Posted on 04/26/2021 4:36:59 AM PDT by Kaslin
Usually, the Federal Reserve acts as a counterweight when Congress and U.S. presidents follow inflationary policies. We haven’t had an incompetent Federal Reserve chairman since Arthur Burns and G. William Miller produced simultaneous inflation and recession, an economic malady known as “stagflation.” Federal Reserve Chairman Jerome Powell may not be as bad as Burns and Miller, but he does seem to be making one economic mistake after another.
Like Miller, Powell is that rare exception: a Fed chair without a background in economics. Being an American today is a bit like riding on a bus driven by someone who lacks a CDL. It might work out okay, but some white knuckles on the curves are well justified.
Powell’s First Mistake – Raising Interest Rates under Trump
Powell’s first mistake occurred when he raised interest rates during President Trump’s successful economic boom that occurred without inflation. President Trump’s economic advisor Peter Navarro indicated that this might have cost Trump the election (at about the 10-minute mark):
Everybody knows me and Mnuchin weren’t exactly bosom buddies. Whenever I wanted to put a little dig in Steve all I had to do was remind the boss [President Trump] that it was Mnuchin that appointed Jay Powell who the boss thought was the worst Fed Chair in modern history who cost us the election because that SOB raised interest rates well before he should have.
Powell’s increase in interest rates was not needed because President Trump’s supply-side economics was simultaneously increasing Aggregate Demand and Aggregate Supply, and thereby producing economic growth with little change in price level.
(Excerpt) Read more at americanthinker.com ...
“...by restraining the wage demands of manufacturing workers.”
Blue Collar Joe wouldn’t to that to his fellow working man would he?
/yuge sarc
inflation is already here.
Coming inflation and resulting chaos? It is already only a few hundred feet down the track, blasting away with all the force that can be created by its whistle and mighty rumble.
The riots and flames of the summer of 2020 will fade in comparison with what the next few months will bring.
“Mission Accomplished” - saw civilization, sank same.
Sorry to say I agree.
The world has never seen hyperinflation on EBT cards (no wheelbarrows), where some preferred classes of people will get 10X what other disfavored (white) classes get.
This is a recipe for massive resentment, and another precursor for CW.
The fed has a target rate of inflation. The federal government produces inflation as a matter of policy.
Inflation makes idiots think the “economy” is doing well, when they see that the DOW is up. The DOW is not the economy, and the increased numbers are due to inflation.
Inflation reduces savings to essentially zero, thus destroying the work of a lifetime, and making people dependent on government.
Money quote:
“The worst-case scenario would occur if foreigners stop using the inflating dollar as the medium of exchange in international transactions, resulting in a crash in the dollar’s exchange rate, much higher prices for imports, and a huge cut in the American standard of living. China appears to be preparing for that scenario by rolling out a digital yuan that could be used as an alternative to the dollar for international transactions.”
The end of the US Dollar as the worlds reserve currency. When this happens, no more printing press.
The exponential rise in housing prices foretells a future bust, which will have an impact upon the long-term wealth of many millennials and their children. I am shocked at how quickly multi-million-dollar houses are selling in the burbs, unremarkable track houses, and fixer-upper’s in small towns. Interest rate changes and unemployment could replicate 2008.
Inflation is the tool democrats use to nullify debt. They basically steal the value from the people they borrow from.
Some British mortgage rates:
https://www.hsbc.co.uk/mortgages/our-rates/
Note that there are no 30-year fixed rate mortgages and that loan-to-value matters.
Because of the use of variable rates, Brits are not overly deterred or encouraged to buy a house at any point in time.
“The exponential rise in housing prices foretells a future bust”
I suspect most of the 30-year mortgages are held by the Federal Reserve.
Mortgagors are going to want their mortgage balance federally adjusted downward after the housing market goes bust.
“Powell’s first mistake occurred when he raised interest rates”
Interest rates should generally exceed Wal-Mart price increases.
Mortgages might be made on an equity share basis, which would normally be fair to both mortgagee and mortgagor. It is not wise for lenders to do when housing prices are so overinflated.
Food inflation is modest, but most things that are housing related have lots of inflation.
There is also a problem with shortages. If you go to buy something you might not be able to buy it.
I bought some American Red Oak late yesterday. I buy a lotof it. The price per foot for 1x12 has gone up from $9.83 in December, to $15.68! Over 50% higher!!!
Gas, up. Food,up. Everything, up, up, up!!!
It will go back down.
Why do you buy a lot of red oak?
Excellent point. And nobody will be the wiser, either.
Of course, hasn't that always been the case since the time LBJ federalized welfare, cash, check or EBT card? The means of payment doesn't really matter that much.
“Food inflation is modest”
Where do you live and what do you buy? I see annual food inflation well over 10% the past year, probably closer to 15%.
Furniture?
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