Posted on 05/31/2022 4:47:32 PM PDT by RomanSoldier19
Amazon founder Jeff Bezos and Tesla and SpaceX CEO Elon Musk blame the government and the Fed for inflation. In Musk’s words, “The obvious reason for inflation is that the government printed a zillion more dollars than it has. This is not super complicated.”
They and other luminaries subscribe to the inflation sophism: “too much money chasing too few goods.”
Yes, we’ve had “too few goods,” due to a pandemic perfect storm — depressed U.S. oil production and manufacturing output, severe supply chain disruptions and war-like labor shortages — but that won’t endure. It was exacerbated by Russia’s invasion of Ukraine, which has radically reduced global purchases of Russian oil, grain and fertilizer and drastically diminished Ukrainian grain exports.
Meanwhile, our economy rebounded much faster than expected (due largely to the dollars pumped-in by the government and Fed), reviving demand that couldn’t be readily met.
It’s true that when our economy was blindsided by COVID, the government borrowed trillions to send stimulus money to most Americans, and — as it had after the financial crash — the Fed electronically “printed money” to buy nearly $5 trillion of government debt and mortgage securities.
But according to a Washington Post analysis, most of those dollars can’t possibly have stoked inflation — because the financial institutions the Fed paid parked over $2 trillion in their accounts at the Fed, and American households saved a big chunk of their stimulus, banking about $3 trillion. The Post quotes a former Treasury Department official: “The money supply went up, but… they’re not spending it.” In fact, money is moving through our economy more slowly than at almost any time in 65 years.
(Excerpt) Read more at msn.com ...
Wasn’t Spiekerman one of the original Ghostbusters?
Inflation can’t affect you when you don’t have a job and own nothing.
Now STFU and eat your cockroach burrito.
Walmart cottage cheese went from $1.76 to $2.58 in the past few months.
No, >= 10% Inflation is an unworkable situation for this country.
Gawd, one gets so sick of the excuses for incompetent and dishonest monetary policy. The Fed may be the prime mover but aside from a couple of legislators no one criticized the Fed except to demand more stimulus.
Economies go up and down. You can’t avoid the downturns. You can only kick them down the road, hoping you are out of office when it hits.
We need to burn the village in order to save it, apparently.
What’s scary is that most Americans are too economically illiterate to grasp this simple fact.
L
you are not wrong
Home sellers could buy down their buyers’ mortgages, converting say a 5% mortgage to a 4% mortgage, for up to say 10 years or until 4% is the market rate.
This 10% escrow could also be a 10% risk reduction for the lender, so the buyers only have to put 10% down to avoid mortgage insurance.
As soon as mortgage rates go down to 4%, the sellers might get what’s left back. If it takes two years for mortgage rates to fall, the sellers would only be out 2% of the sales price.
Part of the commissions could be utilized in a like manner.
It takes money to empty Walmart shelves across the nation.
Big money!
My neighbor Johnny the roofer contractor is still working on roofing contracts sold in 2021.
Homeowner money has been set aside and and won’t enter the economy until Johnny’s Hondurans get to the homeowners’ roofs.
In my town, restaurant workers park on the grass so customers can park on the asphalt.
No one is going to like this, but the truth is money has lost meaning. Not value. Meaning.
When Bernanke created money to cover up the reality in 2008 that capitalism had failed, likely forever, he exposed the reality that money is an imaginary substance, the value of which exists only in the minds of counterparties.
This is not a gold lecture. That also has value only in the minds of counterparties.
Money’s underpinning, when it was gold, placed the economy at the mercy of gold miner CEOs. If he didn’t want money supply to rise, he produced less gold. So don’t think a gold based money is the answer.
Frankly, there is no answer. Oil has been the source of society’s activities for over 100 yrs. It is getting hard to find and even harder to extract. 100 yrs ago you drove a horse drawn wagon with some lumber out into Oklahoma and built an oil derrick and drilled down a few hundred feet and got gushers.
Now, you have to build a 20 story offshore platform, drive it at 5 knots across the world, drill down 23,000 feet, and get flow like you got with the old horse drawn wagon.
The net systemic input of energy into The System of 120ish years is going away. There is no answer for this. The future is not bright.
Most of our new southern arrivals over 18 generally have little trouble finding employment.
There’s more oil than Mother Nature can tolerate, allegedly.
Europeans have told Russians that they have no wish to buy Russian oil.
The old wildcatters had to take their chances, now oil is found by scientific methods.
According to Milton Friedman, recession does not cure inflation. Recession is a symptom of choking off money supply, which is the actual cure.
This makes no sense. If their theory is right, where is the money coming from to pay these inflated prices? (In aggregate, purchases are totaling more than they ever have, and the extra dollars for that have to come from somewhere.)
But I’m not surprised that Musk and Bezos have a better grasp of basic economics than some random pundit (even if said pundit is a former advisor to Newt Gingrich).
And by the way, a recession isn’t worse than inflation; with inflation, you’re just putting off the problem until you eventually have a bigger recession than you would have had naturally.
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