14 ms·

If unemployment continues to rise, and the one-time impact on prices of tariffs leads to self-reinforcing high inflation, we'll have stagflation: https://en.wi

by cs702 1y ago

If unemployment continues to rise, and the one-time impact on prices of tariffs leads to self-reinforcing high inflation, we'll have stagflation: https://en.wikipedia.org/wiki/Stagflation https://en.wikipedia.org/wiki/Stagflation I sure hope not, because stagflation would be extremely unpleasant for everyone. Central banks like the Federal Reserve would be forced to raise interest rates, to put stress on businesses and consumers, so businesses find themselves unable to raise prices further and consumers find themselves unable to demand greater pay at work. Raising rates to put stress on businesses and consumers is the only method known to work for ending self-reinforcing high inflation. It's what Paul Volcker did at the Federal Reserve in response to the stagflation that started in the early 1970's in the US and other countries, after OPEC raised oil prices. Volcker raised the federal funds rate in fits and starts to a high of 20% in 1981: https://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Federal_Reserve https://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_F... It worked. Volcker's actions are widely credited with ending self-reinforcing high inflation. His actions also triggered a recession. Stagflation itself triggered a stock market crash in 1973-1974. It took over 20 years, until 1993, for the US stock market to recover: https://en.wikipedia.org/wiki/1973%E2%80%931974_stock_market_crash https://en.wikipedia.org/wiki/1973%E2%80%931974_stock_market... Like I said, it would be extremely unpleasant, for everyone. I hope we don't end up with stagflation.

txru 1y ago
I heard Volcker speak once, you could still see him remembering how hated he was for those years of the Volcker Shock on his face. Strained and a little sad.
- cs702 1y ago
  As he raised the federal fund rate to 20%, Volcker became widely hated indeed. Businesses and consumers suffered because of his actions. Politicians of course tried to take control of the Fed. They also tried to fire him. At one point he needed Secret Service protection. Here's an article from the 1980's about it: https://www.latimes.com/archives/la-xpm-1987-04-05-fi-492-story.html https://www.latimes.com/archives/la-xpm-1987-04-05-fi-492-st...
- alexqgb 1y ago
  I watched an interview with him several years ago. The brother was sipping from a glass of whisky on the rocks the whole time. I fully get it.
hyperpape 1y ago
This post is right about some things, including the general solution to staglation, and wrong about others. Paul Volker was Fed Chair between 1979 and 1987, not 1973. The 1973 crash and recession were not caused by his actions, if you had to pick a single cause, I think Opec would be it.
- cs702 1y ago
  You're right. Fixed! I knew that, but my puny little brain somehow didn't catch it as I was writing my comment.
- deleted 1y ago
  [deleted]
franktankbank 1y ago
The only people who care about that are the economists. You can also take a one time hit by getting back to the basics and forget the goddamn metrics.
- edoceo 1y ago
  What is back to basics mean here? Forgetting metrics, for a national economy, seems not good.
  - franktankbank 1y ago
    Incentivize our basic necessities and come down hard on fraud. If a bridge needs to be rebuilt pay to have it done. If shipping infrastructure needs to be modernized pay to have it done. If we need more mining get it done. Get it done and get it done fast. If bids are won but they go and fuck all the money away send them to jail. This is how stuff worked before people became obsessed with metrics.
    - glenstein 1y ago
      So just for one example, the Bureau of Labor Statistics started publishing jobs reports in 1915. But having monthly jobs reports on the cotton sector lead to increased fraud and stopped bridges from being built? What's the mechanism? People are distracted by the amount of cotton production, which is the perfect time to falsify an earnings report?
      - franktankbank 1y ago
        How long were supply chains back then? 2-5 nodes in a typical case? I'm not saying publishing of statistics is what caused this shit to happen dingus. I'm saying focusing on it exclusively is dumb and it is wiser to look at a granular level. We can't look at this level because once you have a 150 node supply chain how trustworthy are the receipts? What if your body had a metric as dumb as our high level economic metrics. We'd all be doing our best to get fat as fuck.
VoidWarranty 1y ago
So uh, I'm the first person in my family to break the cycle of poverty. I have nobody I trust to follow advise with money. I do all the 'standard' boring investment strategies (401, index funds, roth, etc). I don't bother with crypto (scams). What does one do if stagflation is coming? Float more cash? Buy real estate?
- jeffbee 1y ago
  You might just be in a long epicycle of poverty and not realize it.
- cs702 1y ago
  All I can suggest is to read Buffett's classic article from 1977: https://fortune.com/article/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/ https://fortune.com/article/buffett-how-inflation-swindles-t...
  - CamperBob2 1y ago
    He goes completely off the rails in the very first sentence: It is no longer a secret that stocks, like bonds, do poorly in an inflationary environment. Does it get better?
    - staticman2 1y ago
      Why do you think that sentence is wrong? Hint: What time period do you think he's talking about?
      - CamperBob2 1y ago
        He's talking about a time period when the stock market was in the doldrums and inflation was high. Right now inflation is considered high (even though it isn't really, historically) and the stock market is berserk. And why wouldn't the stock market be considered a valid investment in the presence of inflation? Where else are you supposed to park your cash if you want to outperform TIPS? Remember that in the 1970s there basically was no retail stock market compared to what we have now, where everyone and their dog has a 401(k) and trading is basically free. Even if valid, his point doesn't seem relevant. It is going to be hard to apply any lessons from the 1970s to what we're facing now, when incompetent and erratic policymakers are driving the US economic picture rather than external influences like OPEC and Viet Nam. (And if we thought OPEC was a malevolent cartel, just wait'll the rest of the world starts forging its own trade agreements without inviting us to participate.)
milesvp 1y ago
The interest rates were wild in 1982. My dad said that no one would lend for a mortgage, and we ended up doing seller financing to buy my childhood home. Also, not enough people talk about housing prices in high interest rate environments. Mortgage payments are the thing that tether housing prices, and act as a lever. We see it today with just an extra 4% with low housing volume and people reluctant to sell, because then they’d need a new mortgage at the new rate. People who would like to downsize don’t since their mortgage payments often ends up similar.
- jghn 1y ago
  I remember my parents being excited about the opportunity to refinance their mortgage to something in the high teens. And now these days headlines act like the apocalypse is occurring when mortgage rates are in the 6-7 range.
  - irq 1y ago
    Back during those high interest rate days, housing costs vs income were much better
  - esseph 1y ago
    Rates are lower, but housing cost is much, MUCH higher as a percentage of total income.
  - ta1243 1y ago
    I'd rather owe 100k over 30 years at 15% than 300k at 4%.
    - dh2022 1y ago
      Now is 300K at 7%...
    - jghn 1y ago
      You also need to adjust the 100k for inflation. It'd be well over 300k now. I'd rather the 300k at 4% in that scenario.
baron816 1y ago
The good news is that these economic problems are entirely the result of bad policies and can be reversed. If we were to also raise broad based taxes, it would allow the Fed to cut interest rates, stoking long term investment, loosen up the housing market (which would allow more people to move), lower the Federal deficit, and improve the trade balance (as if that actually mattered).
- thatguy0900 1y ago
  The bad news is that we're only one year into the 4 years of bad policy(if we're lucky) and the policy itself will probably continue to get worse
  - baron816 1y ago
    Indeed. We’re not fixing it anytime soon.
  - nxm 1y ago
    We survived with 30% inflation ok key goods during the Biden years due to endless spending, we’ll survive this one too. You’re welcome to short the market though if you feel strongly otherwise
    - deleted 1y ago
      [deleted]
    - JamesBarney 1y ago
      "key goods" is doing a lot of heavy lifting in that statement.
      - mindslight 1y ago
        "Biden years" is doing even more work. The suicide cultists generally ignore the trillions in helicopter money that was dumped into the economy under Trump's "watch", right when we were also dealing with supply shortages. It took a few years for the economy to start moving and that new money to go from asset prices into consumer prices, right in time for short memories to blame JOEBIDEN.
doctorhandshake 1y ago
Just yesterday I was remembering my high school economics professor writing two words on the board: STAGFLATION = CLUSTERFUCK
- rapind 1y ago
  Well it's already a clusterfuck so...
thisisit 1y ago
Today's economy is all about politics. There are people who still hold out hope or confuse economic data with economist. Populism >>>> good policy. No one wants to be the next Volcker. So, this is likely going to stagflation. I hope I am wrong because this can be ripple effects all over the world.
- sc68cal 1y ago
  > Today's economy is all about politics. When has it not been? It's how we actually determine the allocation of resources
ashleyn 1y ago
If inflation is lower than the rate the federal reserve hikes rates to, you can ride out stagflation in money market funds and other types of income-generating investments. The real pain is when it doesn't. Stocks decline, cash declines, and there really is nowhere to hide. TIPS? I-bonds? Both are indexed to the CPI, which policymakers have loudly signaled they are okay gaming and manipulating for political favour.
- JumpCrisscross 1y ago
  You’re vastly underestimating the income and political effects of stagflation. Historically speaking, one doesn’t ride it out. It’s fixed fast or the system collapses.
penguin202 1y ago
Last administration cooked the books on BLS numbers for nearly 2 years, issuing corrections and all that nobody paid attention to. They also redefined what a recession is during the last administration. Wasn't a news story then, but is now b/c trump.
- esseph 1y ago
  Seems like Trump is doing just fine creating a recession on his own.
  - penguin202 1y ago
    [dead]
- scrollop 1y ago
  Until the end of 2024 the US had an economy the world envied. At least, this allows Europe to rise, again.
  - mountainriver 1y ago
    Because of debt spending, everyone wants to act like we did something amazing. We didn’t, we just pumped in more debt and the economy went up. We are now even more in the red as a nation
  - cman1444 1y ago
    You are kidding yourself if you believe Europe will be an economic winner at any time in the not-distant future.
  - listenallyall 1y ago
    ...according to two U.S. based professors and editors at the Economist. I dont recall too many foreign leaders stating that they envied the American economy.
- topaz0 1y ago
  twelve pinocchios
cjfd 1y ago
[flagged]
- trod1234 1y ago
  Its hard to ascribe individual responsibility in that way when the only two choices were existentially awful. "You elected an idiot president...", the choices were Communism, or Fascism; which is recoverable and better for people. Certainly not the former, but to be clear neither are a real choice when you vote for democracy, and not voting is a vote for both fascism/communism at the same time. Such was a similar failure and rise of demagogues that ruined Rome. First-passed-the-post voting is fundamentally flawed, and so is ranked choice...
  - malnourish 1y ago
    I am legitimately surprised that someone who can write complete and cogent sentences believes that a vote for one of the two presidential candidates was a vote for communism.
    - yoyohello13 1y ago
      These days, any sort of tax on the wealthy at all is seen as full blown communism.
  - dragonwriter 1y ago
    [flagged]
  - TheBicPen 1y ago
    > First-passed-the-post voting is fundamentally flawed, and so is ranked choice... What voting system so you think is best? None are perfect but IMO ranked choice is the best as it keeps the good attributes of FPTP without suffering from the spoiler effect
    - JoshTriplett 1y ago
      When most people say "ranked choice" they seem to refer to IRV, which is broken in multiple ways, but most notably that it has the property that ranking someone higher can make them lose and ranking someone lower can make them win. That happens because IRV ignores all of someone's preferences except their top choice, until their top choice is thrown out, at which point IRV looks at their next preference. There are much better systems: approval (for simplicity, at the expense of more accurate preference information) and Condorcet (for accuracy, at the expense of making it more difficult to explain tie-breaker corner cases to the average person).
trod1234 1y ago
I've been saying this same thing for awhile, the problem is a lot of sentiment bots have been downvoting it out of view within 24 hours, taking karma as they go. Yesterday lost 10 points for a single post same subject, basically the same as yours. There are a number of subjects now where its almost to the point where any discussion is fruitless because anyone talking is getting punished by third-parties, and moderation aint doing a thing about them. Your right it will be real bad, much worse than before because most of the Volcker recovery was on the back of the global adoption of the petrodollar. The situation is the exact opposite today where you not only have petrodollar pools of money coming back domestically but also runaway government spending. If you compare our modern economics with that of Argentina over the past 100 years, we seem to be following the same policy pitfalls. These things largely only happen because of excessive money-printing under fiat, certain government policy and regulation can cause it as well.
zahlman 1y ago
Unemployment was continuously higher than the current level from approximately early 1970 to mid 1999: https://fred.stlouisfed.org/graph/?g=1M4lw https://fred.stlouisfed.org/graph/?g=1M4lw (click "Max") Markets currently don't expect significantly higher inflation in the long term, as the "10 year breakeven inflation rate" ("The latest value implies what market participants expect inflation to be in the next 10 years, on average.") is fairly stable: https://fred.stlouisfed.org/series/T10YIE https://fred.stlouisfed.org/series/T10YIE By my understanding, this is supposed to trend towards 2.0% when everything is hunky-dory; things are not perfect, but they look fine to me in historical perspective. Similarly for e.g. this 5-year forward chart: https://fred.stlouisfed.org/series/T5YIFR https://fred.stlouisfed.org/series/T5YIFR > Raising rates to put stress on businesses and consumers is the only method known to work for ending self-reinforcing high inflation Yes, and that's how we made sure that the inflation peak in 2022 didn't become self-reinforcing. And as far as anyone seems to be able to tell, it worked. > It's what Paul Volcker did at the Federal Reserve in response to the stagflation that started in the early 1970's in the US and other countries, after OPEC raised oil prices. Volcker raised the federal funds rate in fits and starts to a high of 20% in 1981: Right. Current circumstances are very different. Posting this much about what you "hope doesn't happen" comes across as fear-mongering, given the lack of reason to expect it to happen. The tariff discourse allows people to throw around large, scary-sounding percentages, but in practice the corresponding price increases are on average much smaller. And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.)
- zahlman 1y ago
  > And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.) I should add: historically, increases in the unemployment rate have a tendency to accelerate and then produce a spike, which is then brought under control by some other mechanism, and tends to correspond with a recession. But this is just the normal boom-bust cycle, and seems rather unavoidable. The rate can't keep going down forever, and having it level out doesn't seem feasible, either. The magnitude of such a spike doesn't necessarily indicate the severity of economic downturn, either.
deleted 1y ago
[deleted]
xxpor 1y ago
There's a theory that changing regulation Q to uncap interest rates on savings accounts had more to do with ending stagflation than the fed funds rate hikes. I'm not smart enough to fully evaluate if that's true, but it was an interesting theory to me at least. https://cepr.org/voxeu/columns/what-really-drives-inflation https://cepr.org/voxeu/columns/what-really-drives-inflation
lucius_verus 1y ago
Strictly speaking, Volcker caused two recessions (the first of which likely ended Carter's re-election prospects). Although raising interest rates tamped down inflation on the demand side, we don't give enough credit to Carter for attacking the supply side by deregulating energy markets. Carter typically doesn't get credit because prices didn't really ease until he was out of office. However, it looks like energy prices wouldn't have decreased if Carter hadn't deregulated the oil and gas industry, which allowed domestic producers to become competitive. (Ironically, Carter thought deregulation would raise prices and foster a move to alternative energy. Instead we got shale oil and fracking. Unintended consequences.)
Tadpole9181 1y ago
> the Federal Reserve would be forced to raise interest rates That's just not happening, no matter what happens. The President is obsessed with lowering rates, because it personally enriches him, regardless of how it affects the economy. The cronies he has in line to replace Powell and the SCOTUS seeming like they'll back his unlawful removal of the Fed governors he doesn't like, means the independence of the Fed is guaranteed dead in, at most, 2026. The businesses that should be pushing back just... Aren't? 5 billionaires just had a foot-kissing session with Trump. Law firms are capitulating. Most education institutions are capitulating. Companies would rather bribe Trump with gold statues (Apple) for their own short-term kickback than speak up even a tiny bit to prevent a mid-term economic collapse. I genuinely don't see the US avoiding a self-inflicted (global) depression anymore.
listenallyall 1y ago
> it would be extremely unpleasant As opposed to the current economic environment and that of the past 5 or so years, which absolutely nobody thinks is unpleasant.

by cs702 1y ago

txru 1y ago

I heard Volcker speak once, you could still see him remembering how hated he was for those years of the Volcker Shock on his face. Strained and a little sad.

cs702 1y ago
As he raised the federal fund rate to 20%, Volcker became widely hated indeed. Businesses and consumers suffered because of his actions. Politicians of course tried to take control of the Fed. They also tried to fire him. At one point he needed Secret Service protection. Here's an article from the 1980's about it: https://www.latimes.com/archives/la-xpm-1987-04-05-fi-492-story.html https://www.latimes.com/archives/la-xpm-1987-04-05-fi-492-st...
alexqgb 1y ago
I watched an interview with him several years ago. The brother was sipping from a glass of whisky on the rocks the whole time. I fully get it.

hyperpape 1y ago

This post is right about some things, including the general solution to staglation, and wrong about others. Paul Volker was Fed Chair between 1979 and 1987, not 1973. The 1973 crash and recession were not caused by his actions, if you had to pick a single cause, I think Opec would be it.

cs702 1y ago
You're right. Fixed! I knew that, but my puny little brain somehow didn't catch it as I was writing my comment.
deleted 1y ago
[deleted]

franktankbank 1y ago

The only people who care about that are the economists. You can also take a one time hit by getting back to the basics and forget the goddamn metrics.

edoceo 1y ago
What is back to basics mean here? Forgetting metrics, for a national economy, seems not good.
- franktankbank 1y ago
  Incentivize our basic necessities and come down hard on fraud. If a bridge needs to be rebuilt pay to have it done. If shipping infrastructure needs to be modernized pay to have it done. If we need more mining get it done. Get it done and get it done fast. If bids are won but they go and fuck all the money away send them to jail. This is how stuff worked before people became obsessed with metrics.
  - glenstein 1y ago
    So just for one example, the Bureau of Labor Statistics started publishing jobs reports in 1915. But having monthly jobs reports on the cotton sector lead to increased fraud and stopped bridges from being built? What's the mechanism? People are distracted by the amount of cotton production, which is the perfect time to falsify an earnings report?
    - franktankbank 1y ago
      How long were supply chains back then? 2-5 nodes in a typical case? I'm not saying publishing of statistics is what caused this shit to happen dingus. I'm saying focusing on it exclusively is dumb and it is wiser to look at a granular level. We can't look at this level because once you have a 150 node supply chain how trustworthy are the receipts? What if your body had a metric as dumb as our high level economic metrics. We'd all be doing our best to get fat as fuck.

VoidWarranty 1y ago

So uh, I'm the first person in my family to break the cycle of poverty. I have nobody I trust to follow advise with money. I do all the 'standard' boring investment strategies (401, index funds, roth, etc). I don't bother with crypto (scams). What does one do if stagflation is coming? Float more cash? Buy real estate?

jeffbee 1y ago
You might just be in a long epicycle of poverty and not realize it.
cs702 1y ago
All I can suggest is to read Buffett's classic article from 1977: https://fortune.com/article/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/ https://fortune.com/article/buffett-how-inflation-swindles-t...
- CamperBob2 1y ago
  He goes completely off the rails in the very first sentence: It is no longer a secret that stocks, like bonds, do poorly in an inflationary environment. Does it get better?
  - staticman2 1y ago
    Why do you think that sentence is wrong? Hint: What time period do you think he's talking about?
    - CamperBob2 1y ago
      He's talking about a time period when the stock market was in the doldrums and inflation was high. Right now inflation is considered high (even though it isn't really, historically) and the stock market is berserk. And why wouldn't the stock market be considered a valid investment in the presence of inflation? Where else are you supposed to park your cash if you want to outperform TIPS? Remember that in the 1970s there basically was no retail stock market compared to what we have now, where everyone and their dog has a 401(k) and trading is basically free. Even if valid, his point doesn't seem relevant. It is going to be hard to apply any lessons from the 1970s to what we're facing now, when incompetent and erratic policymakers are driving the US economic picture rather than external influences like OPEC and Viet Nam. (And if we thought OPEC was a malevolent cartel, just wait'll the rest of the world starts forging its own trade agreements without inviting us to participate.)

milesvp 1y ago

The interest rates were wild in 1982. My dad said that no one would lend for a mortgage, and we ended up doing seller financing to buy my childhood home. Also, not enough people talk about housing prices in high interest rate environments. Mortgage payments are the thing that tether housing prices, and act as a lever. We see it today with just an extra 4% with low housing volume and people reluctant to sell, because then they’d need a new mortgage at the new rate. People who would like to downsize don’t since their mortgage payments often ends up similar.

jghn 1y ago
I remember my parents being excited about the opportunity to refinance their mortgage to something in the high teens. And now these days headlines act like the apocalypse is occurring when mortgage rates are in the 6-7 range.
- irq 1y ago
  Back during those high interest rate days, housing costs vs income were much better
- esseph 1y ago
  Rates are lower, but housing cost is much, MUCH higher as a percentage of total income.
- ta1243 1y ago
  I'd rather owe 100k over 30 years at 15% than 300k at 4%.
  - dh2022 1y ago
    Now is 300K at 7%...
  - jghn 1y ago
    You also need to adjust the 100k for inflation. It'd be well over 300k now. I'd rather the 300k at 4% in that scenario.

baron816 1y ago

The good news is that these economic problems are entirely the result of bad policies and can be reversed. If we were to also raise broad based taxes, it would allow the Fed to cut interest rates, stoking long term investment, loosen up the housing market (which would allow more people to move), lower the Federal deficit, and improve the trade balance (as if that actually mattered).

thatguy0900 1y ago
The bad news is that we're only one year into the 4 years of bad policy(if we're lucky) and the policy itself will probably continue to get worse
- baron816 1y ago
  Indeed. We’re not fixing it anytime soon.
- nxm 1y ago
  We survived with 30% inflation ok key goods during the Biden years due to endless spending, we’ll survive this one too. You’re welcome to short the market though if you feel strongly otherwise
  - deleted 1y ago
    [deleted]
  - JamesBarney 1y ago
    "key goods" is doing a lot of heavy lifting in that statement.
    - mindslight 1y ago
      "Biden years" is doing even more work. The suicide cultists generally ignore the trillions in helicopter money that was dumped into the economy under Trump's "watch", right when we were also dealing with supply shortages. It took a few years for the economy to start moving and that new money to go from asset prices into consumer prices, right in time for short memories to blame JOEBIDEN.

doctorhandshake 1y ago

Just yesterday I was remembering my high school economics professor writing two words on the board: STAGFLATION = CLUSTERFUCK

rapind 1y ago
Well it's already a clusterfuck so...

thisisit 1y ago

Today's economy is all about politics. There are people who still hold out hope or confuse economic data with economist. Populism >>>> good policy. No one wants to be the next Volcker. So, this is likely going to stagflation. I hope I am wrong because this can be ripple effects all over the world.

sc68cal 1y ago
> Today's economy is all about politics. When has it not been? It's how we actually determine the allocation of resources

ashleyn 1y ago

If inflation is lower than the rate the federal reserve hikes rates to, you can ride out stagflation in money market funds and other types of income-generating investments. The real pain is when it doesn't. Stocks decline, cash declines, and there really is nowhere to hide. TIPS? I-bonds? Both are indexed to the CPI, which policymakers have loudly signaled they are okay gaming and manipulating for political favour.

JumpCrisscross 1y ago
You’re vastly underestimating the income and political effects of stagflation. Historically speaking, one doesn’t ride it out. It’s fixed fast or the system collapses.

penguin202 1y ago

Last administration cooked the books on BLS numbers for nearly 2 years, issuing corrections and all that nobody paid attention to. They also redefined what a recession is during the last administration. Wasn't a news story then, but is now b/c trump.

esseph 1y ago
Seems like Trump is doing just fine creating a recession on his own.
- penguin202 1y ago
  [dead]
scrollop 1y ago
Until the end of 2024 the US had an economy the world envied. At least, this allows Europe to rise, again.
- mountainriver 1y ago
  Because of debt spending, everyone wants to act like we did something amazing. We didn’t, we just pumped in more debt and the economy went up. We are now even more in the red as a nation
- cman1444 1y ago
  You are kidding yourself if you believe Europe will be an economic winner at any time in the not-distant future.
- listenallyall 1y ago
  ...according to two U.S. based professors and editors at the Economist. I dont recall too many foreign leaders stating that they envied the American economy.
topaz0 1y ago
twelve pinocchios

cjfd 1y ago

[flagged]

trod1234 1y ago
Its hard to ascribe individual responsibility in that way when the only two choices were existentially awful. "You elected an idiot president...", the choices were Communism, or Fascism; which is recoverable and better for people. Certainly not the former, but to be clear neither are a real choice when you vote for democracy, and not voting is a vote for both fascism/communism at the same time. Such was a similar failure and rise of demagogues that ruined Rome. First-passed-the-post voting is fundamentally flawed, and so is ranked choice...
- malnourish 1y ago
  I am legitimately surprised that someone who can write complete and cogent sentences believes that a vote for one of the two presidential candidates was a vote for communism.
  - yoyohello13 1y ago
    These days, any sort of tax on the wealthy at all is seen as full blown communism.
- dragonwriter 1y ago
  [flagged]
- TheBicPen 1y ago
  > First-passed-the-post voting is fundamentally flawed, and so is ranked choice... What voting system so you think is best? None are perfect but IMO ranked choice is the best as it keeps the good attributes of FPTP without suffering from the spoiler effect
  - JoshTriplett 1y ago
    When most people say "ranked choice" they seem to refer to IRV, which is broken in multiple ways, but most notably that it has the property that ranking someone higher can make them lose and ranking someone lower can make them win. That happens because IRV ignores all of someone's preferences except their top choice, until their top choice is thrown out, at which point IRV looks at their next preference. There are much better systems: approval (for simplicity, at the expense of more accurate preference information) and Condorcet (for accuracy, at the expense of making it more difficult to explain tie-breaker corner cases to the average person).

trod1234 1y ago

I've been saying this same thing for awhile, the problem is a lot of sentiment bots have been downvoting it out of view within 24 hours, taking karma as they go. Yesterday lost 10 points for a single post same subject, basically the same as yours. There are a number of subjects now where its almost to the point where any discussion is fruitless because anyone talking is getting punished by third-parties, and moderation aint doing a thing about them. Your right it will be real bad, much worse than before because most of the Volcker recovery was on the back of the global adoption of the petrodollar. The situation is the exact opposite today where you not only have petrodollar pools of money coming back domestically but also runaway government spending. If you compare our modern economics with that of Argentina over the past 100 years, we seem to be following the same policy pitfalls. These things largely only happen because of excessive money-printing under fiat, certain government policy and regulation can cause it as well.

zahlman 1y ago

Unemployment was continuously higher than the current level from approximately early 1970 to mid 1999: https://fred.stlouisfed.org/graph/?g=1M4lw https://fred.stlouisfed.org/graph/?g=1M4lw (click "Max") Markets currently don't expect significantly higher inflation in the long term, as the "10 year breakeven inflation rate" ("The latest value implies what market participants expect inflation to be in the next 10 years, on average.") is fairly stable: https://fred.stlouisfed.org/series/T10YIE https://fred.stlouisfed.org/series/T10YIE By my understanding, this is supposed to trend towards 2.0% when everything is hunky-dory; things are not perfect, but they look fine to me in historical perspective. Similarly for e.g. this 5-year forward chart: https://fred.stlouisfed.org/series/T5YIFR https://fred.stlouisfed.org/series/T5YIFR > Raising rates to put stress on businesses and consumers is the only method known to work for ending self-reinforcing high inflation Yes, and that's how we made sure that the inflation peak in 2022 didn't become self-reinforcing. And as far as anyone seems to be able to tell, it worked. > It's what Paul Volcker did at the Federal Reserve in response to the stagflation that started in the early 1970's in the US and other countries, after OPEC raised oil prices. Volcker raised the federal funds rate in fits and starts to a high of 20% in 1981: Right. Current circumstances are very different. Posting this much about what you "hope doesn't happen" comes across as fear-mongering, given the lack of reason to expect it to happen. The tariff discourse allows people to throw around large, scary-sounding percentages, but in practice the corresponding price increases are on average much smaller. And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.)

zahlman 1y ago
> And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.) I should add: historically, increases in the unemployment rate have a tendency to accelerate and then produce a spike, which is then brought under control by some other mechanism, and tends to correspond with a recession. But this is just the normal boom-bust cycle, and seems rather unavoidable. The rate can't keep going down forever, and having it level out doesn't seem feasible, either. The magnitude of such a spike doesn't necessarily indicate the severity of economic downturn, either.

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xxpor 1y ago

There's a theory that changing regulation Q to uncap interest rates on savings accounts had more to do with ending stagflation than the fed funds rate hikes. I'm not smart enough to fully evaluate if that's true, but it was an interesting theory to me at least. https://cepr.org/voxeu/columns/what-really-drives-inflation https://cepr.org/voxeu/columns/what-really-drives-inflation

lucius_verus 1y ago

Strictly speaking, Volcker caused two recessions (the first of which likely ended Carter's re-election prospects). Although raising interest rates tamped down inflation on the demand side, we don't give enough credit to Carter for attacking the supply side by deregulating energy markets. Carter typically doesn't get credit because prices didn't really ease until he was out of office. However, it looks like energy prices wouldn't have decreased if Carter hadn't deregulated the oil and gas industry, which allowed domestic producers to become competitive. (Ironically, Carter thought deregulation would raise prices and foster a move to alternative energy. Instead we got shale oil and fracking. Unintended consequences.)

Tadpole9181 1y ago

> the Federal Reserve would be forced to raise interest rates That's just not happening, no matter what happens. The President is obsessed with lowering rates, because it personally enriches him, regardless of how it affects the economy. The cronies he has in line to replace Powell and the SCOTUS seeming like they'll back his unlawful removal of the Fed governors he doesn't like, means the independence of the Fed is guaranteed dead in, at most, 2026. The businesses that should be pushing back just... Aren't? 5 billionaires just had a foot-kissing session with Trump. Law firms are capitulating. Most education institutions are capitulating. Companies would rather bribe Trump with gold statues (Apple) for their own short-term kickback than speak up even a tiny bit to prevent a mid-term economic collapse. I genuinely don't see the US avoiding a self-inflicted (global) depression anymore.

listenallyall 1y ago

> it would be extremely unpleasant As opposed to the current economic environment and that of the past 5 or so years, which absolutely nobody thinks is unpleasant.