First of all, I enjoy your writings-they always make me think. I am a HS History teacher on the East Coast. Doing an on-line professional development today focusing on Economics. Had a guest speaker who was an economist for a local financial institution. His topic was "Post-Covid Economics." His main point of discussion was supply and demand of labor and how that would impact the economy. He did touch upon inflation, but he lost me when he blamed the Ukraine war, high demand causing prices to spike, and simultaneously said that oil prices have been taken out of the measurement because they're too volatile. I asked whether the money supply had anything to do with it. He said yes, but followed it up with a paraphrase-"all the nations of the West are dealing with inflation right now, the central banks just didn't correctly predict what would happen as we were coming out of Covid." So, this is a reasonably major player in the economics and financial sector, who didn't see what I saw-18 MONTHS AGO. These are the people setting policy and making decisions. God help us.
I was fortunate enough to be selected for the museum's "Home Front" cohort of teachers in 2018. We got to be in New Orleans for a week, and had almost a complete run of the museum. I was lucky enough to meet and talk with Rob Citino (what a SMART dude that guy is) and they treated us like royalty. Then, the following year, (pre-Covid) we got to go to Hawaii and see all the WWII sites there. Again, we were treated wonderfully. I still want to go back to New Orleans and visit the museum again, preferably with my wife and/or my history nerd almost-grown up children. I will take you up on the zoom offer with my AP class next spring! Thanks.
Crazy how some talking heads on the financial networks are saying that inflation has probably peaked. They never bring up the money supply, only commodity prices at this point.
They also ignore the effect of inflation and interest rates on the housing market. Have you seen that non-bank lenders which are 68% of the mortgage market (!!) are in trouble again, just like back in 2008. However they were only 48% of the market back then. Two of these lenders have filed recently filed for bankruptcy, and Loan Tree which is the #4 lender is laying off thousands.
All press secretaries lie, even the ones you like. Some do it better, some do it worse.
Inflation is a monetary phenomenon. If spending like drunken sailors and resulting deficits were the issues then inflation should have started taking off under Bush 2.
And, yes, you are correct that commodity prices don't drive the rate.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society." - Milton Friedman
Inflation is the result of bad Fed decisions. And they still do not appear to know what to do.
All economic indices are backward looking. So what?
Batting averages are backward looking.
What is never, ever wrong is the bloody TREND.
In this instance the trend is disastrous:
1. CPI rising
2. PPI rising
3. Wages declining
4. GDP growth contracting into negative territory for half a year
5. Interest rates rising - get ready for a 100 bp upward jump by the Fed
6. Job offers being rescinded, layoffs
We have seen this movie before. It was called "Jimmy Carter."
This is going to get very dicey. Very very very dicey.
You know I am right.
JLM
www.themusingsofthebigredcar.com
The truth will set you free. Good one Jeff.
Afternoon Mr. Carter,
First of all, I enjoy your writings-they always make me think. I am a HS History teacher on the East Coast. Doing an on-line professional development today focusing on Economics. Had a guest speaker who was an economist for a local financial institution. His topic was "Post-Covid Economics." His main point of discussion was supply and demand of labor and how that would impact the economy. He did touch upon inflation, but he lost me when he blamed the Ukraine war, high demand causing prices to spike, and simultaneously said that oil prices have been taken out of the measurement because they're too volatile. I asked whether the money supply had anything to do with it. He said yes, but followed it up with a paraphrase-"all the nations of the West are dealing with inflation right now, the central banks just didn't correctly predict what would happen as we were coming out of Covid." So, this is a reasonably major player in the economics and financial sector, who didn't see what I saw-18 MONTHS AGO. These are the people setting policy and making decisions. God help us.
Cathy Wood begs to differ :-) Deflation already here. You cannot make it up.
I was fortunate enough to be selected for the museum's "Home Front" cohort of teachers in 2018. We got to be in New Orleans for a week, and had almost a complete run of the museum. I was lucky enough to meet and talk with Rob Citino (what a SMART dude that guy is) and they treated us like royalty. Then, the following year, (pre-Covid) we got to go to Hawaii and see all the WWII sites there. Again, we were treated wonderfully. I still want to go back to New Orleans and visit the museum again, preferably with my wife and/or my history nerd almost-grown up children. I will take you up on the zoom offer with my AP class next spring! Thanks.
I think you left out some letters in the final/closing statement...SSHH....
Crazy how some talking heads on the financial networks are saying that inflation has probably peaked. They never bring up the money supply, only commodity prices at this point.
They also ignore the effect of inflation and interest rates on the housing market. Have you seen that non-bank lenders which are 68% of the mortgage market (!!) are in trouble again, just like back in 2008. However they were only 48% of the market back then. Two of these lenders have filed recently filed for bankruptcy, and Loan Tree which is the #4 lender is laying off thousands.
All press secretaries lie, even the ones you like. Some do it better, some do it worse.
Inflation is a monetary phenomenon. If spending like drunken sailors and resulting deficits were the issues then inflation should have started taking off under Bush 2.
And, yes, you are correct that commodity prices don't drive the rate.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output... A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society." - Milton Friedman
Inflation is the result of bad Fed decisions. And they still do not appear to know what to do.
https://www.themoneyillusion.com/ends-not-means/
https://thehill.com/opinion/finance/3540685-is-a-recession-looming/
https://americanlookout.com/biden-adviser-thinks-high-inflation-means-we-just-need-to-spend-more-video/