There’s no question that WH fiscal policy is working against the Fed.
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Much of inflation is being driven currently by increased profits.
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She also made a claim she helped passed law to rein in gas prices in my district, but gas prices kept going up after that.
Here is another one from San Diego county.
That’s economically incorrect. Profits don’t cause inflation.
Too much money chasing (Demand) too few goods (Supply) causes inflation.
The fed is trying to tamp down the former while many of the Admin’s investment policies are doing the opposite.
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To remind people - links to articles and videos of political nature fall under the category of “politics” and are not permitted. If you wish to discuss politics, there is a separate politics forum.
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That lady is pretty smart. I am going to go with her numbers.
That being said increased profits from raising prices can cause inflation. You have to remember we are not living in a true free-market economy.
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And no profits/losing money and raising prices can also cause inflation.
The key is not the profits, but the raising prices…
btw: profits are net after tax, so billions more into the federal fisc. Or. look at this another way: if we had 100% tax on profits, there would be zero net corp profit, but inflation would continue as prices are climbing.
(yes, she is smart, but she was not an Econ major.)
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In June, Janet Yellen, Treasury Secretary did not agree that Corp profits cause inflation.
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This thread is becoming a Fox News anti-Biden rant. We are about 5 posts away from someone blaming inflation on Build Back Better (which never passed).
Inflation is worldwide. Anyone who says it is U.S. fiscal policy causing inflation is making it political. U.S. deficits are coming down, not increasing, under Biden, which is deflationary. I don’t feel like arguing the politics, and there are plenty of anti-Biden boards on the internet that will be more receptive to whatever “it’s Biden’s fault” position some of you might have.
The true cause is the American Fed. It led the rest of the world to reckless inflationary monetary policy, was late to pull it off, and now has reversed course to severe tightening without coordinating with other central banks, which is just stupid. The Fed’s incompetence is not Democrat or Republican, it is just incompetence. These are hugely powerful positions, and Powell and several of the other Fed Governors are not up to the job. I think October is going to show another sub-0.5% month over month inflation, which is a big sign that we are at or even potentially past peak inflation. Tapering is in its 4th month at almost $100 billion a month, and has a long way to go, which will put significant deflationary pressure on the economy over time.
The Fed needs to stop playing God every time an economic number is not exactly what Powell wants it to be, because Powell’s “solutions” just make the economy worse. Even if inflation is 3 to 4%, it is not the Fed’s job to artificially force it to 2% or lower when there are secular factors that the market needs to sort out organically. Either we live in a free market economy, or we don’t.
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I think that’s another falsehood. You can Google for it regarding US deficits are shrinking.
Good thing, since no one has posted any such thing.
btw: its the budget deficit that decreased, i.e., year-over-year losses, not cumulative total deficit/debt, which has continued to climb.
I think most economists believe that there are multiple causes.
For an interesting read, check out the Twitter posts by Larry Summers and Paul Krugman.
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The fact that the Fed has hit the gas on rate increases is an indication that the Fed knows it was the problem in the first place. If the Fed was not responsible for inflation, then why would it be raising rates at all? Why not just wait for whatever the other cause of inflation was to figure itself out?
Actually, the Fed spent 6 months telling us that inflation was “transitory” and that it actually was not the cause of inflation. How did that work out?
I expect inflation will be going up again now that diesel inventories are almost gone. There’s no rate increase that’s going to fix that. Although, points for trying. It’s going to be a lousy time to buy a house.
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When we bought our house in 2004, the interest rate was 6.5%. We have gotten used to low interest rates and easy money for the last 15 years. Now the supply side is messed up thanks to COVID and now the war. But there is still too much money sloshing around. This will take a while to fix.
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The diesel inventories are not almost gone. It is a little low but look at the chart and stop listening to the BS.
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I agree that the Fed was wrong on transitory (which to me, the cynic, was just a ploy to get Powell re-appointed), but that still does not mean the Fed is [solely] responsible for inflation.
Even Paul Krugman, as far from Fox News as one can get, has admitted that he was wrong on his assumptions that the American Rescue Plan (Govt spending) would not contribute inflation; indeed, he now admits it has contributed to inflation. If economists on both sides of the aisle say that the ARP spending contributed to inflation, how can more Govt spending/borrowing not do the same?
There are multiple reasons for inflation, and the slow walking Fed is only one of them. Govt spending is another. But, more importantly, the Fed and Admin are working at cross-purposes wrt inflation.
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For ARP to have caused inflation, one of two things have to be true:
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It is only causing inflation in the U.S., which would mean that the dollar should be dropping against the Yen and Euro. Is the dollar dropping against the Yen and Euro?
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Somehow, the American Rescue Plan caused inflation in Europe, which is actually worse than inflation in the U.S., and the rest of the world. That would be quite a feat, and even anti-Biden Fox, which generally starts their shows by stretching logic to a breaking point, has not figured out a way to blame inflation in the rest of the world on Biden. I am all ears if you have an explanation.
While the U.S. deficit spending, and especially America’s artificially low tax rates on the super rich, are inflationary in the long-term, we are not seeing that impact in the short term.
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Currently in Europe. By that I mean Greece, Germany, Turkey, Spain, Malta. and the diesel crisis is real, present and affecting life. Strong $$$ makes things cheap for me.
To the contrary if you don’t need financing this may turn out to be a great time to buy a house. Marginal buyers squeezed out, over extended owners in need of liquidity and banks afraid of holding inventory combined with rental prices proving resilient may offer opportunities to those who have waited for an overheated market to reprice.
Lousy time to buy was 6-12 months ago when prices were unsustainably high, buyers were irrationally expediting closing at the expense of inspections, liquidity was such that multiple bids created price bubbles, remote working seemed indefinite, etc. For those that leveraged up and assumed their assets and jobs were secure they are in trouble particularly if their mortgages are adjustable, inflation continues and the full effect of Fed action results in a prolonged recession.
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