4 ms·

This might prevent a recession, but it will continue to fuel inflation.

by m_a_g 3y ago

thinkingtoilet 3y ago
I know nothing about this stuff. Aren't they combating inflation with higher interest rates? Is it out of their control?
- redsoundbanner 3y ago
  It's 100% out of their control.
- dragontamer 3y ago
  When you consider the politics of the doomers, its far worse than that. The economic-doomers want the Fed to lower rates to "save jobs". Because lower-rates tends to lower unemployment. The Fed is ignoring them and keeping rates high, because the economic-doomers are wrong. ------------ So economic doomers complain about inflation (which the Fed is trying to fix with high rates), but also want to pretend that unemployment is secretly 10x worse than it really is for some reason.
  - jfengel 3y ago
    The Fed is talking about lowering rates, because everybody is thirsty for the punch bowl. They want to be responsible, but it's sooo tempting. Personally I believe they kept rates far too low for far too long last time, deceived by the way the free money inflated assets rather than consumer prices, and that's a big part of what caused the recent inflation spike.
  - orwin 3y ago
    High rates favor labor money, low rates favor capital money. Low rates also improve job creation, so sometimes labor is divided.
  - gustavus 3y ago
    Everyone I know that is an economic doomer is much more worried about inflation than they are about unemployment.
- Gibson_v1 3y ago
  Several rate cuts are expected this year. Based on Jerome Powell's speech yesterday, March cuts are unlikely, today's data would confirm that. Rate cuts likely beginning over summer depending on the data over the next few months.
jeffbee 3y ago
The current policy management has conclusively disproved that you must sacrifice employment to reduce inflation.
jfengel 3y ago
Inflation has been falling for a while. It's down to 3.4% -- higher than the 2% target, but well below the peak. The Fed is even considering cutting interest rates, which says that they think that inflation is under control. The recent bout of inflation is less about monetary policy than about the supply side, especially things like COVID and Ukraine causing supply disruptions. Those things have levelled out and begun to decrease.
- no_wizard 3y ago
  Housing costs haven't dropped enough IMO to declare a win. I think its become clear that its a government problem, because if it was just a market problem, supply / demand would have leveled out by now.
  - SkyPuncher 3y ago
    Why would the market have leveled out by now? It takes years to build any substantial housing.
  - ethanbond 3y ago
    Why would it have leveled out? Just article of faith about The Market? Go talk to a builder. Land is ridiculously expensive due to speculation and labor is impossible to find due to it being a generally shitty job.
  - runako 3y ago
    > Housing costs haven't dropped enough IMO to declare a win. This is a fundamental misunderstanding about inflation. If inflation goes to 0%, housing costs will stay exactly where they are now. You are looking for a deflation in housing costs, where inflation is < 0%. We had that in 2008 and it caused...collateral damage. The only real way to lower housing prices is to build a lot more housing. So yes, it's a government problem in that we don't let private actors build housing to meet the market's demand.
  - sgerenser 3y ago
    It’s a supply and demand problem, but it’ll take years to play out. Too many people are locked into 30-year mortgages with 26-28 years left at 2-3% interest. They’ll basically never sell (barring a major issue like having to move for a job after layoff or a divorce). So the supply of housing is much lower than normal all across the country. In some areas new construction can pick up some of that slack, but new construction is just getting into swing after a huge drop early in the pandemic.
mensetmanusman 3y ago
A shrinking workforce and demographic pyramid collapse will fuel inflation well enough.

This might prevent a recession, but it will continue to fuel inflation.

by m_a_g 3y ago

This might prevent a recession, but it will continue to fuel inflation.

I know nothing about this stuff. Aren't they combating inflation with higher interest rates? Is it out of their control?

redsoundbanner 3y ago
It's 100% out of their control.
dragontamer 3y ago
When you consider the politics of the doomers, its far worse than that. The economic-doomers want the Fed to lower rates to "save jobs". Because lower-rates tends to lower unemployment. The Fed is ignoring them and keeping rates high, because the economic-doomers are wrong. ------------ So economic doomers complain about inflation (which the Fed is trying to fix with high rates), but also want to pretend that unemployment is secretly 10x worse than it really is for some reason.
- jfengel 3y ago
  The Fed is talking about lowering rates, because everybody is thirsty for the punch bowl. They want to be responsible, but it's sooo tempting. Personally I believe they kept rates far too low for far too long last time, deceived by the way the free money inflated assets rather than consumer prices, and that's a big part of what caused the recent inflation spike.
- orwin 3y ago
  High rates favor labor money, low rates favor capital money. Low rates also improve job creation, so sometimes labor is divided.
- gustavus 3y ago
  Everyone I know that is an economic doomer is much more worried about inflation than they are about unemployment.
Gibson_v1 3y ago
Several rate cuts are expected this year. Based on Jerome Powell's speech yesterday, March cuts are unlikely, today's data would confirm that. Rate cuts likely beginning over summer depending on the data over the next few months.

jeffbee 3y ago

The current policy management has conclusively disproved that you must sacrifice employment to reduce inflation.

jfengel 3y ago

Inflation has been falling for a while. It's down to 3.4% -- higher than the 2% target, but well below the peak. The Fed is even considering cutting interest rates, which says that they think that inflation is under control. The recent bout of inflation is less about monetary policy than about the supply side, especially things like COVID and Ukraine causing supply disruptions. Those things have levelled out and begun to decrease.

no_wizard 3y ago
Housing costs haven't dropped enough IMO to declare a win. I think its become clear that its a government problem, because if it was just a market problem, supply / demand would have leveled out by now.
- SkyPuncher 3y ago
  Why would the market have leveled out by now? It takes years to build any substantial housing.
- ethanbond 3y ago
  Why would it have leveled out? Just article of faith about The Market? Go talk to a builder. Land is ridiculously expensive due to speculation and labor is impossible to find due to it being a generally shitty job.
- runako 3y ago
  > Housing costs haven't dropped enough IMO to declare a win. This is a fundamental misunderstanding about inflation. If inflation goes to 0%, housing costs will stay exactly where they are now. You are looking for a deflation in housing costs, where inflation is < 0%. We had that in 2008 and it caused...collateral damage. The only real way to lower housing prices is to build a lot more housing. So yes, it's a government problem in that we don't let private actors build housing to meet the market's demand.
- sgerenser 3y ago
  It’s a supply and demand problem, but it’ll take years to play out. Too many people are locked into 30-year mortgages with 26-28 years left at 2-3% interest. They’ll basically never sell (barring a major issue like having to move for a job after layoff or a divorce). So the supply of housing is much lower than normal all across the country. In some areas new construction can pick up some of that slack, but new construction is just getting into swing after a huge drop early in the pandemic.

mensetmanusman 3y ago

A shrinking workforce and demographic pyramid collapse will fuel inflation well enough.