4 ms·

I hate how the Fed’s reactions to inflation only affect the demand side (reduce number of people who can afford to participate in an overheated market) rather t

I hate how the Fed’s reactions to inflation only affect the demand side (reduce number of people who can afford to participate in an overheated market) rather than the supply side (produce enough of housing/food/goods to lower prices)

dragontamer 4y ago
A bank can't fix Avian Flu to lower the price of eggs.
- runnerup 4y ago
  No, but they can funnel money to investments towards increasing overall egg capacity. Which might not be "profitable" for a normal bank, but the Fed's performance is measured in domestic inflation, not shareholder profits. It may be the case that we need to pay slightly higher prices year-round to maintain excess capacity for some things to reduce price spikes during major disruptors. This is very common for many food products, where governments around the world, including the US government, subsidize production which doesn't have a customer and the food usually has to get destroyed or find someone willing to pay "waste-stream" prices for the products to turn them into something marginally higher value for consumers.
  - dragontamer 4y ago
    https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html https://www.nytimes.com/2020/04/11/business/coronavirus-dest... Yeah, that's what we do when we have too much supply Also, that's not the Feds job.
    - runnerup 4y ago
      > Also, that's not the Feds job. Yes, I'm lamenting that the Fed is "responsible" for inflation but only given the tools to attack one side of it.
      - dragontamer 4y ago
        The Fed is in charge of general inflation. The Agriculture department is responsible for eggs, corn and food. The Department of Energy is responsible for oil, nuclear, and solar. Housing and Urban development is responsible for housing. The Fed is responsible for the stability of the dollar. ------- If there is a specific field that's doing poorly, we focus on that. We're looking at the Fed because we think the general dollar is devaluing too quickly, which is absolutely the Feds job to fix.
brian-bk 4y ago
"Fed" as in the Federal Reserve or govt? 100% agree with you, but the Fed Reserve doesn't have that much power on the supply side.
- runnerup 4y ago
  They don't have a lever they can pull, it's true. But they do have a bully pulpit they could use to strongly advocate for changes which would improve the supply side.
  - warning26 4y ago
    Can you elaborate how that could work in practice?
    - more_corn 4y ago
      Dear Mr president and members of congress. You have tasked us with controlling inflation. We’re doing what we can by raising interest rates. However, We can never control inflation while the cost of housing is unreasonable. I am tasking you with fast tracking structural changes in permitting and the creation of housing construction incentives. The target is an additional 1 million housing units. The rule changes should be broad and sweeping. Please reference the top 5 proven methods of facilitating rapid construction of housing.

dragontamer 4y ago

A bank can't fix Avian Flu to lower the price of eggs.

runnerup 4y ago
No, but they can funnel money to investments towards increasing overall egg capacity. Which might not be "profitable" for a normal bank, but the Fed's performance is measured in domestic inflation, not shareholder profits. It may be the case that we need to pay slightly higher prices year-round to maintain excess capacity for some things to reduce price spikes during major disruptors. This is very common for many food products, where governments around the world, including the US government, subsidize production which doesn't have a customer and the food usually has to get destroyed or find someone willing to pay "waste-stream" prices for the products to turn them into something marginally higher value for consumers.
- dragontamer 4y ago
  https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html https://www.nytimes.com/2020/04/11/business/coronavirus-dest... Yeah, that's what we do when we have too much supply Also, that's not the Feds job.
  - runnerup 4y ago
    > Also, that's not the Feds job. Yes, I'm lamenting that the Fed is "responsible" for inflation but only given the tools to attack one side of it.
    - dragontamer 4y ago
      The Fed is in charge of general inflation. The Agriculture department is responsible for eggs, corn and food. The Department of Energy is responsible for oil, nuclear, and solar. Housing and Urban development is responsible for housing. The Fed is responsible for the stability of the dollar. ------- If there is a specific field that's doing poorly, we focus on that. We're looking at the Fed because we think the general dollar is devaluing too quickly, which is absolutely the Feds job to fix.

brian-bk 4y ago

"Fed" as in the Federal Reserve or govt? 100% agree with you, but the Fed Reserve doesn't have that much power on the supply side.

runnerup 4y ago
They don't have a lever they can pull, it's true. But they do have a bully pulpit they could use to strongly advocate for changes which would improve the supply side.
- warning26 4y ago
  Can you elaborate how that could work in practice?
  - more_corn 4y ago
    Dear Mr president and members of congress. You have tasked us with controlling inflation. We’re doing what we can by raising interest rates. However, We can never control inflation while the cost of housing is unreasonable. I am tasking you with fast tracking structural changes in permitting and the creation of housing construction incentives. The target is an additional 1 million housing units. The rule changes should be broad and sweeping. Please reference the top 5 proven methods of facilitating rapid construction of housing.