The Fed Has To Stop Playing With Inflation!

[Foxfyre]

Media reports are that the Federal Reserve Board will not raise the Federal Funds Rate at the next meeting on October 31/November1. This is a colossal mistake; inflation is a devastating cancer to a country's economy and America's inflation problem is not under control it is not on a certain trajectory to two percent long-term. The Federal Reserve has done great work over the last eighteen months or so bringing down the inflation rate but it is not tamed it could readily begin to rise again. Last month the inflation rate was 3.7 percent and for August it was also 3.7 percent, far from the needed 2.0 percent target. The 2nd quarter GDP growth was 2.1 % and the 1st quarter was 2.2 % and the estimate for the third quarter is 1.9 percent indicating a strong economy owing to the infrastructure and green energy bills passed in Washington over the last three years, on the employment front the economy created 336K jobs in September and 227K in August meaning America's jobs picture is higher than just stagnant employment indicating workers still have a decent hand in getting a high wage and the American consumer will have money to spend all putting upward pressure on prices. Plus, once inflation gets bad it has a self-propelling cyclical effect which America is seeing where high inflation causes workers to ask for higher wages which causes employers to raise prices.

The Feds got to raise the Fed Funds rate a quarter point at the next meeting and the one in mid-December and they got to announce to the public they aren't lowering it for all of 2024 barring a major recession. The medicine so far given to the inflation problem cancer hasn't given great confidence that the cancer will be completely destroyed, a stronger treatment program than heretofore utilized is needed, it is obvious! Chairman Jay Powell has got to realize that the nation's political leadership is too political they don't have the character to endure a really long stretch of high interest rates to stop unduly high inflation rate from being ingrained in the economy and causing terrible harm. This political leadership cannot be trusted to endure another round of interest rate increases in 2025 if it turns out inflation is not under control at that time. President Donald Trump if he follows his track record will deem such an effort by the Fed in 2025 as grounds for removing the sitting Fed. Chairman and a President Biden will be lobbied like crazy from his caucus in Congress to bring about a change!

I fail to see how raising interest rates to more than double what they were in roughly a year's time helps curb inflation. I see little change in inflation at the grocery store, at the gas pump, in utility bills and other critical costs of living. I know what all the economic theories are but they obviously are not working as salaries fail to keep pace with inflation, family wealth is declining, and there is no light visible at the end of the tunnel.

All the administration has accomplished so far is to ensure that people don't have as much to donate, save, invest, spend on quality of life and far too many are forced into taking on more and more personal debt to make ends meet.

https://www.cnn.com/2023/05/15/economy/household-debt-credit-q1/index.html

Biden economics is serving no one well other than the very rich who have resources to insulate themselves from the effects.

 

[Tom Paine 1949]

The Fed stopped raising rates at their last session, but as the OP pointed out it (and other central banks) has already very dramatically reversed its previous easy credit policy — almost approaching the “zero interest rate policy” that Donald Trump advocated before COVID — and it has also for about a year now replaced “Quantitative Easing” with “Quantitative Tightening.”

There are other factors that led to inflation other than the much hyped bipartisan spending during COVID. Unfortunately it is also true that just Fed tightening of interest rates does not stop inflation quickly. This relationship is perhaps less strong than in the past, when our national economy was more independent, or just a much larger part of the world economy than today.

Post-COVID logistics’ screw-ups, Ukraine War related rises in world oil and wheat prices, post-“derisking & “decoupling” policies toward China, and similar developments have all after many years of little inflation pushed the world toward a new era where inflation is once again a problem. QT now still continues to roll off 40-60 billion of Fed balance sheets, thus withdrawing money from circulation. If inflation remains high or worsens again, as I believe it will, the Fed will raise rates again — but raising rates is not only not always effective, it can produce its own serious problems. Sudden big moves especially can lead to systemic crisis that would be much worse even than temporary high inflation.

In the present situation, at least “savers” in the U.S. can earn over 5% on CDs and government bonds, beating or matching inflation even after taxes, and that should — if it lasts — lead to some positive developments. There are no magic pills, however, and only simpletons think that the U.S. economy can withdraw into a closed national economy or avoid foreign trade & competition … or even foreign political entanglements.

 

[Natural Citizen]

They're raising rates just enough to induce stagflation and no more than that.

Which is precisely what I said they were gonna do when they started raising them.

But nyoooo...nobody ever listens to Natty C. lolol...

 

[John Edgar Slow Horses]

My claim is you can't show evidence for your claim.

Prove me wrong by showing evidence for your claim.

Or run away again.

That is not how it works. You make a claim with evidence, which you have not done. All I to do at this point is say you are wrong.

 

[John Edgar Slow Horses]

I fail to see how raising interest rates to more than double what they were in roughly a year's time helps curb inflation. I see little change in inflation at the grocery store, at the gas pump, in utility bills and other critical costs of living. I know what all the economic theories are but they obviously are not working as salaries fail to keep pace with inflation, family wealth is declining, and there is no light visible at the end of the tunnel.

All the administration has accomplished so far is to ensure that people don't have as much to donate, save, invest, spend on quality of life and far too many are forced into taking on more and more personal debt to make ends meet.

https://www.cnn.com/2023/05/15/economy/household-debt-credit-q1/index.html

Biden economics is serving no one well other than the very rich who have resources to insulate themselves from the effects.

The idea is slow consumer demand on goods and services, which will lower the costs of goods and services, giving consumers more purchasing power to spend. It's a delicate balance.

 

[Foxfyre]

The idea is slow consumer demand on goods and services, which will lower the costs of goods and services, giving consumers more purchasing power to spend. It's a delicate balance.

The idea is not working. Most leftist ideas to lower quality of life or give the State more control over lives don't work to the benefit of those they pretend they care about. Maybe some do care or have good intentions but it is mostly taking more and more liberty, choices, options, opportunity and therefore control from the people.

 

[Toddsterpatriot]

That is not how it works. You make a claim with evidence, which you have not done. All I to do at this point is say you are wrong.

You make a claim with evidence, which you have not done.

Excellent idea.

state policy can affect inflation but other causes exist as well.

What evidence do you have of other causes?

 

[John Edgar Slow Horses]

The idea is not working. Most leftist ideas to lower quality of life or give the State more control over lives don't work to the benefit of those they pretend they care about. Maybe some do care or have good intentions but it is mostly taking more and more liberty, choices, options, opportunity and therefore control from the people.

It is working actually, down from 7 to 3%. We live in a country of laws and can't have 330 million doing each as he pleases.

 

[Foxfyre]

It is working actually, down from 7 to 3%. We live in a country of laws and can't have 330 million doing each as he pleases.

I don't care how a dishonest government presents it. I'm the one buying the groceries, buying the gas, paying the utility bills remember? And nobody I know has as much money in their pocket after all necessities are paid as they did before this incompetent Administration.

And the Founder would profoundly disagree with you. They envisioned and gave us a government that would secure our rights so that each citizen could then do exactly as he or she pleases.

 

[DudleySmith]

If I don't have a counterparty, why do I need any money at all?

So you're boyfriend is out of town?

 

[Tom Paine 1949]

And the Founder would profoundly disagree with you. They envisioned and gave us a government that would secure our rights so that each citizen could then do exactly as he or she pleases.

Sure …like buy and exploit African slaves and their descendants for personal profit!

Your knowledge of economics seems weak, and your blaming an “incompetent Administration” for all our economic problems … is both ultra-partisan and ultra-simple-minded.

 

[DudleySmith]

My position is you can't name any non-state causes.

lol

Total Household Debt Reaches $16.90 trillion in Q4 2022; Mortgage and Auto Loan Growth Slows - FEDERAL RESERVE BANK of NEW YORK

www.newyorkfed.org

Total Household Debt Reaches $16.90 trillion in Q4 2022​

U.S.: corporate debt securities 2022 | Statista

Outstanding corporate debt securities in the United States have been trending upwards since the first quarter of 2018, with this growth accelerating with the onset of the global coronavirus (COVID-19) pandemic.

www.statista.com

From a total of almost 19.6 trillion U.S. dollars in Q1 2018, by Q2 2022 this value had climbed to approximately 23.9 trillion U.S. dollars

 

[DudleySmith]

My claim is you can't show evidence for your claim.

Prove me wrong by showing evidence for your claim.

Or run away again.

Todd really thinks people 'run away' from his imbecilic attempts at propaganda.

 

[DudleySmith]

Raising rates will not stop or cure inflation. You cannot pump $2TT into the economy and not have consequences, Housing is not going down, incomes will need to increase, there is no other realistic alternative…

it will slow down consumer borrowing to spend, and lower demand. The prime rate is still effectively negative for the big borrowers, so they won't be hit hard at all, which is why the rates need to be a lot higher.

 

[Foxfyre]

Sure …like buy and exploit African slaves and their descendants for personal profit!

Your knowledge of economics seems weak, and your blaming an “incompetent Administration” for all our economic problems … is both ultra-partisan and ultra-simple-minded.

The Founders stopped the importation of slaves and wrote into law that any states formed out of the territories would not be slave states. That is the best they could do in order to form a more perfect union with each state retaining as much autonomy as was possible and still have a country. They knew as all thinking people knew and know now that everything is not perfect, but a free people will learn, grow, improve, get better much more effectively than will those ruled by a central government. And so we did.

I do not and have not blamed current Administration for all our economic problems--is it something in the water leftists drink that compels them to characterize what others say so dishonestly?--but I absolutely have had more than enough economics education and experience to blame an incompetent current Administration for making things much worse than they had to be.

 

[John Edgar Slow Horses]

The Founders, particularly Washington and Adams and Hamilton, would agree with Biden not you. Your rights are preserved.

 

[GWV5903]

it will slow down consumer borrowing to spend, and lower demand.

Demand isn’t going to change, you’re forcing the middle class and poor to suffer, how do you explain this?

The prime rate is still effectively negative for the big borrowers,

Now you’re showing how uninformed you are, cost have increased dramatically as well as rates. The consumer ultimately pays more for everyday goods.

so they won't be hit hard at all, which is why the rates need to be a lot higher.

This is passed on to all of us, always has been, historically it’s a fact.

You cannot pump $2TT into the market and expect it not to create more demand. The mindset of Liberal Progressives is very dangerous and damaging.

 

[John Edgar Slow Horses]

Demand isn’t going to change, you’re forcing the middle class and poor to suffer, how do you explain this?

Now you’re showing how uninformed you are, cost have increased dramatically as well as rates. The consumer ultimately pays more for everyday goods.

This is passed on to all of us, always has been, historically it’s a fact.

You cannot pump $2TT into the market and expect it not to create more demand. The mindset of Liberal Progressives is very dangerous and damaging.

Shut up until you tell the truth. From Bush 43 on both parties have spending like cowboys in a brothel.

 

[Toddsterpatriot]

lol

Total Household Debt Reaches $16.90 trillion in Q4 2022; Mortgage and Auto Loan Growth Slows - FEDERAL RESERVE BANK of NEW YORK

www.newyorkfed.org

Total Household Debt Reaches $16.90 trillion in Q4 2022​

U.S.: corporate debt securities 2022 | Statista

Outstanding corporate debt securities in the United States have been trending upwards since the first quarter of 2018, with this growth accelerating with the onset of the global coronavirus (COVID-19) pandemic.

www.statista.com

From a total of almost 19.6 trillion U.S. dollars in Q1 2018, by Q2 2022 this value had climbed to approximately 23.9 trillion U.S. dollars

Yeah, Biden is awesome, isn't he?

 

[Toddsterpatriot]

Todd really thinks people 'run away' from his imbecilic attempts at propaganda.

They run away, because they have no evidence for their moronic claims.
Like you running away from "derivatives don't need a counterparty" idiocy.
Pussy.