The Fed is chipping away at inflation by raising the fed funds rate.
It’s also chipping away at inflation by removing the categories that have the highest inflation.
Fed Officials Say Stubborn Inflation Justifies Continued Rate Increases
‘It is critical that we prevent an inflationary psychology from taking hold,’ says governor Lisa Cook
By Nick Timiraos, The Wall Street Journal, Updated Oct. 6, 2022
…
The Fed at its meeting last month raised its benchmark interest rate to a range between 3% and 3.25%. Officials penciled in additional, cumulative rate increases of 1.25 percentage points this year.
To meet those projections, officials could raise rates by 0.75 percentage point at their meeting next month and by 0.5 point at their gathering in December…
A slowdown in housing costs may not feed through to broader measures of price inflation for several months because of how those costs are measured. But Fed governor Christopher Waller Waller said he thought it was possible that inflation excluding food, energy and shelter could slow because of the impact of the Fed’s rate increases so far this year. … [end quote]
The Fed used to exclude “volatile” food and energy prices from their calculation of inflation. Now are they also excluding shelter prices which have risen so fast? Sorry, folks, that’s bogus! Everyone needs food, energy and shelter.
The “sticky” inflation rate is still rising.
So is the median CPI.
Inflation has legs. It has not stopped running and chipping away at the fastest contributors to inflation won’t lessen the real pain to consumers.
Exactly. If central banks stop tightening, we’re going to have some pretty nasty inflation. If they continue raising interest rates, we risk recession. But the inflation is almost certain given the former, while recession is only a risk of the latter.
I’m not smart enough to opine on the world economy. I only know the US numbers. And in the US, I agree with the Fed’s actions. There are more jobs than people willing to fill them. So there is room to slow the economy - perhaps even going into recession - without causing high unemployment.
Actually, Leap, the top personal tax rate was 90% back then. If you look at the total weighted average rate actually paid by top earners back then, it was not even close to 70%:
Better data on just the top earners ( note 91% was the highest rate):
Blockquote
However, despite these high marginal rates, the top 1 percent of taxpayers in the 1950s only paid about 42 percent of their income in taxes. As a result, the tax burden on high-income households today is only slightly lower than what these households faced in the 1950s.
Murphy the top bracket was higher briefly when Truman raised it. Ike lowered it to 70%.
Mea culpa I stand corrected. Regardless of what I had heard several times…I thought over the years…the record has Ike with 90% taxes on the top bracket.
The link has some interesting reading on Ike’s policies. Along with a table on the national debt.