozone-inflation-june.html https://www.nytimes.com/2022/07/01/business/eurozone-inflati... Pick another currency that meets the requirements of being a reserve currency and then look at its inflation rate.
  - slaw 4y ago
    In the 80s inflation was high, but interest rate was above inflation. This time inflation is 8% above interest rate.
    - shagie 4y ago
      That is the result from the rate of inflation changes being so steep. As it is, the interest rate is being adjusted at the fastest reasonable (and predictable) rate. There were more than a few people shocked with the first 0.75% increase... not so many this past time. For addressing inflation, the fed's tools are rather blunt (adjusting interest rate). The issues of disrupted logistics and energy cost increases are ones that the fed has little direct control over. The monetary policy tools are being used to the greatest degree they can. The fiscal policy tools have been left rather idle as those require political will to use. Returning to the reserve currency question - is there another currency that meets the requirements? Saying "the euro" is ok - and that represents the second largest reserve currency holdings, but, if you are pointing to inflation, it is hitting just as hard in Europe. The yen and the pound sterling have their own issues and China's currency has another set of issues. The crystal ball gazing of "what about 15% inflation and reserve currency" misses out on what is happening to the rest of the world and what can and is being done to address inflation.

qclibre22 4y ago

Congress and the previous and current administrations are also responsible for the "free money", not just the Fed. Lot of blame to go around.

slaw 4y ago

Is dollar going to stop being world reserve currency with 15% inflation?

dr_faustus 4y ago
Not if the rest of the world is at 30%…
shagie 4y ago
If we survived the economics of the 80s, we can survive the 2020s. Next, pick a country and its inflation rate. The Euro? https://www.nytimes.com/2022/07/01/business/eurozone-inflation-june.html https://www.nytimes.com/2022/07/01/business/eurozone-inflati... Pick another currency that meets the requirements of being a reserve currency and then look at its inflation rate.
- slaw 4y ago
  In the 80s inflation was high, but interest rate was above inflation. This time inflation is 8% above interest rate.
  - shagie 4y ago
    That is the result from the rate of inflation changes being so steep. As it is, the interest rate is being adjusted at the fastest reasonable (and predictable) rate. There were more than a few people shocked with the first 0.75% increase... not so many this past time. For addressing inflation, the fed's tools are rather blunt (adjusting interest rate). The issues of disrupted logistics and energy cost increases are ones that the fed has little direct control over. The monetary policy tools are being used to the greatest degree they can. The fiscal policy tools have been left rather idle as those require political will to use. Returning to the reserve currency question - is there another currency that meets the requirements? Saying "the euro" is ok - and that represents the second largest reserve currency holdings, but, if you are pointing to inflation, it is hitting just as hard in Europe. The yen and the pound sterling have their own issues and China's currency has another set of issues. The crystal ball gazing of "what about 15% inflation and reserve currency" misses out on what is happening to the rest of the world and what can and is being done to address inflation.