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Post by walnut on Sept 16, 2023 2:14:07 GMT
Is The FED done raising rates? While they have been adamant, inflation needs to get back to 2 percent, the economy shows signs of slowing down. Further rate increases risk of a recession. While higher oil prices increases inflation, my guess is, they will start cutting rates by the end of the year. When corporate earnings decline, the stock market declines. At a certain point unemployment increases. Mass unemployment does not get politicians reelected. What good in low inflation, when you have limited or no income? When you wreck the currency, the cure is to wreck the economy. Isn't that about it? |
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Post by nonentropic on Sept 16, 2023 3:33:45 GMT
To be realistic a weakening economy is part of the goals of rates rises so rates would fall faster if the US experiences GDP slowing or decline. That is generally deflationary.
Also rates are not that ridiculously high given the inflation rates we all have. With asset prices much higher now than in the early 80's say the consequent impact on leverage is also more severe and possibly faster acting.
Lets see if the Govt's of the world also understand this, I have reservations that this penny will drop.
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Post by walnut on Sept 16, 2023 15:49:44 GMT
To be realistic a weakening economy is part of the goals of rates rises so rates would fall faster if the US experiences GDP slowing or decline. That is generally deflationary. Also rates are not that ridiculously high given the inflation rates we all have. With asset prices much higher now than in the early 80's say the consequent impact on leverage is also more severe and possibly faster acting. Lets see if the Govt's of the world also understand this, I have reservations that this penny will drop. Rates are not that high in absolute terms, but the rate of change was vicious and had very bad effects on the economy. My point of contention is that they didn't need to cause the inflation in the first place with their covid cash drops, the results of which necessitated the business destroying Fed hawkishness. All just self inflicted destruction for their engineered catastrophe. Just another chapter in the book lies called covid-19. |
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Post by missouriboy on Sept 16, 2023 22:20:04 GMT
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Post by glennkoks on Sept 16, 2023 22:30:36 GMT
To be realistic a weakening economy is part of the goals of rates rises so rates would fall faster if the US experiences GDP slowing or decline. That is generally deflationary. Also rates are not that ridiculously high given the inflation rates we all have. With asset prices much higher now than in the early 80's say the consequent impact on leverage is also more severe and possibly faster acting. Lets see if the Govt's of the world also understand this, I have reservations that this penny will drop. Rates are not that high in absolute terms, but the rate of change was vicious and had very bad effects on the economy. My point of contention is that they didn't need to cause the inflation in the first place with their covid cash drops, the results of which necessitated the business destroying Fed hawkishness. All just self inflicted destruction for their engineered catastrophe. Just another chapter in the book lies called covid-19. In all fairness. The inflation they caused had its roots back in 2008 with The Great Recession and endless QE. Covid cash drops and shutting down the economy was the straw that broke the camels back. The biggest mistake was not slowly raising rates after the financial crisis was over and getting them closer to historic norms. When the Fed finally realized the inflation was anything but "transitory" they had to raise rates in a hurry before we had Weimar Republic style out of control inflation. August CPI data came in hot and clearly showed the Fed has not got inflation under control just yet. I still don't buy into the soft landing as I am of the opinion we are looking like decadal long battle with inflation like we had in the 1970's. I am not sure the Fed has ever raised rates this hard and this fast and had a soft landing... |
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Post by ratty on Sept 17, 2023 1:15:24 GMT
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Post by walnut on Sept 17, 2023 1:48:14 GMT
Rates are not that high in absolute terms, but the rate of change was vicious and had very bad effects on the economy. My point of contention is that they didn't need to cause the inflation in the first place with their covid cash drops, the results of which necessitated the business destroying Fed hawkishness. All just self inflicted destruction for their engineered catastrophe. Just another chapter in the book lies called covid-19. In all fairness. The inflation they caused had its roots back in 2008 with The Great Recession and endless QE. Covid cash drops and shutting down the economy was the straw that broke the camels back. The biggest mistake was not slowly raising rates after the financial crisis was over and getting them closer to historic norms. When the Fed finally realized the inflation was anything but "transitory" they had to raise rates in a hurry before we had Weimar Republic style out of control inflation. August CPI data came in hot and clearly showed the Fed has not got inflation under control just yet. I still don't buy into the soft landing as I am of the opinion we are looking like decadal long battle with inflation like we had in the 1970's. I am not sure the Fed has ever raised rates this hard and this fast and had a soft landing... But Glenn, I really never saw any significant inflation during the QE, other than higher financial asset prices and real estate values. I had no prejudices, and I somewhat expected to see it, but I can't say that I ever did. Then the covid cash drops, and BAM instant inflation. Inflation really does seem to be about the CASH supply in circulation. Natural law demands its pound of flesh for the epic mismanagement, and those hurt the most had little to gain from any of the charade. The damage is coming out in the wash. |
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Post by glennkoks on Sept 17, 2023 12:24:20 GMT
In all fairness. The inflation they caused had its roots back in 2008 with The Great Recession and endless QE. Covid cash drops and shutting down the economy was the straw that broke the camels back. The biggest mistake was not slowly raising rates after the financial crisis was over and getting them closer to historic norms. When the Fed finally realized the inflation was anything but "transitory" they had to raise rates in a hurry before we had Weimar Republic style out of control inflation. August CPI data came in hot and clearly showed the Fed has not got inflation under control just yet. I still don't buy into the soft landing as I am of the opinion we are looking like decadal long battle with inflation like we had in the 1970's. I am not sure the Fed has ever raised rates this hard and this fast and had a soft landing... But Glenn, I really never saw any significant inflation during the QE, other than higher financial asset prices and real estate values. I had no prejudices, and I somewhat expected to see it, but I can't say that I ever did. Then the covid cash drops, and BAM instant inflation. Inflation really does seem to be about the CASH supply in circulation. Natural law demands its pound of flesh for the epic mismanagement, and those hurt the most had little to gain from any of the charade. The damage is coming out in the wash. There was no inflation prior to the covid cash drops but the stage was set. "With QE, a central bank purchases securities in an attempt to reduce interest rates, increase the supply of money and drive more lending to consumers and businesses." The supply of money was increasing with every central bank purchase for years. As long as global supply chains were working optimally inflation was kept in check. With the Covid lockdowns and shuttered business the supply chains broke down at the exact same time we handed out free China Flu cash. This was clearly a recipe for disaster. Years of increased money supply via QE, supply chain breakdowns and free money for the masses. We ended up with a record supply of money in the system competing for less and less goods and services. Personally I think of inflation as the winter. It may start with the shortest day on the solstice but the coldest days of the year come in the following months. I have done a lot of research and I know of no examples of "transitory" inflation in our history. It is like a train, once it gets going it is hard to stop. www.forbes.com/advisor/investing/quantitative-easing-qe/#:~:text=Getty,lending%20to%20consumers%20and%20businesses. |
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Post by glennkoks on Sept 17, 2023 13:21:56 GMT
On the subject of inflation five periods stand out in U.S. history: 1.). In 1778 Congress did not yet have the power to tax it citizens to fund the Revolutionary War so they turned on the printing presses. Inflation peaked at nearly 30%. It was followed by the economic panic of 1785. 2.) We turned on the printing presses again in 1917 to fund WWI and inflation peaked at 20%. It remained high until the Depression of 1920-1921. 3.) Jump forward twenty years and we were forced to print again when the Japanese bombed Pearl Harbor and drug us into WWII. Inflation peaked at 13 percent in 1942. 4.) Then there is the stagflation era of the mid 1970's when inflation peaked at 12% while we were in the Recession of 1973-1975. 5.). Finally there was The Great Inflation of the early 1980's followed by the Reagan Recession which all of us lived through and probably remember pretty well. So if history is our guide and they say it may not repeat itself but it rhymes we can expect some hard times. Three out of four periods of inflation ended in panic, depression or recession. The other by a World War. In all fairness we all have our biases and I have been a self admitted permanent-bear since at least the onset of Covid. Our economy is much bigger and stronger than it has been at anytime in the past so I cannot rule out a soft landing. With that being said we have never had a debt to GDP ratio this high or a representative body in Washington quite this selfish and inept either. I remain skeptical of our economic future both short and long term. www.gobankingrates.com/money/economy/inflation-look-back-at-famous-periods-throughout-history/ |
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Post by missouriboy on Sept 22, 2023 0:49:43 GMT
In the not so distant future, we should hope that Peter Zeihan is more or less correct. It may be a tough decade, but life for the USA may look good on the other side.
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Post by Sigurdur on Sept 22, 2023 1:11:56 GMT
In the not so distant future, we should hope that Peter Zeihan is more or less correct. It may be a tough decade, but life for the USA may look good on the other side.
Peter doesn't have a clue about Agriculture. |
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Post by ratty on Sept 25, 2023 11:25:52 GMT
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Post by missouriboy on Sept 25, 2023 21:44:01 GMT
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Post by ratty on Sept 26, 2023 7:56:07 GMT
A look into the not too distant future? |
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Post by ratty on Sept 28, 2023 11:45:29 GMT
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and 
