At the same time, U.S. inflation has continued to accelerate particularly for food staples, but also for long term items such as housing and heath insurance costs (so much for blaming everything on temporary C-19 shortages), European inflation has skyrocketed. Germany, with its normal stable economy, has had inflation hitting a 40-year high at its most recent reading of producer price inflation just hit a jaw-dropping 25.9 - this before the Ukraine war started and gas prices climbed.

So let's play the US now is In a global economy game. Another concern is that the highest inflation rate in generations abroad could lead to increased inflation expectations, which could create a vicious cycle of higher expectations creating even higher inflation. The FED considers inflation in the US basically a nothing burger with a 2% inflation target - that may change.

wifeisafurd said:

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The FED considers inflation in the US basically a nothing burger with a 2% inflation target - that may change.

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It's already changed.
Chairman Powell was speaking over a week ago about a 1/2 point rate hike at multiple meetings.

Last Friday, Citicorp's chief economist came out and predicted 50 basis point moves in May, June, and July.
The FED hasnt raised the Fed Funds rate by 1/2 point since May 2000.

Fed rate hike: Jerome Powell hints at big interest rise | Fortune

DiabloWags said:

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wifeisafurd said:

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The FED considers inflation in the US basically a nothing burger with a 2% inflation target - that may change.

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It's already changed.
Chairman Powell was speaking over a week ago about a 1/2 point rate hike at multiple meetings.

Last Friday, Citicorp's chief economist came out and predicted 50 basis point moves in May, June, and July.
The FED hasnt raised the Fed Funds rate by 1/2 point since May 2000.

Fed rate hike: Jerome Powell hints at big interest rise | Fortune

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So what is the FED target now?

wifeisafurd said:

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]So what is the FED target now?

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Last Friday, fed-funds futures were pricing in a 2.50% to 2.75% target range by year end and a mid-2023 peak of 3.00% to 3.25%.

This is compared to the FED projections during their March 15/16 meeting of 1.9% by year end and topping out at 2.8% in 2023.

Interesting read from Bloomberg:

Throughout 2021, as inflation picked up, Fed Chair Jerome Powell insisted price pressures were largely "transitory," driven by pandemic disruptionssuch as the massive shift of consumer spending away from services and into goodsthat would eventually come to an end as the health crisis subsided.


Now, the Fed's story is changing. Consumer prices were up 7.9% in February from the year before, while average hourly earnings for production and nonsupervisory employeesa group that comprises over 80% of the U.S. workforcewere up 6.6%. And Fed officials increasingly see an important link between the two phenomena.

After the announcement of the rate increase on March 16, Powell told reporters that "there is a misalignment of demand and supply, particularly in the labor market, and that is leading to wages moving up at ways that are not consistent with 2% inflation over time, and so we need to use our tools to guide inflation back down."

But the surge in profits, eclipsing any increase in workers' pay, belies the notion that wage demands are what's pushing prices higher, according to George Pearkes, a global macro strategist at Bespoke Investment Group in Charlotte. He points to labor's share of income, which isn't rising.

"It's completely inconsistent with a wage-price spiral," Pearkes says. "There is no other way to put it."

How does this affect the avg joe ?

going4roses said:

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How does this affect the avg joe ?

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Are you serious?

DiabloWags said:

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going4roses said:

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How does this affect the avg joe ?

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Are you serious?

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Lol.
Allow me to attempt.

The avg Joe doesn't understand what any political party stands for. Nor do they understand economic "jargon".

All he knows is that if the price of bread, milk and go up, it must be the fault of the current President.

The result is that he/she votes for the opposite party.

Wrong.

DiabloWags said:

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OdontoBear66 said:

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The average Joe may be a tad smarter than you think...e.g. Only 6% think Putin is responsible for the price of gas going up.

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Are they smart enough to blame our good "friends" the Saudi's and OPEC+ for that?

Or do they just listen to the talking heads at Faux News and parrot the typical Biden bashing narrative of
"He closed down the Keystone Pipeline, blah, blah, blah " - - - too dumb to know that the first 3 phases of Keystone have been open and in service for quite some time.

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Or smart enough to know that the current Keystone Pipeline references refer to the third stage and also smart enough to know that Biden allowed that huge lease sale you often refer to because he was directed to by court order.

oski003 said:

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DiabloWags said:

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OdontoBear66 said:

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The average Joe may be a tad smarter than you think...e.g. Only 6% think Putin is responsible for the price of gas going up.

---

Are they smart enough to blame our good "friends" the Saudi's and OPEC+ for that?

Or do they just listen to the talking heads at Faux News and parrot the typical Biden bashing narrative of
"He closed down the Keystone Pipeline, blah, blah, blah " - - - too dumb to know that the first 3 phases of Keystone have been open and in service for quite some time.

---

Or smart enough to know that the current Keystone Pipeline references refer to the third stage and also smart enough to know that Biden allowed that huge lease sale you often refer to because he was directed to by court order.

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Sorry, but you are mistaken.
The third stage of Keystone is OPEN.

It runs from Cushing, Oklahoma to the refineries in the Houston, Texas area.
It has NOTHING to do with CANADA.

DiabloWags said:

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oski003 said:

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DiabloWags said:

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OdontoBear66 said:

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The average Joe may be a tad smarter than you think...e.g. Only 6% think Putin is responsible for the price of gas going up.

---

Are they smart enough to blame our good "friends" the Saudi's and OPEC+ for that?

Or do they just listen to the talking heads at Faux News and parrot the typical Biden bashing narrative of
"He closed down the Keystone Pipeline, blah, blah, blah " - - - too dumb to know that the first 3 phases of Keystone have been open and in service for quite some time.

---

Or smart enough to know that the current Keystone Pipeline references refer to the third stage and also smart enough to know that Biden allowed that huge lease sale you often refer to because he was directed to by court order.

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Sorry, but you are mistaken.
The third stage of Keystone is OPEN.

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Fourth, whatever, I posted it earlier in one of your other threads you codger!

oski003 said:

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DiabloWags said:

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oski003 said:

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DiabloWags said:

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OdontoBear66 said:

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The average Joe may be a tad smarter than you think...e.g. Only 6% think Putin is responsible for the price of gas going up.

---

Are they smart enough to blame our good "friends" the Saudi's and OPEC+ for that?

Or do they just listen to the talking heads at Faux News and parrot the typical Biden bashing narrative of
"He closed down the Keystone Pipeline, blah, blah, blah " - - - too dumb to know that the first 3 phases of Keystone have been open and in service for quite some time.

---

Or smart enough to know that the current Keystone Pipeline references refer to the third stage and also smart enough to know that Biden allowed that huge lease sale you often refer to because he was directed to by court order.

---

Sorry, but you are mistaken.
The third stage of Keystone is OPEN.

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Fourth, whatever, I posted it earlier in one of your other threads you codger!

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Third stage..... Fourth, whatever.

LMFAO!

Keystone Pipeline - Wikipedia

going4roses said:

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How does this affect the avg joe ?

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I don't think this is a bad question. I think the answer is a bit less clear because there are a lot of different average joe's. For a regular person who has seen wage increases, they may be just fine because it could more than offset the change in prices they are facing.

The basket of goods that everyone purchases can be quite different and the measures of inflation used by the Fed and government don't really match up that well to individual purchasing. The Fed uses the PCE (article here) and the government uses CPI which is less dynamic and tends to overstate inflation.

I think the biggest concern for the average joe isn't that prices are rising but that rising prices are going to cause the Fed to whammy our economy in order to prevent rising prices to get out of control. When the Fed whammies our economy it will increase unemployment which means many average joe's are going to lose their jobs.

Happy to hear other people's takes. DW - what did I get wrong?

Unit2Sucks said:

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going4roses said:

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How does this affect the avg joe ?

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Happy to hear other people's takes. DW - what did I get wrong?

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I think that you covered some of the basics.
I didnt think that Going 4 Roses was genuinely interested in a reply, so I abstained.

I also didnt want to spend a lot of time talking about the basics of monetary policy and what a flat yield curve means. But it should be obvious to anyone that the price of money is the primary ingredient to economic growth, let alone job growth.

In a nutshell, the best way for the FED to get a handle on INFLATION is to kill off the housing market.
The housing market requires a lot of labor and raw material prices.

Kill off the demand for labor and commodities and inflation will subside.
They'll do this by raising rates.

But in doing so, you wind up losing jobs in the process and risk sending the economy into negative growth.

As to your point about hiking rates too far, which winds up causing a Recession, it is true that the FED has had a terrible track record when it comes to navigating this type of monetary policy and engineering a "soft" landing.
The only one that I can think of was back in 1994.

In 1994, the FED actually was successful in bringing inflation back under 3% without causing a Recession.
And this set the stage for the dot-com led boom that capped the end of the century.

It started with an unexpected quarter point increase in the Fed Funds rate. They then imposed a series of sharper than expected hikes of 50 basis points, culminating with a 75 basis point move and essentially doubling the key rate in a little over a year.

Right now, there's an awful lot of speculation on what the super flat yield curve means (the spread between the 2 and 10 year bond yields). Again, it's Basic Econ 101a that when the curve is this flat (or inverts) Banks arent willing to finance economic growth, because they borrow short term in order to lend long term. If short term rates are as high (if not higher) than long term rates, it makes making a loan an unprofitable venture.

Bottom line: Flat ( to inverted ) yield curves have happened on a number of occasions and not all of them result in a Recession. But when they do, it usually doesnt come until 12 - 18 months down the road.

The fear is that a tightening of monetary policy by the FED will bring about a Recession.

Interestingly enough, one can make the case that the yield curve is not offering a "true" picture of where long term rates should be, given that they have been artificially low from the FED nearly doubling its Balance Sheet to $9 Trillion Dollars. - - - I've read that without QE, 10 year yields would probably be up around 3.7%

Thus, a case can be made that the yield curve's Recession signal may indeed be distorted.

My god!
This is no mere futuristic fantasy dystopian movie.

https://en.m.wikipedia.org/wiki/File:Chernobyl_2019_Miniseries.jpg



Chernobyl released about 10 times the radiation that was released after the ***ushima accident.

Nice job Tom.

You took a thread about INFLATION and hijacked it into a thread about nukes and Chernobyl.

concordtom said:

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DiabloWags said:

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going4roses said:

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How does this affect the avg joe ?

---

Are you serious?

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Lol.
Allow me to attempt.

The avg Joe doesn't understand what any political party stands for. Nor do they understand economic "jargon".

All he knows is that if the price of bread, milk and go up, it must be the fault of the current President.

The result is that he/she votes for the opposite party.

---

As much as like to needle Tom, this is not far off. It is more than food prices, also prices at the pump, and particularly housing (and for some medical costs) as these costs often can be higher than food prices. Sometimes the inflationary causes can be attributed to a President's policies, but often not. But I think Tom has it right with the average Joe voting his pocket book

Where I think this goes is that Biden will reduce his ask on BBB spending, figure out away to increase tax revenue (reduce deficit spending), release more oil from US supplies to drive down gas prices longer term, suck up high interest rates, and figure out a way to get wage growth without increasing inflation. A lot of this is counter to the policies Biden ran on to become President (like reducing gas prices which increases fossil fuel use). FWIW, Clinton found himself in a similar situation and was able to ride an austerity budget and FED anti-inflation policy into lowering expectations of inflation and economic growth. I appreciate this is an oversimplification; for example, Clinton benefited from an explosion in the tech economy.

DiabloWags said:

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Nice job Tom.

You took a thread about INFLATION and hijacked it into a thread about nukes and Chernobyl.

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Inflation is part of the misery index, as you know.
So is criticism.

wifeisafurd said:

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concordtom said:

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DiabloWags said:

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going4roses said:

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How does this affect the avg joe ?

---

Are you serious?

---

Lol.
Allow me to attempt.

The avg Joe doesn't understand what any political party stands for. Nor do they understand economic "jargon".

All he knows is that if the price of bread, milk and go up, it must be the fault of the current President.

The result is that he/she votes for the opposite party.

---

As much as like to needle Tom, this is not far off. It is more than food prices, also prices at the pump, and particularly housing (and for some medical costs) as these costs often can be higher than food prices. Sometimes the inflationary causes can be attributed to a President's policies, but often not. But I think Tom has it right with the average Joe voting his pocket book

Where I think this goes is that Biden will reduce his ask on BBB spending, figure out away to increase tax revenue (reduce deficit spending), release more oil from US supplies to drive down gas prices longer term, suck up high interest rates, and figure out a way to get wage growth without increasing inflation. A lot of this is counter to the policies Biden ran on to become President (like reducing gas prices which increases fossil fuel use). FWIW, Clinton found himself in a similar situation and was able to ride an austerity budget and FED anti-inflation policy into lowering expectations of inflation and economic growth. I appreciate this is an oversimplification; for example, Clinton benefited from an explosion in the tech economy.

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Respectfully, thank you.

And, he also had a GOP on The Hill which had (under Bush1) believed in that austerity.
"No new taxes", when the fiscally smart thing to do was to, actually have a balanced budget. It set the stage for Clinton's rosy economy, (at least I've read as much).

Sadly, we don't live in a country where one party would ever really do anything to help the "greater good" so long as it meant the other party would benefit.

wifeisafurd said:

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Where I think this goes is that Biden will reduce his ask on BBB spending, figure out away to increase tax revenue (reduce deficit spending), release more oil from US supplies to drive down gas prices longer term, suck up high interest rates, and figure out a way to get wage growth without increasing inflation. A lot of this is counter to the policies Biden ran on to become President (like reducing gas prices which increases fossil fuel use). FWIW, Clinton found himself in a similar situation and was able to ride an austerity budget and FED anti-inflation policy into lowering expectations of inflation and economic growth. I appreciate this is an oversimplification; for example, Clinton benefited from an explosion in the tech economy.

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Unfortunately, the latest budget proposal by Biden is a joke.
There is no mission statement. No interest in taking back the debt that was increased during the pandemic.
It's essentially a place-holder for BBB and it's basically gonna be dead in the water, because Manchin will never vote for a wealth tax.

Clinton was a master at running to the center whenever he was doing poor in the polls.
Biden doesnt seem to have any knack or talent at doing so.

DiabloWags said:

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concordtom said:

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Biden may indeed be an aged dolt.
But he is better than a criminal madman and his army of henchmen seeking nothing more than power and a sense of being on the winning side.

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Please stop obsessing over the Orange Crap Stain.
It's not healthy.

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You know as well as I do that it's not just him.
He's got successors! Believers! Dolts upon dolts.
I don't see the idiocy ending.

And I suppose that's how one travels from Inflation to Chernobyl.

helltopay1 said:

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yes...you are right.....Inflation is the highest its been in 40 years. But, it could be 45 years...so, it's silly of us to complain...

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Why would you care?

You get your meals served to you on a tray table at Rossmoor.

Does Nurse Ratchett wipe the drool away too?

Unit2Sucks said:

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The President's budget has become a joke over the decades. It's essentially gamesmanship. Biden is hoping that signalling a wealth tax will make him more popular with everyone who isn't loaded, even though you have millions of poor and middle class white people who for whatever reason think that taxing rich people is a mistake.

Biden and his team know very well that his budget isn't going to be the starting point and that his wealth tax doesn't have the support. He didn't genuinely believe that he was going to get it through. He wanted to be able to say "I tried to make the wealthiest in our country pay their fair share, but Republicans got in the way again." It probably won't work but what does he have to lose? Fox News was going to skewer him anyway. Congress controls the purse strings and they will have a lot of mouths to feed that can only be done by spending money.


No one power is ever going to want to balance the budget. That's reality. Just like no one runs for student body president on an austerity platform, no US president is ever going to say "I'm taxing you more and giving you less." No democrat, no republican, no one ever. The only way we balance the budget is by accident, like what's happened in California and it won't be for long.

Our deficit will go down, because it has to without the CARES act and other spending bills repeating, but it will still be historically high. The only hope is for interest rates to come back down because we're going to be royally screwed if we have to pay high interest rates on debt that is growing faster than GDP with no end in sight.

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Couldn't agree more Unit2.....Paragraph 3 is already in play..Terminology was used to show a big budget surplus while we have monstrously more indebtedness long term to pension promises.

Paragraph 4 is the killer. Any politician has to bring to her/his constituency to survive (aka, spend money). Spending goes up in times of low interest rates and everyone loves the side effects of the drug.

Interest rates rise, we can't pay indebted interest without reducing services. Who gets hurt? Yup, the middle class and the poor mostly.

And yes, balancing the budget is gone.