Opinion is divided on tariffs and their contribution to inflation. Seems like the average 19% average tariff on all Chinese imports has to have an impact on prices; China’s trade surplus is $397 billion. In addition to the tariffs, we have also have the overhang of the massive tax cuts to business leftover from the GOP tax package and a huge infusion of cash from the Covid relief packages. Add that to supply chain woes and increasing demand as the pandemic recedes, and how in hell could we not have inflation at this point in the recovery?
Question is what can we do? Watch interest rates climb? Will the Fed sell quantities of securities forcing banks to use cash? Increase reserve requirements?
Any way to escape the pain? Is it 1978 all over again? Or even worse 1778?
https://www.investopedia.com/ask/answers/112714/whats-highes…
Since the founding of the United States in 1776, the highest year-over-year inflation rate observed was 29.78 percent in 1778. In the period of time since the introduction of the CPI, the highest inflation rate observed was 19.66 percent in 1917.
What can we expect in the way of price trends for acquiring debt like bonds and preferred? Already seeing some preferred stocks drop after spending a whole lotta time holding off as they almost always traded above par for anything I was yearning to own.
Meantime maybe it’s time to lift tariffs and end the somewhat ill-conceived tariff wars. While we’re at it, sop up some of the liquidity by putting back the corporate tax rates to reasonable levels.Cutting them from 35% to 21% was lunacy.