US Core Inflation Rises In April To 4.7% Despite M2 Money Growth Crashing To -4.6% YoY, More Rate Hikes Forecast (Damn It, Janet [Yellen])

Confounded Interest ^ | 05/26/2023 | Anthony B. Sanders

[Kaiser8408a]

Damn it, Janet (Yellen)!

So much for Treasury Secretary Janet Yellen’s proclamtion that inflation is transitory and would subside to under 2%. April’s core inflation (PCE Deflator) rose to 4.7% YoY. Despite M2 Money growth crashing to -4.6% YoY.

Today’s Fed Funds Futures data is pointing to another rate hike or two.

With Core PCE at 4.7%, the Taylor Rule suggested Fed Funds Target rate is now 10.57%. So, The Fed is only about half way there.

Damn it, Janet, people are suffering from the ravages of inflation and you laugh.

[Kaiser8408a]

Yellen is grossly incomptent and a liar. PERFECT for the lying Biden Administration!

[Lonesome in Massachussets]

Yellen: Dammit Joe, I’m a bureaucrat, not an alchemist!

[mikelets456]

Everyone I talk to now says it’s extremely slow. I don’t see how spending is up. Could someone explain this? We sell to chemical and food manufacturers and they say they’re sitting on inventory they can’t move.

[econjack]

This isn’t rocket since, people. The Equation of Exchange says:

MV = PQ

where:
M = money supply (often measured using M2)
V = the velocity of money (how fast money “turns over” and almost constant to the last 50 years)
P = Price index (desire is for this to be constant)
Q = Output of goods and services (hopefully growing)

Because V is almost constant and P should be constant (no inflation), if Q grows by 3%, M should grow by (M + .03)/V, which is less that 1%. Actually, since economic growth has been less than 3% under Biden, growth in M2 should be almost nothing. Instead, look at what’s happened during his administration:

https://fred.stlouisfed.org/series/M2SL

Yellen’s only part of the problem. You also need to pillory and post Jerome H. Powell as the Fed’s chair for the control of M2.

[frogjerk]

Its slow. People are hitting reserves banking on a good summer. I am not banking on a good summer.

[AndyJackson]

There is also, M1 - "ready money" or "real money" which has done this:

The reader is invited to ponder the impact of dumping all of that cash on the economy at the start of the Covid lockdown.

[frogjerk]

Q is not growing by 3%. That is BS

[joe fonebone]

Not rocket science, but a foreign language.
Can someone take this gobbledygook and explain it in clear english

[frogjerk]

I agree with you. M2 growth needs to stop (sorry Fedzilla and Wall Street) and Government spending needs to full stop. But this will cause a recession. What goes up must come down. It is going to be difficult for sure but...

There is no such thing a as a free lunch - Friedman

[econjack]

I said it was less under Biden. It's averaged about 3.2% since post WWII. If you'd take the time to read carefully, you would have seen:

Actually, since economic growth has been less than 3% under Biden,...

[frogjerk]

12-18-month lag and inflation hits hard. Whereas Dr. Friedman was proven correct yet again.

[frogjerk]

Not a criticism of you but this is the BS that is and will be peddled in this election cycle.

[AndyJackson]

Dr. Friedman was proven correct yet again.

The great genius who could not even tell the difference between money and a Polynesian rock... [/sarcasm]

[econjack]

Not long ago, Biden made the statement there was no inflation. He said the Consumer Price index this month was the same as last month, so there is no inflation. Expect that same spin now. When he made that statement Year-Over-Year inflation (CPI a year ago versus today) was 8.1%. Alas, most of the voting public don’t have the economic acuity to know he’s lying.

[going hot]

Biden made the statement

Same as "my chicken clucked yesterday while looking at the sky."

[poinq]

Inflation is going up because of the war in Ukraine and we are pulling away from China. Its a small cost to pay to get our economy back. The war is crap. But separating from China is very important. Our businesses and our government have been bought and paid for by China. Just look at Australia and Canada. We need to separate even if things cost more.

Our little Broadway play about debt limits is also a farce. Yellen’s deadline of June 1st is silly. She can go on for close to a year if she had to. But creating a small crises may shake the markets and send the interest rates up, which they want. Then the fed does not have to do it. If the ten year note goes to 5% then they will stop raising rates. Until then they will keep raising. The 1 year is over five. The five year is is over 4 and the ten year is under 4%. Thats inverted. They need the ten year at 5% which will hurt China if it keeps print money. The Chinese Yuan is not worth 7 to the dollar. They won’t be able to buy dollars with Yuan any more.

[FlingWingFlyer]

How’s everybody doing so far with all the money the RATS said we’d be “putting back in our pockets.”

[Vaduz]

Everyone in the Biden Administration are grossly incompetent and a liar there is nothing they haven’t screwed up it’s Obama act three.