Posted on 03/03/2023 6:10:32 AM PST by Kaiser8408a
Yesterday’s inflation report (in the form on skyrocketing labor costs) helped lead Bankrate’s 30-year mortgage rate to over 7% … again.
Here is yesterday’s horrible unit labor costs YoY chart showing the fastest growth in labor costs since 1982 and Fed Chair Paul Volcker. Jerome Powell, the current Fed Chair is trying to reduce the Bernanke/Yellen/Powell monetary stimulypto (with an extra dose of “sugar” from the Covid outbreak).
The good news is that the 10-year Treasury yield is down -7.3 basis points this morning.
Here is The Fed’s Open Market Committee (FOMC) trying to summon Paul Volcker to help them figure out how they got inflation so wrong.
(Excerpt) Read more at confoundedinterest.net ...
If I’m not mistaken, Paul Voelker once raised interest rates 500 basis points at one time, stunning everyone in the process.
US Mortgage rates were 18.5% in 1981 after Carter was booted from office and Reagan/Volcker labored for a painful reset.
That is true. But this is the first time since Volcker that a Fed chair tightened rates this quickly. Yellen kept rates too low for too long to support Obama’s reckless agenda, then started raising rates once Trump was elected.
Just return to energy independence...ie...fracking and drilling and start up the Alaskan oil pipeline.
Even worse, spending keeps going up.
Still cheap, in 1992 my first mortgage was 8 1/2% and the second mortgage was 10%, the owners carried 10% at 10% interest
The federal government not only feeds the inflation beast with borrowing but government expenditures that flow directly into the economy are much more significant than they were in the Volcker years.
If huge government expenditures are funded at 8% higher (like SS or food stamps for example) how can inflation possibly get under control?
It cannot.
In the modern economy inflation becomes a death loop—feeding on itself over and over and over again...
If you go back and look at the Volker years, you’ll find interest rates were shooting up before he took over as Fed Chairman. His final increases were not as sharp as those before him.
And . . . this is the ugly part, inflation didn’t respond. Rates doubled before Volker took office. He only raised them another 50%.
As interesting is the 12% inflation of 1974ish. Quite the wiggle in the Fed Funds rate, but inflation rose for several months after a 10% FFrate, which then declined.
Point being, no one really knows what decides inflation. No one has control of it.
Charts of M2 also fail to align, and let’s keep in mind inflation is an international thing. Nobody in South Korea cares much what the US Fed does.
The most compelling reality of inflation is the past 20 years. Plummeting interest rates. No inflation, until now.
Bkmk
Communists are currently in full control. There is no room for a nationalist presence.
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