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Powell tries to be ‘plausible’ as prices soar ---- US Fed chairman maintains policy is 'well-positioned' to manage inflation outcomes but that's not what the data shows ^ | October 24, 2021 | David P. Goldman

Posted on 10/24/2021 5:41:49 PM PDT by elpadre

NEW YORK – The data firm Markit-IHT reported Friday “survey-record rise in backlogs of work as firms struggled to meet demand due to supply chain bottlenecks and labor shortages” in October, “in turn driving the steepest rise in prices yet recorded by the survey.”

Markit’s widely followed Purchasing Managers’ Index showed continued economic growth as well as stiffening inflationary headwinds.

Also on Friday, the Atlanta Federal Reserve Bank lowered its “Nowcast” for US gross domestic product (GDP) for the third quarter to just 0.5% per annum, that is, nearly zero growth. The “Nowcast model” translates current data releases into an estimate for overall growth. A similar model devised by the St. Louis Federal Reserve estimates third quarter growth at a robust 6.85%.

The huge differences in forecasts reflect an unprecedented degree of uncertainty about the US economy. Most workers who dropped out of the labor force during the Covid-19 pandemic haven’t returned. Some businesses can pass on higher input prices, but many can’t. Supply shortages are constricting business activity.

As Markit noted, order backlogs and price increases are the worst in the 15-year history of its survey. The one thing that all the forecasters agree about is that inflation is the worst in 40 years and getting worse. US Federal Reserve Chairman Jerome Powell spent the first nine months of 2021 insisting that inflation wasn’t there, and if it was there, it was “transitory.” On Friday, Powell said in a virtual panel discussion moderated by Bloomberg that “our policy is well-positioned to manage a range of plausible outcomes.” Equity markets fell.

(Excerpt) Read more at ...

TOPICS: Business/Economy; Government; News/Current Events

1 posted on 10/24/2021 5:41:49 PM PDT by elpadre
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To: elpadre

“...The problem is that the Federal Reserve increased its balance sheet by nearly $5 trillion since early 2020 and set off a tsunami of demand. In the sort of monetary theory that prevailed while the US economy was reasonably sound, a surge in the money supply was supposed to lead to higher inflation.

The difficulty with the Quantity Theory of Money championed by Milton Friedman and others is that the same amount of money can have different impacts on prices at different times. For example, bank lending has collapsed in the US since the pandemic, which means that the trillions of additional reserves that the Fed put into the banking system haven’t translated into bank credit.....”

2 posted on 10/24/2021 5:44:01 PM PDT by elpadre ( ying them.)
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To: elpadre

A lot of people say this monetary policy makes no sense at all.

I think it makes perfect sense.

A deep state intermediary tells the fed member that they should do they were asked and the wire transfer to the secret account will go through. Otherwise they will get epsteined.

See, perfectly understandable

3 posted on 10/24/2021 5:59:06 PM PDT by Mount Athos
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To: elpadre

Pump trillion of dollars into the US Economy by stimulus spending and bond buying and then are surprised when it triggers demand driven inflation.

Truly we are governed by idiots

4 posted on 10/24/2021 6:16:43 PM PDT by MNJohnnie (They would have abandon leftism to achieve sanity. Freeper Olog-hai)
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To: elpadre
"inflation is the worst in 40 years"

Jimmy Carter.
5 posted on 10/24/2021 6:24:17 PM PDT by clearcarbon (Fraudulent elections have consequences.)
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To: MNJohnnie
"Truly we are governed by idiots"

Which brings up this question.

Who are the idiots? Those who have been elected and the ones that they appoint to run things? Or, those who vote for the elected idiots who appoint the other idiots to run things?

6 posted on 10/24/2021 6:25:31 PM PDT by Parmy
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To: Parmy

All of the above?

7 posted on 10/24/2021 6:29:43 PM PDT by MNJohnnie (They would have abandon leftism to achieve sanity. Freeper Olog-hai)
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To: elpadre

Welcome back, Carter.

8 posted on 10/24/2021 7:06:17 PM PDT by ArcadeQuarters (Remember the 2020 backstabbers. No more RINOs ever!)
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To: ArcadeQuarters
I remember the Carter years. This is WAY WORSE. The only thing missing is the double-digit interest rates, and believe me when I tell you: those are coming.

That's the only "weapon" the Fed has to combat inflation at this point. Sooner or later, their hand will be forced.

9 posted on 10/24/2021 7:15:25 PM PDT by usconservative (When The Ballot Box No Longer Counts, The Ammunition Box Does. (What's In Your Ammo Box?))
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To: elpadre

Gaslighting and gibberish. They just flood us with words.

10 posted on 10/24/2021 7:53:03 PM PDT by Luke21
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To: usconservative

The Fed is covering their ears and humming loudly to ignore rampant inflation. They know if they raise rates, all that government debt becomes impossible to service raising the potential of default on government bonds. They’d rather let inflation drive the public into poverty than correct the situation.

11 posted on 10/24/2021 8:01:49 PM PDT by Flick Lives (The future is a quiet world)
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To: elpadre

by far one of Trump’s biggest mistakes was appointing Powell Chairman of the Fed.

12 posted on 10/24/2021 8:41:48 PM PDT by millenial4freedom (The Left: We hate the white male, but we need his money)
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To: elpadre


13 posted on 10/24/2021 10:12:19 PM PDT by NetAddicted ( Just looking)
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To: Flick Lives

Republicans win big in 2022. Then they can put pressure on the Fed to raise interest rates to tame inflation.

14 posted on 10/24/2021 10:19:38 PM PDT by MinorityRepublican
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