9 ms·

Today’s inflation is not a repeat of the 1970s

87 points by SirLJ 4y ago

seydor 4y ago
america can afford a terrible Fed. But Europe and the ECB will have to follow the same path and that will be disastrous for europe
deleted 4y ago
[deleted]
mjevans 4y ago
Anecdotally, I suspect today's inflation is caused by a couple factors. 1 Not enough Housing (where people want and NEED it) 2 Global politics exacerbating energy shortages 3 Insufficient supply (generally) for demand 3 is really driven by 1 and 2, but the pandemic also had a hand in creating it. For service industries there were a lot of short term layoffs; and workers are extremely reluctant to return to jobs that don't make economic sense for them, and professions they've moved away from. 2 & 1 Regulatory changes to make it easier to build within approved project profiles would really help. The US should adopt Japan's style of area zoning and require that nation-wide (though States and more local areas should still decide which areas are zoned what). As would changes that make ALL types of energy production easier to finance and build in PRE-approved configurations. Electric trains, trucks, and cars would really help with insane energy prices caused by unfriendly global oil interests. 1 Housing hasn't kept up with job growth locations of the US, and probably internationally as well, for at least 50 years. This needs market _correction_ level directives and instead of rent-protection skyscraper, middle-sized multi-levels, townhouses, and even some single family sized houses, where they make sense, need to be built.
- starfallg 4y ago
  You left out the underlying factor, which was Covid stimulus including the grants and loans that were written off. Money was being created and then funneled to the sectors of the economy which were not productive (such as commercial real estate) creating stress in the sectors that were. This will inevitably cause inflation with the conditions 2 & 3 you listed. Housing is due for a correction as prices are at such high multiples of average wage. The wage price growth we see now is just the first step in bringing the ratio down.
  - willnonya 4y ago
    For some reason people keep skipping over this part...
  - mjevans 4y ago
    Ignored, not forgot. It'd be like 4 or 5 on the list at least, and was a 'One Time' (spread across 3 or so events within about a year) tax holiday like effect. The timing was, maybe not the best, but I've yet to see a compelling explanation for how it would have an overall effect on __long term__ inflation.
    - starfallg 4y ago
      I'm not just talking about government spending, but central bank intervention as well. It's in the trillions - https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/ https://www.bloomberg.com/graphics/2021-coronavirus-global-d...
- bsder 4y ago
  > 3 Insufficient supply (generally) for demand Welcom to Always Late Inventory(tm). Nobody has any inventory to absorb demand. Nobody has any excess capacity to bring online to absorb demand. Nobody is going to tool up for demand that is likely to go away once fulfilled--especially since most of them have no competitors anyway due to consolidation. Rattle this backward at each step of the supply chain. Maximally efficient is minimally robust.
  - ravel-bar-foo 4y ago
    > especially since most of them have no competitors anyway due to consolidation. This is the core explanation for the observed price increases being of the same magnitude as increases in corporate profits.
- 29athrowaway 4y ago
  There's a deficit of 600,000 residential units.
- ppg677 4y ago
  I think it is the labor market. Pandemic caused a lot of people to leave the labor market.
  - 7speter 4y ago
    But we’re at full employment…
    - yxhuvud 4y ago
      Which is a statement that doesn't gainsay what you commented on in any way. People leaving the labor market is not measured by the unemployment rate, it is measured by the labor participation rate.
    - steve_adams_86 4y ago
      Not sure what to make it of it, but statistics suggest that our per unit output of labour has dropped substantially. So, good employment rate or not, we’re producing less with our labour either way. This is the case in the United States and Canada, at least. Not sure about the rest of the world.
      - YokoZar 4y ago
        Naively, you would expect a bit of a drop in productivity when going to full employment, as the least productive workers are generally hired last. Total production, notably, is still increasing.
    - lotsofpulp 4y ago
      Labor force participation rate is lower than pre pandemic. https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm https://www.bls.gov/charts/employment-situation/civilian-lab... I assume it resumes overall downward trend simply due to aging population.
    - icedchai 4y ago
      The people who “drop out” of the labor market (not working and don’t collect unemployment) basically are not counted. They are not considered part of the labor force. I know people who get burned out and live off their savings for long periods of time.
- yucky 4y ago
  1 - makes no sense. We had the same (worse, really) housing shortages pre-COVID with very little inflation.
- scubakid 4y ago
  Isn't it fascinating how everyone likes to theorize but no one is consistently right about the causation of macroeconomic developments? Understanding a distributed system with 7.8 billion agents is... hard.
- kypro 4y ago
  > Not enough Housing (where people want and NEED it) Not a new problem. Wouldn't have caused a spike. > Global politics exacerbating energy shortages Energy prices have contributed a little to US inflation, but it's not the main factor. Inflation was also an issue in 2021 before the Ukraine war, but it's a fair point as it hasn't helped in 2022. > Insufficient supply (generally) for demand This is an issue, but in recessions it's not uncommon for supply to drop. What's uncommon is for demand not to fall inline (or more than) supply, but instead skyrocket. Call me crazy, but I have a simpler explanation for the spike in inflation we saw in 2021: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL The Fed has been funding extremely reckless fiscal policy for two years. We literally shut the economy down and gave people checks for doing nothing. I don't think we need to reach for fancy explanations. The reason for inflation seems plainly obvious to me.
  - bamboozled 4y ago
    I feel similar, from everything I've read, historically creating money causes inflation. We created money and we got inflation. What am I missing?
    - randomdata 4y ago
      Creating money causes inflation if it ends up in the hands of people ready to spend it. But if you printed money endlessly and gave it all to Jeff Bezos, there would be no competitive pressure to see prices rise in the general economy. He might try to buy up all the real estate or stocks, driving asset inflation, but there is little reason for him to buy up all the bread to see it appear in CPI where we measure general inflation. And by all accounts the people don't have any more money. In fact, governments around the world have been creating support packages to deal with the people not having more money to support the rising prices. This suggests that it is supply-side driven, and I'm going to suggest food in particular. The farm price for food started rising at the beginning of the pandemic when labour was difficult to secure amid illness. Then came the big fertilizer crunch which remains ongoing. Then the war in Ukraine, Europe's bread basket. And now there are looming fears over diesel availability. A quadruple whammy in short succession for something that everyone has to buy. Saving rates are crashing to support this temporary blip, but with very little income growth it doesn't look sustainable. You can't have inflation if people don't have money to spend. As we start to solve some of our food issues, fertilizer in particular, a massive deflationary event seems quite likely.
- cersei 4y ago
  1. I suspect that the 1% who owns 98% of the wealth parks their money into things like land and real-estate, which is causing an artificial shortage and price hikes.
zmmmmm 4y ago
Seems like both post-COVID supply chain effects and the Ukraine war are fairly logical temporary effects that aren't representing fundamental limits on supply. Hence measures taken should be seen in the light of managing a short term, temporary effect on supply of energy and labor with the goal of ensuring inflation doesn't become self-reinforcing - rather than modulating the medium to longer term economy.
- JohnJamesRambo 4y ago
  https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-supply-shock-and-its-everywhere https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-... I've always found this insightful.
  - readthenotes1 4y ago
    From Oct 2021, when the bureaucrats in charge were claiming inflation was transitory...
    - oneoff786 4y ago
      So where would inflation be if there was no war in Ukraine and a massive energy crisis Several months later? Do you think the sudden loss of energy, which affects our ability to produce everything, has had a negligible effect on inflation?
      - readthenotes1 4y ago
        It has had a measurable effect on inflation. However it is not the most significant impact on it. You can look at the rates of inflation before the war started and see how high they were. If you want to adjust for reality, then find the actual rate of increase for rent and home ownership during the time frame. The US data lags considerably.
        oneoff786 4y ago
outsider7 4y ago
The only we'll ever this inflation period flattened is to reduce marketing to a strict minimum to keep demand down.
throwaway743 4y ago
No mention of quantitative easing. Am I missing something?
- kodyo 4y ago
  If the answer was simply "they printed too much money out of thin air" then we wouldn't need experts to tell us what else it could have been.
  - culopatin 4y ago
    It’s not simply printing money but maintaining high demand when supply wasn’t there
    - kodyo 4y ago
      Sure thing, man. Prices are going to fall right back to 2020 levels any year now.
      - partiallypro 4y ago
        I don't think your point hits how you think, if prices -could- fall to the 2020 level then you could say it was mostly supply/demand driven and not monetarily driven. Of course, it never will, which lends to the idea that this has a major monetary cause on top of everything else.
  - throwaway743 4y ago
    I'm a cynic and the majority of the time when I hear something like "experts to tell us" all I think of is clout chasers pontificating to anyone who'll lend them an ear.
- yxhuvud 4y ago
  Quantitative easing did not drive inflation in any relevant way. If it did, the society wide inflation would have showed up a lot earlier.
kypro 4y ago
In theory interest rates should be set at a level which keeps demand in balance with supply, but isn't so high that they're out of line with economic fundamentals. For example, imagine I were to say, "the US economy is so strong today consumers can afford 7% mortgage rates". This is obviously laughable. The underlying economy isn't strong enough to support anything even close to those kinds of rates, but because of excessive fiscal and monetary stimulus over the last couple of years the consumer has high savings, low debts and extremely low 30-year fixed rate mortgages - the Fed could raise rates to 50% and for a large percentage of US consumers today it would make practically no difference. Similarly with the US being a consumer economy so long as the consumer is strong businesses are generally going to be fine. Some overleveraged companies might go under, but those with healthy balance sheets will likely do better than ever, keeping the labour market robust. The problem we have today is that rates are now way too high relative to underlying economic strength, yet are doing close nothing to address the supply / demand imbalances we're seeing. In fact they're at levels so high it wouldn't just slow demand but kill it dead were anyone actually forced borrow at them. And yes, eventually some people will have unexpected expenses which they'll need to put on credit cards, and from time to time people will need move and be forced to try to afford a mortgage at a much higher rate, but that's going to take quite some time given robust levels of savings and otherwise historically low mortgage servicing costs. https://fred.stlouisfed.org/series/MDSP https://fred.stlouisfed.org/series/MDSP I guess what I'm saying is that the Fed has no effective tools to address this. The US consumer is almost completely insensitive to interest rates moves right now. What I'd argue we actually need is fiscal measures such as tax increases and spending cuts to force down economic demand. Should rates keep rising though (which is likely given the Fed never seems to have any idea what they're doing) then eventually someone's risk model will blow up because these are unprecedented moves we're seeing in the treasury and FX market today. Expect people in developing countries to starve and expect a series of financial crises in developed economies. Of course I hope that doesn't happen and I hope eventually the Fed sees sense, but this does seem to be the path we're on today.
- DantesKite 4y ago
  This is an incredibly insightful comment. (By the way, I read your post about insomnia troubles. I used to struggle quite a bit. Tried everything. So many medications. What ultimately helped me was cognitive behavioral therapy. Almost all insomnia is a consequence of overthinking about sleep. This Harvard professor wrote a whole book about it. Highly recommend. What else do you got to lose? The book is called "Say Goodnight to Insomnia" by Gregg Jacobs.)
purpleblue 4y ago
The biggest problem with have with inflation right now is that it's being persisted by the upper middle class and above, ie. the white collar workers. Meanwhile the lower-income people are the ones that are truly suffering but they have no control over it. The massive amount of income inequality we have seen since Obama in 2009 is causing this to happen. The white collar workers are persisting inflation because they can afford to keep paying whatever it costs to get whatever they need. They can get wage increases commensurate with inflation. Meanwhile, the lower income, ie. The Poors, have no control and just have to endure and suffer with inflation. The only way we cut inflation is by having mass layoffs of white collar workers. We won't see a recession at all until white collar workers stop spending. Until we see that, we're going to get very sticky 5%+ inflation, and then once layoffs start happening, then a recession will be quick and sharp. This will be an extremely hard landing for all of us.
SevenNation 4y ago
> The simplest reason I believe we won’t have a repeat of the 1970s inflationary spiral is because Fed officials have studied that period and the mistakes made by their predecessors. There are no mistakes to be made because the Fed is a talking organization only. It stopped trying to regulate money decades ago. Bank reserves are the only thing it can control, and they have very little effect on the real economy. The Fed raises and lowers interest rates, begins and ends QE, to exactly the opposite effect of what's purported and nobody comments on it. Here's the real reason this isn't the 1970s: the bond market is telling all of us so. The bond market is telling us that inflation is about to fall and fall hard. The yield curve is inverted all the way up to the 3 month. Inversion has been the norm for months now. Inflation will roll over and the Fed will have had nothing to do with it.
pauljurczak 4y ago
Of course not. This is 2022, not 1973.
seydor 4y ago
So, if the Fed has made a terrible mistake and the theory is disproven , will it have to be abolished / change mandate?
deleted 4y ago
[deleted]
ianai 4y ago
If your data don’t encapsulate conditions similar to the conditions you’re trying to explain then you really shouldn’t use that data at all or in isolation. This is still the post-Covid economy and the closest period to that was 1917-1922 (give or take). (Data probably aren’t that great for that period. Boo hoo) That pandemic saw a huge reversion in trends towards wage earners away from corporate power due to labor changes from millions of people dying or leaving the workforce due to illness. In the current era, policy makers seem to be making a characteristic silence on labor force shifts. (And immigration is seeing pushes to diminish supply of labor.) Also the current era sees historically high levels of market power concentration at the corporate level. Simply, if market power is ceded to an entity then changes in that market are likely caused by those power brokers and they’ll be the ones with the power to make whatever change - all else staying the same. If I’m wrong then Powell increasing rates will have the desired effects with minimal side effects. Side effects being a sign that “the lever pulled did work but only through secondary effects managing to affect the right underlying factors.” This would signify that interest rates weren’t the best way to address inflation. If I’m right, then market concentration needs to be directly addressed through regulation and oversight. Empower the workers - the people.

87 points by SirLJ 4y ago

america can afford a terrible Fed. But Europe and the ECB will have to follow the same path and that will be disastrous for europe

deleted 4y ago

[deleted]

mjevans 4y ago

Anecdotally, I suspect today's inflation is caused by a couple factors. 1 Not enough Housing (where people want and NEED it) 2 Global politics exacerbating energy shortages 3 Insufficient supply (generally) for demand 3 is really driven by 1 and 2, but the pandemic also had a hand in creating it. For service industries there were a lot of short term layoffs; and workers are extremely reluctant to return to jobs that don't make economic sense for them, and professions they've moved away from. 2 & 1 Regulatory changes to make it easier to build within approved project profiles would really help. The US should adopt Japan's style of area zoning and require that nation-wide (though States and more local areas should still decide which areas are zoned what). As would changes that make ALL types of energy production easier to finance and build in PRE-approved configurations. Electric trains, trucks, and cars would really help with insane energy prices caused by unfriendly global oil interests. 1 Housing hasn't kept up with job growth locations of the US, and probably internationally as well, for at least 50 years. This needs market _correction_ level directives and instead of rent-protection skyscraper, middle-sized multi-levels, townhouses, and even some single family sized houses, where they make sense, need to be built.

starfallg 4y ago
You left out the underlying factor, which was Covid stimulus including the grants and loans that were written off. Money was being created and then funneled to the sectors of the economy which were not productive (such as commercial real estate) creating stress in the sectors that were. This will inevitably cause inflation with the conditions 2 & 3 you listed. Housing is due for a correction as prices are at such high multiples of average wage. The wage price growth we see now is just the first step in bringing the ratio down.
- willnonya 4y ago
  For some reason people keep skipping over this part...
- mjevans 4y ago
  Ignored, not forgot. It'd be like 4 or 5 on the list at least, and was a 'One Time' (spread across 3 or so events within about a year) tax holiday like effect. The timing was, maybe not the best, but I've yet to see a compelling explanation for how it would have an overall effect on __long term__ inflation.
  - starfallg 4y ago
    I'm not just talking about government spending, but central bank intervention as well. It's in the trillions - https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/ https://www.bloomberg.com/graphics/2021-coronavirus-global-d...
bsder 4y ago
> 3 Insufficient supply (generally) for demand Welcom to Always Late Inventory(tm). Nobody has any inventory to absorb demand. Nobody has any excess capacity to bring online to absorb demand. Nobody is going to tool up for demand that is likely to go away once fulfilled--especially since most of them have no competitors anyway due to consolidation. Rattle this backward at each step of the supply chain. Maximally efficient is minimally robust.
- ravel-bar-foo 4y ago
  > especially since most of them have no competitors anyway due to consolidation. This is the core explanation for the observed price increases being of the same magnitude as increases in corporate profits.
29athrowaway 4y ago
There's a deficit of 600,000 residential units.
ppg677 4y ago
I think it is the labor market. Pandemic caused a lot of people to leave the labor market.
- 7speter 4y ago
  But we’re at full employment…
  - yxhuvud 4y ago
    Which is a statement that doesn't gainsay what you commented on in any way. People leaving the labor market is not measured by the unemployment rate, it is measured by the labor participation rate.
  - steve_adams_86 4y ago
    Not sure what to make it of it, but statistics suggest that our per unit output of labour has dropped substantially. So, good employment rate or not, we’re producing less with our labour either way. This is the case in the United States and Canada, at least. Not sure about the rest of the world.
    - YokoZar 4y ago
      Naively, you would expect a bit of a drop in productivity when going to full employment, as the least productive workers are generally hired last. Total production, notably, is still increasing.
  - lotsofpulp 4y ago
    Labor force participation rate is lower than pre pandemic. https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm https://www.bls.gov/charts/employment-situation/civilian-lab... I assume it resumes overall downward trend simply due to aging population.
  - icedchai 4y ago
    The people who “drop out” of the labor market (not working and don’t collect unemployment) basically are not counted. They are not considered part of the labor force. I know people who get burned out and live off their savings for long periods of time.
yucky 4y ago
1 - makes no sense. We had the same (worse, really) housing shortages pre-COVID with very little inflation.
scubakid 4y ago
Isn't it fascinating how everyone likes to theorize but no one is consistently right about the causation of macroeconomic developments? Understanding a distributed system with 7.8 billion agents is... hard.
kypro 4y ago
> Not enough Housing (where people want and NEED it) Not a new problem. Wouldn't have caused a spike. > Global politics exacerbating energy shortages Energy prices have contributed a little to US inflation, but it's not the main factor. Inflation was also an issue in 2021 before the Ukraine war, but it's a fair point as it hasn't helped in 2022. > Insufficient supply (generally) for demand This is an issue, but in recessions it's not uncommon for supply to drop. What's uncommon is for demand not to fall inline (or more than) supply, but instead skyrocket. Call me crazy, but I have a simpler explanation for the spike in inflation we saw in 2021: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL The Fed has been funding extremely reckless fiscal policy for two years. We literally shut the economy down and gave people checks for doing nothing. I don't think we need to reach for fancy explanations. The reason for inflation seems plainly obvious to me.
- bamboozled 4y ago
  I feel similar, from everything I've read, historically creating money causes inflation. We created money and we got inflation. What am I missing?
  - randomdata 4y ago
    Creating money causes inflation if it ends up in the hands of people ready to spend it. But if you printed money endlessly and gave it all to Jeff Bezos, there would be no competitive pressure to see prices rise in the general economy. He might try to buy up all the real estate or stocks, driving asset inflation, but there is little reason for him to buy up all the bread to see it appear in CPI where we measure general inflation. And by all accounts the people don't have any more money. In fact, governments around the world have been creating support packages to deal with the people not having more money to support the rising prices. This suggests that it is supply-side driven, and I'm going to suggest food in particular. The farm price for food started rising at the beginning of the pandemic when labour was difficult to secure amid illness. Then came the big fertilizer crunch which remains ongoing. Then the war in Ukraine, Europe's bread basket. And now there are looming fears over diesel availability. A quadruple whammy in short succession for something that everyone has to buy. Saving rates are crashing to support this temporary blip, but with very little income growth it doesn't look sustainable. You can't have inflation if people don't have money to spend. As we start to solve some of our food issues, fertilizer in particular, a massive deflationary event seems quite likely.
cersei 4y ago
1. I suspect that the 1% who owns 98% of the wealth parks their money into things like land and real-estate, which is causing an artificial shortage and price hikes.

zmmmmm 4y ago

Seems like both post-COVID supply chain effects and the Ukraine war are fairly logical temporary effects that aren't representing fundamental limits on supply. Hence measures taken should be seen in the light of managing a short term, temporary effect on supply of energy and labor with the goal of ensuring inflation doesn't become self-reinforcing - rather than modulating the medium to longer term economy.

JohnJamesRambo 4y ago
https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-supply-shock-and-its-everywhere https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-... I've always found this insightful.
- readthenotes1 4y ago
  From Oct 2021, when the bureaucrats in charge were claiming inflation was transitory...
  - oneoff786 4y ago
    So where would inflation be if there was no war in Ukraine and a massive energy crisis Several months later? Do you think the sudden loss of energy, which affects our ability to produce everything, has had a negligible effect on inflation?
    - readthenotes1 4y ago
      It has had a measurable effect on inflation. However it is not the most significant impact on it. You can look at the rates of inflation before the war started and see how high they were. If you want to adjust for reality, then find the actual rate of increase for rent and home ownership during the time frame. The US data lags considerably.
      - oneoff786 4y ago

outsider7 4y ago

The only we'll ever this inflation period flattened is to reduce marketing to a strict minimum to keep demand down.

throwaway743 4y ago

No mention of quantitative easing. Am I missing something?

kodyo 4y ago
If the answer was simply "they printed too much money out of thin air" then we wouldn't need experts to tell us what else it could have been.
- culopatin 4y ago
  It’s not simply printing money but maintaining high demand when supply wasn’t there
  - kodyo 4y ago
    Sure thing, man. Prices are going to fall right back to 2020 levels any year now.
    - partiallypro 4y ago
      I don't think your point hits how you think, if prices -could- fall to the 2020 level then you could say it was mostly supply/demand driven and not monetarily driven. Of course, it never will, which lends to the idea that this has a major monetary cause on top of everything else.
- throwaway743 4y ago
  I'm a cynic and the majority of the time when I hear something like "experts to tell us" all I think of is clout chasers pontificating to anyone who'll lend them an ear.
yxhuvud 4y ago
Quantitative easing did not drive inflation in any relevant way. If it did, the society wide inflation would have showed up a lot earlier.

kypro 4y ago

In theory interest rates should be set at a level which keeps demand in balance with supply, but isn't so high that they're out of line with economic fundamentals. For example, imagine I were to say, "the US economy is so strong today consumers can afford 7% mortgage rates". This is obviously laughable. The underlying economy isn't strong enough to support anything even close to those kinds of rates, but because of excessive fiscal and monetary stimulus over the last couple of years the consumer has high savings, low debts and extremely low 30-year fixed rate mortgages - the Fed could raise rates to 50% and for a large percentage of US consumers today it would make practically no difference. Similarly with the US being a consumer economy so long as the consumer is strong businesses are generally going to be fine. Some overleveraged companies might go under, but those with healthy balance sheets will likely do better than ever, keeping the labour market robust. The problem we have today is that rates are now way too high relative to underlying economic strength, yet are doing close nothing to address the supply / demand imbalances we're seeing. In fact they're at levels so high it wouldn't just slow demand but kill it dead were anyone actually forced borrow at them. And yes, eventually some people will have unexpected expenses which they'll need to put on credit cards, and from time to time people will need move and be forced to try to afford a mortgage at a much higher rate, but that's going to take quite some time given robust levels of savings and otherwise historically low mortgage servicing costs. https://fred.stlouisfed.org/series/MDSP https://fred.stlouisfed.org/series/MDSP I guess what I'm saying is that the Fed has no effective tools to address this. The US consumer is almost completely insensitive to interest rates moves right now. What I'd argue we actually need is fiscal measures such as tax increases and spending cuts to force down economic demand. Should rates keep rising though (which is likely given the Fed never seems to have any idea what they're doing) then eventually someone's risk model will blow up because these are unprecedented moves we're seeing in the treasury and FX market today. Expect people in developing countries to starve and expect a series of financial crises in developed economies. Of course I hope that doesn't happen and I hope eventually the Fed sees sense, but this does seem to be the path we're on today.

DantesKite 4y ago
This is an incredibly insightful comment. (By the way, I read your post about insomnia troubles. I used to struggle quite a bit. Tried everything. So many medications. What ultimately helped me was cognitive behavioral therapy. Almost all insomnia is a consequence of overthinking about sleep. This Harvard professor wrote a whole book about it. Highly recommend. What else do you got to lose? The book is called "Say Goodnight to Insomnia" by Gregg Jacobs.)

purpleblue 4y ago

The biggest problem with have with inflation right now is that it's being persisted by the upper middle class and above, ie. the white collar workers. Meanwhile the lower-income people are the ones that are truly suffering but they have no control over it. The massive amount of income inequality we have seen since Obama in 2009 is causing this to happen. The white collar workers are persisting inflation because they can afford to keep paying whatever it costs to get whatever they need. They can get wage increases commensurate with inflation. Meanwhile, the lower income, ie. The Poors, have no control and just have to endure and suffer with inflation. The only way we cut inflation is by having mass layoffs of white collar workers. We won't see a recession at all until white collar workers stop spending. Until we see that, we're going to get very sticky 5%+ inflation, and then once layoffs start happening, then a recession will be quick and sharp. This will be an extremely hard landing for all of us.

SevenNation 4y ago

> The simplest reason I believe we won’t have a repeat of the 1970s inflationary spiral is because Fed officials have studied that period and the mistakes made by their predecessors. There are no mistakes to be made because the Fed is a talking organization only. It stopped trying to regulate money decades ago. Bank reserves are the only thing it can control, and they have very little effect on the real economy. The Fed raises and lowers interest rates, begins and ends QE, to exactly the opposite effect of what's purported and nobody comments on it. Here's the real reason this isn't the 1970s: the bond market is telling all of us so. The bond market is telling us that inflation is about to fall and fall hard. The yield curve is inverted all the way up to the 3 month. Inversion has been the norm for months now. Inflation will roll over and the Fed will have had nothing to do with it.

pauljurczak 4y ago

Of course not. This is 2022, not 1973.

seydor 4y ago

So, if the Fed has made a terrible mistake and the theory is disproven , will it have to be abolished / change mandate?

deleted 4y ago

[deleted]

ianai 4y ago

If your data don’t encapsulate conditions similar to the conditions you’re trying to explain then you really shouldn’t use that data at all or in isolation. This is still the post-Covid economy and the closest period to that was 1917-1922 (give or take). (Data probably aren’t that great for that period. Boo hoo) That pandemic saw a huge reversion in trends towards wage earners away from corporate power due to labor changes from millions of people dying or leaving the workforce due to illness. In the current era, policy makers seem to be making a characteristic silence on labor force shifts. (And immigration is seeing pushes to diminish supply of labor.) Also the current era sees historically high levels of market power concentration at the corporate level. Simply, if market power is ceded to an entity then changes in that market are likely caused by those power brokers and they’ll be the ones with the power to make whatever change - all else staying the same. If I’m wrong then Powell increasing rates will have the desired effects with minimal side effects. Side effects being a sign that “the lever pulled did work but only through secondary effects managing to affect the right underlying factors.” This would signify that interest rates weren’t the best way to address inflation. If I’m right, then market concentration needs to be directly addressed through regulation and oversight. Empower the workers - the people.