No. Milton Berle was a comedian. I meant Milton Friedman who was a comedian as far as being an economist goes, but he wasn’t funny “ha ha”. He was funny “strange.”
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The FED/Treasury do both. You can not distinguish it that way. I mean you can be it wont matter because they do both. It is all along the yield curve. While rates are in a free market the FED maintains a healthier market.
While looking at the debt you might think we are overextended, we are not. Coming off of Covid and the supply chain problems, the liquidity of necessity, etc we need to look at what happens with more debt v less debt. We can get deflation with less debt. Ironic. We can get inflation with more debt. The FED studies this at length. This is not shooting in the dark. Fiscal policy is coordinated with monetary policy. Meaning the Congress knows well how to spend.
Just do not depend on the liars who wont stop the lying. It might seem simple and easy to believe. It is still out and out lying.
As of September 2022, the Fed is cutting back its bond portfolio by about $95 billion per month (only about 1% of its holdings each month) by not purchasing new securities to replace maturing bonds.Feb 3, 2023
Federal Reserve Calibrates Policy to Keep Inflation in Check | U.S. Bank.
My comment these are bonds that simply disappear. They are not rolled over. As they mature the holder, the FED, is not paid. Or the FED is paid and has more cash on its books. Cash on the FED’s books is not cash in the economy. The FED’s economic actions are that of a drum separate from the economy and responding to the needs of the economy.
There was a widely shared theory that the inflation was transitory, and would disappear quickly once supply chain kinks worked themselves out. I thought so too, but then other events intruded - specifically the labor shortage (because of the pandemic) which brought a demand for higher wages and strong competition among employers for personnel, the housing market overheating and a surge of private investment into the rental market which began pushing up rents.
I do believe that had those other macro pressures happened that inflation would have come down pretty quickly. It didn’t, obviously. And frankly I’m amazed at how quickly wages came up. Just a few years ago people were laughing at the idea of $15/hr, and now it’s common.
Interestingly, wages among the lowest paid have risen faster than those in the middle class.
Last month, Target [announced] that it would pay new employees as much as $24 an hour and extend health benefits to anyone working at least 25 hours a week. The company is hardly the only one coughing up cash to lure in new workers or retain those on staff. Starbucks [recently set]a national minimum wage of $15. McDonald’s, Dairy Queen, and Subway franchises have been offering signing incentives. Lowe’s is giving bonuses to [hourly workers] .
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I remember the ignorant claims that if people at the bottom got raises the people in the middle would see inflation and no raise. But no one said the major corporations would be to blame for making much higher profits. Talk about not knowing what is going on and wishing to use people for the sake of it.
No arguement there. But I think you would also agree that a:
- A 0% FFR is not sustainable and should be temporary and
- An increase from 0% to 0.25%, even with “transitory” inflation of 5%, was not going to result in deflation - that even if the Fed was correct that it was indeed transitory, starting back on the path to normal rates was justified even if inflation abated and came back down to the 2% target rate.
Wonder if this gives the Fed pause on a 50 point increase (odd of which are about 70% for next week):
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When inflation does take root it reminds me of giant wildfires at the end of a long, hot drought. Which is why I am averaging my overweight cash back into the markets on a monthly basis after accumulating it in 2021. I continue to expect stubborn inflation, a determined Fed, and downward pressure on stock prices this year.
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Yes.
I didn’t expect “deflation”, I thought prices would move higher and stay there, but not necessarily continue increasing. That’s not de-flatiron or in-flation, that’s a one time speed bump. It didn’t work out that way for the several reasons I’ve mentioned.
The economy has repeatedly flummoxed the experts in recent years. Almost no one expected inflation would rise so much, interest rates to jump so quickly or higher interest rates to show so little effect on the econ-omy.
I don’t agree with the guy’s thesis, but he summarized the issue nicely in his first paragraph:
Heh, sardonically, I think this time she did launch a political attack on Powell:
WASHINGTON (Reuters) -Democratic U.S. Senator Elizabeth Warren on Tuesday called on Federal Reserve Chair Jerome Powell to recuse himself from an internal review of recent bank failures, saying his actions “directly contributed” to them.
Horsepuckies.
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She is fighting the FED. It is getting crazier. What is she proposing as an alternative? Nada.
I may want regulations but I also want free market interest rates. They are critical. At that point Warren has it totally inside out.