Posted on 12/06/2022 6:05:27 AM PST by Diana in Wisconsin
The US Federal Reserve continues to grapple with inflation, which at 7.7% (October CPI) is more than triple the Fed’s 2% target, without causing a recession by lifting interest rates too high.
The Fed has two options when it comes to interest rate increases designed to tackle the highest US inflation since the early 1980s. The first is it continues to hike rates, beyond what the economy can handle, causing a recession, usually defined as two consecutive quarters of negative economic growth. This is the “Volcker Fed” playbook.
In 1979, then US Federal Reserve Chair Paul Volcker faced a serious challenge: how to quell inflation which had been wracking the economy for most of the decade. The prices of goods and services had averaged 3.2% annually since World War II, but after the 1973 oil shock, they more than doubled, to an annual 7.7%. Inflation reached 9.1% in 1975, the highest since 1947. Although prices declined the following year, by 1979 inflation had reached a startling 11.3% (led by the 1979 energy crisis) and in 1980 it soared to 13.5%.
Not only was inflation going through the roof, but economic growth had stalled and unemployment was high, rising from 5.1% in January 1974 to 9% in May 1975. In this low-growth, hyperinflationary environment we had “stagflation”.
(Excerpt) Read more at aheadoftheherd.com ...
LOL!
“With credit cards at all time highs how much longer can people keep buying non-essential stuff?”
I agree. I think once Christmas is over, and the after-Christmas sales are done, CC use is going to drop off a cliff.
However, most people out there don’t use credit as it’s designed. They still see it as ‘free money,’ unfortunately.
I pay off my CC every month. No interest payments for me; I use it as a convenience and to get points and perks towards other things - that it ends up I rarely need.
Beau does the same. He’s got a ton of Cabela’s Cash stashed for the next ammo run or some other firearms emergency. ;)
I, too, trust his ideas above all others.
I think the mindset of a lot of people is stuck in the Trump era. They feel that the rise in inflation is somehow transitory and that the economy will snap right back into low rates, cheap gas and cheap Chinese imported goods. None of that is coming back IMO.
Inflation is going to be around for a lot longer than people believe and it will do a lot of damage to their finances. Inflation is an insidious form of wealth destruction.
As far a credit cards are concerned, the interest charges on them are absolutely obscene. I use them as a convenience and I’m not interested in ‘rewards’.
That said, Visa has been a great investment for me. I loved to see people using the card.
An argument I might add is that inflation has been with us for quite some time, and its taking this long for the numbers to finally verify reality. Meaning 2 to 3% we had in the first decades of the 21st century were completely managed numbers. Shadow stats shows how its done.
Start with ending the war on energy. Within a year and a half prices will come down.
Shadow Stats has had REAL Consumer Inflation pegged at 17-18% for a year, now.
I check them often.
We're operating from the same playbook.
Walmart CEO Warns Retail Thefts Will Lead To Price Hikes, Store Closures
Canning Jar ‘diversity’ is also now a ‘thing.
Quart, Pint, Half-Pint, Fancy, regular and wide-mouth lids and ring, LOL! :)
Yes and their methodology makes sense....
They ‘splain it all and don’t hide anything. Just the FACTS, Ma’am!
What a concept, LOL!
Which makes me ask why the site doesn’t get more attention. If journalists were actually useful and actually looking out for Joe and Jill, they would report on the differences between the reported numbers and independent valuations.
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