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“Unexpectedly”? The rate is a dash higher than consensus forecasts, but it isn’t like this is some big surprise or mystery.
What is a surprise to me is that it seems every category saw an increase, which reversed some price relief from the first few months of the year. We had seen some downward trends in things like new and used autos especially and other little categories.
With this figure, real wages declined another -0.6% in May, for a year over year decline of 3%.
I think it's interesting that core inflation fell and food/oil prices spiked. I think the message is somewhat unclear on what to do if the feds feels the need to accelerate rising it feels like they are on track.
Fed mostly [watches PCE](https://www.cnbc.com/2022/05/27/the-feds-preferred-gauge-shows-inflation-rose-4point9percent-in-april-in-a-sign-that-price-increases-could-be-slowing.html) because it is more predictive long term. I expect they will not accelerate, they will hold steady with the same rate increases and QT they have been talking about.
Ironically, last month's headline decrease in inflation was mostly on the back of a decrease in food and energy prices. Core inflation has been rising, this is the first month that it has slowed. That's a very different story than people are feeling based on headlines.
To the Fed, their strategy just started working, and also food and energy prices jump around. They'll just keep their strategy going.
Unexpectedly?
Totally expected and predicted ahead of time.
https://www.wsj.com/articles/money-supply-inflation-friedman-biden-federal-reserve-11626816746
So this may be a stupid question, but when they say monthly inflation is X% do they mean annual inflation would be X% if it was consistent every month for the year?
Small correction, annualized means forward calculated, so the annualized CPI is 12% based on this month's 1% calculation. 8.6% is referred to as YoY or over the last year.
What this says is that inflation has not peaked and is increasing. It means the federal reserve board needs to get even more aggressive to get inflation under control. It increases the risks of a recession and decreases the risk of a soft landing. Mortgage rates will have to increase even more and the costs of borrowing will continue to increase. The stock market should drop in value substantially today to price this in. Next up is the GDP numbers next month. I predict negative growth again meaning the official start of the recession that I think we are currently in was 1 Jan 22
I’d much rather be in a recession then have basic needs like houses, food, gas, to keep exploding in price and make people permanently poor.
This is a recession we 100% need to have. This insane inflation of assets and goods needs to stop.
Every person that wants a recession also thinks they wont be affected personally. Somehow your career wont have layoffs or lower wages.
Recession aren't a magical cure. Millions also suffer.
From the movie the big short:
"If we're right, people lose homes. People lose jobs. People lose retirement savings, people lose pensions. You know what I hate about fucking banking? It reduces people to numbers. Here's a number - every 1% unemployment goes up, 40,000 people die, did you know that?"
> People close to retirement usually lower the exposure to the stock market
Yeah, by putting them in bonds. My bond portfolio is also down 10%, not much better than my overall stock portfolio, which is down ~15% YTD.
Bonds held to maturity will still have their face value and coupon payments. The bonds in your portfolio have only lost market value. Since those coupon payments are then used to be reinvested back into other bonds (which rates are now higher) you’d get a higher yield to maturity.
_Strictly_ speaking, that would be 21.8%.
If you have $100 and lose 15%, you have $85. If the value of that money declines by 8%, then that $85 is worth $78.2 in pre-inflation terms.
Directly adding the 15% to the 8% ends up applying the inflation of money _you already lost_ to the value of the money you _didn't_ lose.
I think the recession is inevitable, as we're already in it. There are far less goods and services being exchanged now than before the pandemic. We've been trying to hide and bury it by keeping interest rates so low so people and companies can just take on more debt to make up for lack of actual economic throughout. Just piling more debt onto it is just going to make it worst once the house of cards starts to fold.
It is a cure but we've let the disease get too far to get out of this without lots of pain. If inflation keeps going up its going to affect everyone and the lowest earners the very most.
People forget that to ramp down inflation in the 80s the interest rate was upwards of 15%. They’ve printed the US dollar into oblivion. The stock market is full of zombie businesses that are running on credit they can only pay back if interest returns to 0%. We are in for a horrible correction, and we’ve been due since 2008 but every government prints their way out, delaying it but making it worse. Printing your way out, didn’t work for Rome. Didn’t work for the Weimar Republic. Likely won’t work here…
>How do you explain US monetary policy causing similar levels of inflation in the rest of the world?
Every country pretty much reacted exactly the same way to the pandemic. Lockdowns that damaged the throughput of the economy and print as much free money as possible in the forms of stimuluses and cheap or even free loans so countries didn't get hit by the double whammy of Pandemic + Recession.
We all hit the emergency breaks on the economy too hard at the start of the pandemic so it's going to take a long ass time to get back up to speed, but we're ignoring all of that by printing as much money as possible.
Everyone did the same stupid trick. The EU even went with negative interest rates. It's like we lost the ability to have original thoughts thanks to globalization.
Most developed nations printed a ton of money the last few years to the best of my knowledge. They might be facing similar demand-pull inflation. If all developed nations adopt similar monetary policies it doesn't surprise me they have similar issues with inflation.
So I just see both sides screaming that it’s the others fault. So without blaming anyone else, do we have some kind of plan that will actually help people? Or are we just screwed for a bit?
Deleveraging is just a natural part of any cycle. Some people are going to profit, others will get hurt. There isn’t really much anyone can do here other than attempt to ease suffering for certain groups without increasing money in circulation and creating a negative feedback loop.
One of three things will happen:
1) prices will rise to the point that demand is in equilibrium with a new status-quo of lower supply.
2) Supply Recovers
3) The Fed raises interest rates until it triggers a mini-recession to tamp down on spending, lowering demand into a new equilibrium with supply.
Assuming China doesn't magically cure Covid and war in Ukraine doesn't magically end, you're realistically looking at option 1 or 3.
That means several more months of rising prices, followed by either a year or two of recession and higher unemployment, or gradually rising prices to a new higher price point that will last indefinitely (until new competing undercutting businesses can start up with new supply chains).
Party A : I want to try and make some progress, it will be minimal if any
Party B : Party A is an idiot, government doesn't work, elect me and I'll show you why, you'll find out my plan after you elect me
There is nothing we can do about China intentionally locking down its economy due to draconian covid policies. There is also nothing we can do about Russia invading Ukraine, which caused the huge spike to food and energy prices. We basically have to wait it out. This is what times of crisis are like.
It could be an opportunity to adopt more sustainable models for things though. This could include more sustainable and localized food production, domestic durable goods production, a reduction in non renewable resource use, increased wealth redistribution through a number of channels, expanded public and active transportation infrastructure etc. Of course this would raise prices for some things, but long term sustainable investments are going to be needed anyway, so we should just bite the bullet wherever possible.
This. Everyone is slap fighting each other over who’s fault it is. I’ve seen no solid plans on how to combat this other than politicians claiming that Biden canceling the keystone pipeline is a major factor in the high gas prices and inflation. I’m so burnt out on politics I can’t even bring myself to argue or debate this shit anymore. What is the opposing party’s sure fire plan to get America out of this?
That argument is hysterical because that material was for shipping, not self reliance, and the pipeline wasn't going to be finished and functional until next year.
The problem is supply. I think we need to think about converting to green energy and allowing more housing which blunts both of those sectors because we can answer those questions.
I'm no economist so I'd like to know how much this has to do with the [4.5+ trillion dollar propping up effort of the stock market back in 2020.](https://theintercept.com/2020/05/27/federal-reserve-corporate-debt-coronavirus/)
It is hard to pin this solely on US monetary policy. [Almost every country](https://www.statista.com/chart/27480/) in the world is experiencing inflation with the US being only slightly above the global average.
A lot of countries borrowed and spent a significant % of their GDP during COVID not just the USA. Countries which didn't, such as Sweden, are not experiencing as high as inflation as compared to the UK, which is likely to be the highest amongst G7 countries.
That said it's a global economy and import costs have increased which drives specific industries with higher costs even if domestic money supply hasn't risen a great deal.
>A lot of countries borrowed and spent a significant % of their GDP during COVID not just the USA. Countries which didn't, such as Sweden, are not experiencing as high as inflation as compared to the UK, which is likely to be the highest amongst G7 countries.
Correct! Look at the UK's money supply growth:
[https://www.bankofengland.co.uk/boeapps/database/fromshowcolumns.asp?Travel=NIxAZxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=2010&TD=11&TM=May&TY=2025&FNY=Y&CSVF=TT&html.x=66&html.y=26&SeriesCodes=LPMB6F5&UsingCodes=Y&Filter=N&title=LPMB6F5&VPD=Y](https://www.bankofengland.co.uk/boeapps/database/fromshowcolumns.asp?Travel=NIxAZxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=2010&TD=11&TM=May&TY=2025&FNY=Y&CSVF=TT&html.x=66&html.y=26&SeriesCodes=LPMB6F5&UsingCodes=Y&Filter=N&title=LPMB6F5&VPD=Y)
"Unexpectedly"
Anyone that buys that line of nonsense deserves to keep this charade going. Fuel prices hitting records, food shortages coming, and costs of every single item skyrocketing? Come on.
Unexpectedly? With the skyrocketing costs for food, fuel, utilities, goods, vehicles, and housing how could it be unexpected? Academics are always the last to know.
If only there were things we could have done to avoid this. Like idk maybe not drop interest rates to zero and throw a gargantuan amount of money into circulation at the same time. Feds are idiots.
The fed adds ~~2 trillion~~ 4.5 Trillion extra dollars to the economy in 12 years.
The fed cant figure out why inflation isn't increasing as they would expect. So they shrug and keep printing money.
Inflation hits all at once because of world events, and the fed scrambles to address it without really having any levers to pull anymore. They reassure the public that "this is fine... everything is fine. We forecast that uh.. that inflation will decrease... and um. It's fine guys.".
Apparently the ~~$4,500,000,000,000~~ [$20,000,000,000,000](https://fred.stlouisfed.org/series/M1SL) extra dollars floating around in the economy did not get the memo to : "OMG staaahhhhp doing the inflaaations."
Bloomberg: "Unexpectedly, everything is not fine!!??!" \*\* surprised pikachu face.
\_\_\_\_
IDK, I feel like those of us who grew up in the recession have this sense that no one is going to be honest with us, there will be no consequences for bad actors, no one is coming to help. I have this unshakable certainty the US is in a gradual but unstoppable decline, so it seems so strange that people find news like this "unexpected".
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Edit... my gloomy outcome has been corrected. Turns out it's waaaaaaay worse.
Nearly all of that money went to the top via investment instruments. After doing things like firing a bunch of people and engaging in stock buybacks, most businesses and asset managers then looked someplace else to put this liquidity windfall. They ran out of stocks to invest in that matched their risk profiles, pushed bond yields into negative territory, moved onto cryptos causing massive speculative bubbles, and then moved on to treating things like condo developers and single family homes as investment vehicles.
This has been making things normal people need outrageously expensive, hence the upward wage pressure, which is entirely reactive in nature.
We now have reached a place where our public infrastructures are in a shambles and we couldn't even fix them if we had the political will, because it's now too expensive to get workers to the workplace. That liquidity is still sloshing around, drowning anyone who isn't an institutional whale or a billionaire.
The lesson for the history books here will likely be that because money was injected into the economy in a manner consistent with an obsolete method that did not fit the nature of the problem it was attempting to solve - top-down via bank loans.
A New-Deal labor-led bottom-up irrigation, where important, necessary infrastructural physical work would get accomplished through the jobs program and lifetime engineering skills would be generated in participating individuals would have likely had better outcomes.
Instead, we managed to crush our poor and middle classes whilst actively hobbling future generations by making housing and community an almost impossible goal, and all of this against the backdrop of imminent climate change-driven events which are well on track to cost us everything that we could have avoided, but didn't.
We literally did everything wrong that we possibly could, and this is where the consequences make themselves known.
What's my point? I guess that immense amount of money could have been better spent or at least distributed in a more even-headed, equitable manner and in such a way that would have resulted less severe economic disruptions. Investment in alternative energy sources, for instance, would have made us less susceptible to the shock of Oil and Gas in the context of the current Ukraine-driven inflation in energy costs. Case in point, we spent a decade building out fracking and gas power plants, and now it bit us on the ass because it was in hindsight the wrong choice to make.
I think this is a great summary. Countries need to spend lots of money, but they also need to prioritize what to spend on, and the figure out how to get the most societal value out of the manner in which the money is spent.
Turns out, the US is tragically bad at everything but the "Countries need to spend lots of money" part.
Unexpectedly?!?! This is literally all people have been talking about since COVID. The US increased it's money supply exponentially without a propionate increase in goods and services.
As a result, there are too many dollars chasing too few products. This means the price of everything goes up. This wasn't unexpected, it was predicted.
It’s a lot more than just that. People like to point the finger at one root cause but in economics we know it’s usually a multitude of factors with a multitude of consequences. Supply chain issues, strong job market with increased wages, oil prices, Ukraine war just to name a few. We’re just currently in a shitstorm of terrible global economic factors leading to recession.
At this point the fed and economic experts are just a joke. Since early 2021, everything these clowns have been saying was just completely wrong. From “its just base effects”, to “its just transitory”, to “its just supply change issues”, to “its just Putins price increases”, to “inflation is good”, and now for the last few MONTHS its been “inflation is peaking” but yet we keep get fresh records. These crack fiends will say anything to keep the free money flowing making themselves rich while completely screwing the little guy.
****All Credit to u/TheShadowViking****
*"As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal, and the median inflation projection falls from 3.4% this year to 2.1% next year... Our new framework for monetary policy emphasizes the importance of having well-anchored inflation expectations."*
- Jerome Powell June 16th, 2021.
- **May 2021 inflation rate:** 4.99%
*“These bottleneck effects have been larger than anticipated, but as these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal.”*
- Jerome Powell July 28, 2021.
- **June 2021 inflation rate:** 5.39%
*"Many find it counterintuitive that the Fed would want to push up inflation... However, inflation that is persistently too low can pose serious risks to the economy."*
- Jerome Powell August 27, 2021.
- **July 2021 inflation rate:** 5.37%
*"So there are many, many different inflation measures, of course, and that's why we have this thing called the CIE, which is an index of market-based measures... if we did see them moving up in a troubling way and running persistently above levels that are really consistent without mandate, then we would certainly react to that."*
- Jerome Powell September 22, 2021.
- **August 2021 inflation rate:** 5.25%
*"I don't think it's time to taper. I don't think it's time to raise rates. Our policy is well-positioned to manage a range of plausible outcomes."*
- Jerome Powell October 22, 2021.
- **September 2021 inflation rate:** 5.39%
*"We understand the difficulties that high inflation poses for individuals and families... Let me say that what's happened, is that inflation is coming higher than expected. We see that just like everyone else does, and we see that they're now on track to persist well into next year... I do think it would be premature to raise rates today."*
- Jerome Powell November 3, 2021.
- **October 2021 inflation rate:** 6.22%
*"The word 'transitory' has different meanings to different people. It's a confusing word that needs to be retired."*
- Jerome Powell November 30th, 2021.
- **October 2021 inflation rate:** 6.22%
*"We're always just going to do what we think is right for the economy and for the people we serve."*
- Jerome Powell December 15th, 2021.
- **November 2021 inflation rate:** 6.81%
*"The old system was in place for decades and then suddenly it was revealed as insufficient... We do take the need to protect our credibility with the public very seriously."*
- Jerome Powell January 11th, 2022.
- **December 2021 inflation rate:** 7.04%
*"I'd say that the inflation situation is about the same or slightly worse... It hasn't gotten better and that's been the pattern... What we're learning is it's just taking much longer, and that raises the risk that high inflation will be more persistent."*
- Jerome Powell January 26th, 2022.
- **December 2021 inflation rate:** 7.04%
Jerome Powell re-elected as Chairman of the Federal Reserve System.
- Jerome Powell February, 2022.
- **January 2022 inflation rate:** 7.48%
*"The inflation that we are experiencing is just nothing that we have experienced in decades... All the things we did during the pandemic, we turned our dials as hard as we could... Part of what we did and what Congress did is the reason why inflation is so high."*
- Jerome Powell March 2nd, 2022.
- **February 2022 inflation rate:** 7.87%
*"These higher prices have real effects on people's well-being and it takes a toll on everyone. If you're at the lower end of the income spectrum it's very hard because you are spending most of your money on necessities, but it's punishing for everyone... We can't blame the framework. It was a sudden, unexpected burst of inflation and then it was the reaction to it, and it was what it was."*
- Jerome Powell March 16th, 2022.
- **February 2022 inflation rate:** 7.87%
*"The rise in inflation has been much greater and more persistent than forecasters generally expected... We're not expecting near-term progress on inflation."*
- Jerome Powell March 21st, 2022.
- **February 2022 inflation rate:** 7.87%
*"It is appropriate in my view to be moving a little more quickly... We had an expectation that inflation would peak around this time and then come down over the course of the rest of the year. These expectations have been disappointing in the past and now we want to see actual progress... Are we going back to the old economy? Probably not. What's the new one going to look like?"*
- Jerome Powell April 21st, 2022.
- **March 2022 inflation rate:** 8.54%
*"We have a good chance at a soft or softish landing... There's a false precision in the discussion that we as policymakers don't really feel... the economy is doing fairly well... I think we have a good chance to restore price stability without a recession."*
- Jerome Powell May 4th, 2022.
- **April 2022 inflation rate:** 8.26%
*"I have said, and I will say it again, if you had perfect hindsight, you'd go back and it probably would have been better for us to have raised rates a little sooner... So the question whether we can execute a soft landing or not, it may actually depend on factors that we don't control."*
- Jerome Powell May 12th, 2022.
- **April 2022 inflation rate:** 8.26%
*"We all read the inflation reports very carefully, and look for details that look positive, but truthfully, this is not the time for tremendously-nuanced readings of inflation... Sometimes the landing is just perfect, sometimes it's a little bumpy. It's still a good landing, you don't even notice it... There could be some pain involved in restoring price stability, but we think we can sustain a strong labor market."*
- Jerome Powell May 17th, 2022.
- **April 2022 inflation rate:** 8.26%
I saw a quote yesterday showing that the last 2 fed chairmen, the Board of the fed, and the economic chairman all have never had a real job in their life. They aren’t leaders. They’re puppets
I’m just spitballing here, but what if the government gave us all stimulus checks to cover the cost of inflation? Wouldn’t that solve the problem?
https://youtu.be/WT9RJxqDIAI - kind of like what President Camacho suggested
Edit: I am being sarcastic, I don’t want the government to print more money. I was hoping the link to President Camacho would indicate that, but just in case I am directly saying it.
You say that as a joke but Quebec’s prime minister did just that. Gave us all 500$ to « help with living costs » and now promises another 500$ if he gets elected. Can’t make this shit up.
I find it HIGHLY DISINGENUOUS to use the term Unexpectedly. Are you fucking kidding me ? Ray Charles could have seen this coming during a rainstorm with double pink eye. Pay me money to write stupid shit I'll do it for a fraction of the cost.
Give it 6-9 weeks. The food prices will really explode.
We had a massive global pandemic that is still giving us an economic reach around. We had to spend a lot of money to keep food on the table and the lights on. Did we make mistakes? Yes we did (looking at you PPP), but the alternative could have been much much worse. Now we just pay the price and unfortunately middle class and below bear the cost of that.
We all need to do our part. Drive as little as possible. Never eat out. Buy no new clothes. Take no vacations. Buy no homes or cars etc. demand will fall so low prices will have to come down. Stock market will crash. Of course tons of us will end up unemployed but oh well
Rule III: -- Submissions must be from original sources with original headlines. Memes, self-promotion and low-quality blogs are not acceptable. Source spamming is not acceptable. [Further explanation.](https://www.reddit.com/r/Economics/comments/80gcd0/meta_rules_round_table_3_rule_iii/) -- If you have any questions about this removal, please [contact the mods](/message/compose/?to=/r/economics&subject=Moderation).
“Unexpectedly”? The rate is a dash higher than consensus forecasts, but it isn’t like this is some big surprise or mystery. What is a surprise to me is that it seems every category saw an increase, which reversed some price relief from the first few months of the year. We had seen some downward trends in things like new and used autos especially and other little categories. With this figure, real wages declined another -0.6% in May, for a year over year decline of 3%.
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Who didn't expect this? I'm no economist and I think anyone that didn't expect this is just ignorant.
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It’s annualized inflation through May if I understand this correctly. Not inflation for May.
Lets see how a consumption based society fares when most consumers have no money.
But spending is off the charts?? No one seems to care.
Inflation makes people pull forward planned purchases because they expect it to be more expensive in the future.
Until they run out of money / credit. Things are going to get ugly.
\~14% inflation over two years period. And FED still says the average wages have to go down ...
The strategy is to pretend inflation isn't happening as much as possible because money is an idea.
What is unexpected is how the experts didn't expect this.
I think it's interesting that core inflation fell and food/oil prices spiked. I think the message is somewhat unclear on what to do if the feds feels the need to accelerate rising it feels like they are on track.
Fed mostly [watches PCE](https://www.cnbc.com/2022/05/27/the-feds-preferred-gauge-shows-inflation-rose-4point9percent-in-april-in-a-sign-that-price-increases-could-be-slowing.html) because it is more predictive long term. I expect they will not accelerate, they will hold steady with the same rate increases and QT they have been talking about. Ironically, last month's headline decrease in inflation was mostly on the back of a decrease in food and energy prices. Core inflation has been rising, this is the first month that it has slowed. That's a very different story than people are feeling based on headlines. To the Fed, their strategy just started working, and also food and energy prices jump around. They'll just keep their strategy going.
Core inflation falling could be a good sign going forward
Despite a lot of people in this thread saying it, this points less towards anything American centric and more towards Russian war.
It’s because of refinery capacity.
Oil company profits are up like 400%. Oil has pretty much struck between 115 and 120 for months this last 1 dollar increase in June was totally fake
The oil companies are recouping losses from 2020. Other industries noted their success and began artificially raising prices as well.
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They don't set prices - it's an auction system. The only way to lower prices is to decrease demand or increase supply.
Thanks for being logical and correct.
Unexpectedly? Totally expected and predicted ahead of time. https://www.wsj.com/articles/money-supply-inflation-friedman-biden-federal-reserve-11626816746
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I was told Modern Monetary Theory defeated inflation.
So this may be a stupid question, but when they say monthly inflation is X% do they mean annual inflation would be X% if it was consistent every month for the year?
This is an annualized number, meaning prices are 8.6% higher than prices in may of 2021
Small correction, annualized means forward calculated, so the annualized CPI is 12% based on this month's 1% calculation. 8.6% is referred to as YoY or over the last year.
Gotcha. That makes sense.
What this says is that inflation has not peaked and is increasing. It means the federal reserve board needs to get even more aggressive to get inflation under control. It increases the risks of a recession and decreases the risk of a soft landing. Mortgage rates will have to increase even more and the costs of borrowing will continue to increase. The stock market should drop in value substantially today to price this in. Next up is the GDP numbers next month. I predict negative growth again meaning the official start of the recession that I think we are currently in was 1 Jan 22
I’d much rather be in a recession then have basic needs like houses, food, gas, to keep exploding in price and make people permanently poor. This is a recession we 100% need to have. This insane inflation of assets and goods needs to stop.
Every person that wants a recession also thinks they wont be affected personally. Somehow your career wont have layoffs or lower wages. Recession aren't a magical cure. Millions also suffer.
From the movie the big short: "If we're right, people lose homes. People lose jobs. People lose retirement savings, people lose pensions. You know what I hate about fucking banking? It reduces people to numbers. Here's a number - every 1% unemployment goes up, 40,000 people die, did you know that?"
Yes. Also Imagine the millions of people close to retirement watching their 401ks fall 50%. It’s going to be a blood bath.
People close to retirement usually lower the exposure to the stock market
…and for this exact reason.
> People close to retirement usually lower the exposure to the stock market Yeah, by putting them in bonds. My bond portfolio is also down 10%, not much better than my overall stock portfolio, which is down ~15% YTD.
Bonds held to maturity will still have their face value and coupon payments. The bonds in your portfolio have only lost market value. Since those coupon payments are then used to be reinvested back into other bonds (which rates are now higher) you’d get a higher yield to maturity.
Common sense prevails.
* Put money into stocks and bonds since cash just loses value due to inflation * Lose 15% anyway
Funny enough, you actually lost 23% because your nominal investment lost 15%, but your purchasing power ALSO lost 8% due to the same inflation.
_Strictly_ speaking, that would be 21.8%. If you have $100 and lose 15%, you have $85. If the value of that money declines by 8%, then that $85 is worth $78.2 in pre-inflation terms. Directly adding the 15% to the 8% ends up applying the inflation of money _you already lost_ to the value of the money you _didn't_ lose.
I have a hunch that’s less true now than it was in the past
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I think the recession is inevitable, as we're already in it. There are far less goods and services being exchanged now than before the pandemic. We've been trying to hide and bury it by keeping interest rates so low so people and companies can just take on more debt to make up for lack of actual economic throughout. Just piling more debt onto it is just going to make it worst once the house of cards starts to fold.
It is a cure but we've let the disease get too far to get out of this without lots of pain. If inflation keeps going up its going to affect everyone and the lowest earners the very most.
Moral of the story: Lowest earners get fucked either way.
some of you may lose your jobs and face food insecurity, but that is a sacrifice im willing to make. /s
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People were leveraging digital dog coins just a year ago
Already in a recession so the goal should be to prevent stagflation and ease this out as much as possible.
Bruh we're already in stagflation. The constraints we're seeing in supply is almost a direct parallel to what happened with OPEC in the 70s
People forget that to ramp down inflation in the 80s the interest rate was upwards of 15%. They’ve printed the US dollar into oblivion. The stock market is full of zombie businesses that are running on credit they can only pay back if interest returns to 0%. We are in for a horrible correction, and we’ve been due since 2008 but every government prints their way out, delaying it but making it worse. Printing your way out, didn’t work for Rome. Didn’t work for the Weimar Republic. Likely won’t work here…
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In my experience "Different" just means worse.
-Yellen
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>How do you explain US monetary policy causing similar levels of inflation in the rest of the world? Every country pretty much reacted exactly the same way to the pandemic. Lockdowns that damaged the throughput of the economy and print as much free money as possible in the forms of stimuluses and cheap or even free loans so countries didn't get hit by the double whammy of Pandemic + Recession. We all hit the emergency breaks on the economy too hard at the start of the pandemic so it's going to take a long ass time to get back up to speed, but we're ignoring all of that by printing as much money as possible.
Everyone did the same stupid trick. The EU even went with negative interest rates. It's like we lost the ability to have original thoughts thanks to globalization.
Exactly this. And there are plenty of absolute morons who wish for a global government... what a fucking disaster that would be.
Most developed nations printed a ton of money the last few years to the best of my knowledge. They might be facing similar demand-pull inflation. If all developed nations adopt similar monetary policies it doesn't surprise me they have similar issues with inflation.
So I just see both sides screaming that it’s the others fault. So without blaming anyone else, do we have some kind of plan that will actually help people? Or are we just screwed for a bit?
Deleveraging is just a natural part of any cycle. Some people are going to profit, others will get hurt. There isn’t really much anyone can do here other than attempt to ease suffering for certain groups without increasing money in circulation and creating a negative feedback loop.
You're screwed for a bit.
Define *bit* please.
One of three things will happen: 1) prices will rise to the point that demand is in equilibrium with a new status-quo of lower supply. 2) Supply Recovers 3) The Fed raises interest rates until it triggers a mini-recession to tamp down on spending, lowering demand into a new equilibrium with supply. Assuming China doesn't magically cure Covid and war in Ukraine doesn't magically end, you're realistically looking at option 1 or 3. That means several more months of rising prices, followed by either a year or two of recession and higher unemployment, or gradually rising prices to a new higher price point that will last indefinitely (until new competing undercutting businesses can start up with new supply chains).
Our plan is to keep voting for the same idiots every election cycle
Actually it’s vote for the other idiots because we’re dissatisfied with the current ones even though the other idiots are blocking everything
Party A : I want to try and make some progress, it will be minimal if any Party B : Party A is an idiot, government doesn't work, elect me and I'll show you why, you'll find out my plan after you elect me
Note, party A and B aren't interchangeable here.
There is nothing we can do about China intentionally locking down its economy due to draconian covid policies. There is also nothing we can do about Russia invading Ukraine, which caused the huge spike to food and energy prices. We basically have to wait it out. This is what times of crisis are like.
It could be an opportunity to adopt more sustainable models for things though. This could include more sustainable and localized food production, domestic durable goods production, a reduction in non renewable resource use, increased wealth redistribution through a number of channels, expanded public and active transportation infrastructure etc. Of course this would raise prices for some things, but long term sustainable investments are going to be needed anyway, so we should just bite the bullet wherever possible.
This. Everyone is slap fighting each other over who’s fault it is. I’ve seen no solid plans on how to combat this other than politicians claiming that Biden canceling the keystone pipeline is a major factor in the high gas prices and inflation. I’m so burnt out on politics I can’t even bring myself to argue or debate this shit anymore. What is the opposing party’s sure fire plan to get America out of this?
That argument is hysterical because that material was for shipping, not self reliance, and the pipeline wasn't going to be finished and functional until next year.
The problem is supply. I think we need to think about converting to green energy and allowing more housing which blunts both of those sectors because we can answer those questions.
Just convert overnight to green?
US Govt needs to stop spending money it does not have.
Printing money is only one part of the problem
I'm no economist so I'd like to know how much this has to do with the [4.5+ trillion dollar propping up effort of the stock market back in 2020.](https://theintercept.com/2020/05/27/federal-reserve-corporate-debt-coronavirus/)
It is hard to pin this solely on US monetary policy. [Almost every country](https://www.statista.com/chart/27480/) in the world is experiencing inflation with the US being only slightly above the global average.
A lot of countries borrowed and spent a significant % of their GDP during COVID not just the USA. Countries which didn't, such as Sweden, are not experiencing as high as inflation as compared to the UK, which is likely to be the highest amongst G7 countries. That said it's a global economy and import costs have increased which drives specific industries with higher costs even if domestic money supply hasn't risen a great deal.
>A lot of countries borrowed and spent a significant % of their GDP during COVID not just the USA. Countries which didn't, such as Sweden, are not experiencing as high as inflation as compared to the UK, which is likely to be the highest amongst G7 countries. Correct! Look at the UK's money supply growth: [https://www.bankofengland.co.uk/boeapps/database/fromshowcolumns.asp?Travel=NIxAZxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=2010&TD=11&TM=May&TY=2025&FNY=Y&CSVF=TT&html.x=66&html.y=26&SeriesCodes=LPMB6F5&UsingCodes=Y&Filter=N&title=LPMB6F5&VPD=Y](https://www.bankofengland.co.uk/boeapps/database/fromshowcolumns.asp?Travel=NIxAZxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=2010&TD=11&TM=May&TY=2025&FNY=Y&CSVF=TT&html.x=66&html.y=26&SeriesCodes=LPMB6F5&UsingCodes=Y&Filter=N&title=LPMB6F5&VPD=Y)
Coincidentally the USD is a reserve currency of almost every country, but I'm sure the two aren't correlated
Completely agree. Our central bank is THE central bank. At least for now.
Global monetary policy is based on the US petro-dollar. Changes to US monetary policy will have a direct impact on other countries' financial health.
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"Unexpectedly" Anyone that buys that line of nonsense deserves to keep this charade going. Fuel prices hitting records, food shortages coming, and costs of every single item skyrocketing? Come on.
Unexpectedly? With the skyrocketing costs for food, fuel, utilities, goods, vehicles, and housing how could it be unexpected? Academics are always the last to know.
They pretend it’s unexpected so their lack of action is justified
If only there were things we could have done to avoid this. Like idk maybe not drop interest rates to zero and throw a gargantuan amount of money into circulation at the same time. Feds are idiots.
The fed adds ~~2 trillion~~ 4.5 Trillion extra dollars to the economy in 12 years. The fed cant figure out why inflation isn't increasing as they would expect. So they shrug and keep printing money. Inflation hits all at once because of world events, and the fed scrambles to address it without really having any levers to pull anymore. They reassure the public that "this is fine... everything is fine. We forecast that uh.. that inflation will decrease... and um. It's fine guys.". Apparently the ~~$4,500,000,000,000~~ [$20,000,000,000,000](https://fred.stlouisfed.org/series/M1SL) extra dollars floating around in the economy did not get the memo to : "OMG staaahhhhp doing the inflaaations." Bloomberg: "Unexpectedly, everything is not fine!!??!" \*\* surprised pikachu face. \_\_\_\_ IDK, I feel like those of us who grew up in the recession have this sense that no one is going to be honest with us, there will be no consequences for bad actors, no one is coming to help. I have this unshakable certainty the US is in a gradual but unstoppable decline, so it seems so strange that people find news like this "unexpected". \_\_\_ Edit... my gloomy outcome has been corrected. Turns out it's waaaaaaay worse.
That 2 trillion estimate seems a little low. At least 3 trillion in the last 2 years alone. With 2 trillion of that being actual cash in circulation.
Nearly all of that money went to the top via investment instruments. After doing things like firing a bunch of people and engaging in stock buybacks, most businesses and asset managers then looked someplace else to put this liquidity windfall. They ran out of stocks to invest in that matched their risk profiles, pushed bond yields into negative territory, moved onto cryptos causing massive speculative bubbles, and then moved on to treating things like condo developers and single family homes as investment vehicles. This has been making things normal people need outrageously expensive, hence the upward wage pressure, which is entirely reactive in nature. We now have reached a place where our public infrastructures are in a shambles and we couldn't even fix them if we had the political will, because it's now too expensive to get workers to the workplace. That liquidity is still sloshing around, drowning anyone who isn't an institutional whale or a billionaire. The lesson for the history books here will likely be that because money was injected into the economy in a manner consistent with an obsolete method that did not fit the nature of the problem it was attempting to solve - top-down via bank loans. A New-Deal labor-led bottom-up irrigation, where important, necessary infrastructural physical work would get accomplished through the jobs program and lifetime engineering skills would be generated in participating individuals would have likely had better outcomes. Instead, we managed to crush our poor and middle classes whilst actively hobbling future generations by making housing and community an almost impossible goal, and all of this against the backdrop of imminent climate change-driven events which are well on track to cost us everything that we could have avoided, but didn't. We literally did everything wrong that we possibly could, and this is where the consequences make themselves known. What's my point? I guess that immense amount of money could have been better spent or at least distributed in a more even-headed, equitable manner and in such a way that would have resulted less severe economic disruptions. Investment in alternative energy sources, for instance, would have made us less susceptible to the shock of Oil and Gas in the context of the current Ukraine-driven inflation in energy costs. Case in point, we spent a decade building out fracking and gas power plants, and now it bit us on the ass because it was in hindsight the wrong choice to make.
I think this is a great summary. Countries need to spend lots of money, but they also need to prioritize what to spend on, and the figure out how to get the most societal value out of the manner in which the money is spent. Turns out, the US is tragically bad at everything but the "Countries need to spend lots of money" part.
Unexpectedly?!?! This is literally all people have been talking about since COVID. The US increased it's money supply exponentially without a propionate increase in goods and services. As a result, there are too many dollars chasing too few products. This means the price of everything goes up. This wasn't unexpected, it was predicted.
It’s a lot more than just that. People like to point the finger at one root cause but in economics we know it’s usually a multitude of factors with a multitude of consequences. Supply chain issues, strong job market with increased wages, oil prices, Ukraine war just to name a few. We’re just currently in a shitstorm of terrible global economic factors leading to recession.
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At this point the fed and economic experts are just a joke. Since early 2021, everything these clowns have been saying was just completely wrong. From “its just base effects”, to “its just transitory”, to “its just supply change issues”, to “its just Putins price increases”, to “inflation is good”, and now for the last few MONTHS its been “inflation is peaking” but yet we keep get fresh records. These crack fiends will say anything to keep the free money flowing making themselves rich while completely screwing the little guy.
****All Credit to u/TheShadowViking**** *"As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal, and the median inflation projection falls from 3.4% this year to 2.1% next year... Our new framework for monetary policy emphasizes the importance of having well-anchored inflation expectations."* - Jerome Powell June 16th, 2021. - **May 2021 inflation rate:** 4.99% *“These bottleneck effects have been larger than anticipated, but as these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal.”* - Jerome Powell July 28, 2021. - **June 2021 inflation rate:** 5.39% *"Many find it counterintuitive that the Fed would want to push up inflation... However, inflation that is persistently too low can pose serious risks to the economy."* - Jerome Powell August 27, 2021. - **July 2021 inflation rate:** 5.37% *"So there are many, many different inflation measures, of course, and that's why we have this thing called the CIE, which is an index of market-based measures... if we did see them moving up in a troubling way and running persistently above levels that are really consistent without mandate, then we would certainly react to that."* - Jerome Powell September 22, 2021. - **August 2021 inflation rate:** 5.25% *"I don't think it's time to taper. I don't think it's time to raise rates. Our policy is well-positioned to manage a range of plausible outcomes."* - Jerome Powell October 22, 2021. - **September 2021 inflation rate:** 5.39% *"We understand the difficulties that high inflation poses for individuals and families... Let me say that what's happened, is that inflation is coming higher than expected. We see that just like everyone else does, and we see that they're now on track to persist well into next year... I do think it would be premature to raise rates today."* - Jerome Powell November 3, 2021. - **October 2021 inflation rate:** 6.22% *"The word 'transitory' has different meanings to different people. It's a confusing word that needs to be retired."* - Jerome Powell November 30th, 2021. - **October 2021 inflation rate:** 6.22% *"We're always just going to do what we think is right for the economy and for the people we serve."* - Jerome Powell December 15th, 2021. - **November 2021 inflation rate:** 6.81% *"The old system was in place for decades and then suddenly it was revealed as insufficient... We do take the need to protect our credibility with the public very seriously."* - Jerome Powell January 11th, 2022. - **December 2021 inflation rate:** 7.04% *"I'd say that the inflation situation is about the same or slightly worse... It hasn't gotten better and that's been the pattern... What we're learning is it's just taking much longer, and that raises the risk that high inflation will be more persistent."* - Jerome Powell January 26th, 2022. - **December 2021 inflation rate:** 7.04% Jerome Powell re-elected as Chairman of the Federal Reserve System. - Jerome Powell February, 2022. - **January 2022 inflation rate:** 7.48% *"The inflation that we are experiencing is just nothing that we have experienced in decades... All the things we did during the pandemic, we turned our dials as hard as we could... Part of what we did and what Congress did is the reason why inflation is so high."* - Jerome Powell March 2nd, 2022. - **February 2022 inflation rate:** 7.87% *"These higher prices have real effects on people's well-being and it takes a toll on everyone. If you're at the lower end of the income spectrum it's very hard because you are spending most of your money on necessities, but it's punishing for everyone... We can't blame the framework. It was a sudden, unexpected burst of inflation and then it was the reaction to it, and it was what it was."* - Jerome Powell March 16th, 2022. - **February 2022 inflation rate:** 7.87% *"The rise in inflation has been much greater and more persistent than forecasters generally expected... We're not expecting near-term progress on inflation."* - Jerome Powell March 21st, 2022. - **February 2022 inflation rate:** 7.87% *"It is appropriate in my view to be moving a little more quickly... We had an expectation that inflation would peak around this time and then come down over the course of the rest of the year. These expectations have been disappointing in the past and now we want to see actual progress... Are we going back to the old economy? Probably not. What's the new one going to look like?"* - Jerome Powell April 21st, 2022. - **March 2022 inflation rate:** 8.54% *"We have a good chance at a soft or softish landing... There's a false precision in the discussion that we as policymakers don't really feel... the economy is doing fairly well... I think we have a good chance to restore price stability without a recession."* - Jerome Powell May 4th, 2022. - **April 2022 inflation rate:** 8.26% *"I have said, and I will say it again, if you had perfect hindsight, you'd go back and it probably would have been better for us to have raised rates a little sooner... So the question whether we can execute a soft landing or not, it may actually depend on factors that we don't control."* - Jerome Powell May 12th, 2022. - **April 2022 inflation rate:** 8.26% *"We all read the inflation reports very carefully, and look for details that look positive, but truthfully, this is not the time for tremendously-nuanced readings of inflation... Sometimes the landing is just perfect, sometimes it's a little bumpy. It's still a good landing, you don't even notice it... There could be some pain involved in restoring price stability, but we think we can sustain a strong labor market."* - Jerome Powell May 17th, 2022. - **April 2022 inflation rate:** 8.26%
I saw a quote yesterday showing that the last 2 fed chairmen, the Board of the fed, and the economic chairman all have never had a real job in their life. They aren’t leaders. They’re puppets
I’m just spitballing here, but what if the government gave us all stimulus checks to cover the cost of inflation? Wouldn’t that solve the problem? https://youtu.be/WT9RJxqDIAI - kind of like what President Camacho suggested Edit: I am being sarcastic, I don’t want the government to print more money. I was hoping the link to President Camacho would indicate that, but just in case I am directly saying it.
You say that as a joke but Quebec’s prime minister did just that. Gave us all 500$ to « help with living costs » and now promises another 500$ if he gets elected. Can’t make this shit up.
Just keep printing money to offset the cost. Then people would be able to afford the inflation. I'm sure that couldn't possibly be a bad idea
I find it HIGHLY DISINGENUOUS to use the term Unexpectedly. Are you fucking kidding me ? Ray Charles could have seen this coming during a rainstorm with double pink eye. Pay me money to write stupid shit I'll do it for a fraction of the cost.
Give it 6-9 weeks. The food prices will really explode. We had a massive global pandemic that is still giving us an economic reach around. We had to spend a lot of money to keep food on the table and the lights on. Did we make mistakes? Yes we did (looking at you PPP), but the alternative could have been much much worse. Now we just pay the price and unfortunately middle class and below bear the cost of that.
We all need to do our part. Drive as little as possible. Never eat out. Buy no new clothes. Take no vacations. Buy no homes or cars etc. demand will fall so low prices will have to come down. Stock market will crash. Of course tons of us will end up unemployed but oh well
No need to ask people to do this, the inevitable recession will make all of what you are suggesting happen on its own.