The relevancy of the Fed on inflation

Feel free to discuss this among yourselves.

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So when the Fed gets it wrong they are beat up, when the Fed gets it right they are beat up. Let’s just beat up the Fed. :joy:

It’s just like the guys calling for a recession and they missed the big run up in the S&P but don’t worry. They will eventually get it right. :roll_eyes:



How much time should we spend discussing foolishness? Is calling this bit of writing foolishness sufficient to satisfy your desire for discussion?


Agreed she is just one more monkey at a keyboard. Type enough and twice a day she will be right.

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In spite of those mocking, I tend to agree. The Fed may have “jawboned”, but most of the inflation fall is/was (in my view) the normalization of supply chains and the resumption of a quasi-normal economy following 2 years of pandemic induced shortages and shopping disruptions.

[edit: Ha! Just read this in today’s WSJ:

Inside the story:

Since then, however, inflation has cooled markedly even though unemployment stayed low. How could this happen? At least a partial explanation might be that those supply-chain problems really were transitory, but were also in place longer than most economists realized.

Here’s what “Port Congestion” looked like during the plague:

The drop in the housing market is surely due to the Fed, and that is a signficant component, but there’s more afoot, as businesses have continued to expand and hire (and sometimes over hire) in spite of the interest rates.

My concern is that it takes so long for those interest rate increases to affect anything (and likewise, going the other way) that they may have overdone it and will be caught when the economy really does start to deteriorate in 2024 and not have the “rapid” ammunition to fight it.

We shall see, of course, and I hope I’m wrong, but it’s clear the battle is almost won, which is different than saying “It’s over.” As I have said before, it isn’t a “soft landing” until you’ve landed.


Based on your comment, it looks like you’re done. Do you know that you can mute threads?

We should have more monkey’s at the keyboard like her.

I wonder how many Fools here have her qualifications and experience to base their opinions on? I know that I don’t.

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Yet she isn’t on the Fed and she does not have their qualifications. Everyone is an expert at prognosticating and helping drive the bus until it crashes. Then all of those experts are pointing at the real drivers saying how they would have missed the pot holes. Face it, the economy is so big and there are so many factors involved that it is impossible to get the direction correct. Everyone reading the tea leaves gets it wrong except by luck. Just ask Summers, Burry, and all of the others who have been beating up on the Fed.

I think of the Fed more as a herder of cats. Always poking one of the cats to get back in the herd. Sometimes the cats get away and it takes them awhile to get them back in line.


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I think of the Fed more as pushers on a string. The jobs they are given controlling inflation and providing full employment but they do not have adequate tools to do these tasks.


Maybe because those “jobs” aren’t their job. Their job is the care and feeding of the member banks. The “jobs” thing is political window dressing, because TPTB can’t admit their only mission is to protect bankers from their own excesses.



Most useful! :heavy_check_mark:

The Captain

The FED raised interest rates at a historic pace and cut the money supply.

Does she know that? Why avoid it? Why fabricate things to dismiss the FED?

Also a “normalization of the supply lines” would have seen a resurgence from China. That is not what happened. Something better happened, the US is surging. Our economy is surging with less inflation and blossoming economies of scale.

Moves which historically take 6-12 months to show up in the real world economy. So as they are “about to show up”, most of the work is already done. Let me know how you feel around April/May if a recession begins.

No, because many manufacturers began reshoring over the past three years. Apple moved significant production to India and Vietnam. Korea began moving cars and tv screens and who knows what all. The world did change. Some of the supply kinks worked out, some changed entirely.

I don’t blame the Fed for reacting, just for reacting late, and then standing on the brakes for too long. But, as the saying goes, “We shall see.”

Wouldn’t it be wonderful if Congress did its job of fiscal policymaking? I expect only about 30% of those critters could enter into a coherent elementary fact based conversation about the matter, however well rehearsed their “views” or “talking points.”

d fb


When was the first hike November 2022? October 2022?

What ar you working off of for your April recession deadline? October 2023?

FED been reducing the money supply for over 12 months.

If we get a recession you need to tone it down. Recessions at this point will be mild. This is not Reagan’s economy.

I don’t think so. Companies have over-hired and they’re reluctant to trim right now because they had a hard time finding the newbies in the first place. But when the dam breaks, it will cascade and quickly.

I’m certainly not predicting another 2008, but I see the potential for one that is deeper than usual. I’m not predicting it, I’m hoping for the same thing that everyone is: a soft landing. But there is turbulence in China’s economy, in Europe’s economy, and I see the potential for trouble here.

I KNOW that I dunno.

d fb


Potential for worse times is always true, nothing new in that regard. And there is potential for good times and average times. Kind of like saying “markets will be volatile.”


Henry Poor used to tell this story: He walked down to the financial district with John D. Rockefeller one morning and tried to elicit some information as to the market for Standard Oils. The latter passed two blocks before giving an answer and then said slowly, “I think they will fluctuate.”


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Not necessarily. As has been known for years (decades), China was facing a variety of workforce problems starting in the 2010-2020 time period. Plus, the govt was unable to keep subsidizing production costs for exports (as had been done for decades). Thus, they had a few economic problems they could not fix given their limited capabilities. With the retirement of many older workers, their workforce size will shrink significantly–which will exacerabate other problems as well.

Business movement out of China was already in process because costs were lower elsewhere. Been there, done that (not China–elsewhere). More modern manufacturing processes mean production costs are generally uniform almost anywhere. Market access and shipping costs start to become relevant compared to other factors.