Posted on 02/11/2023 7:55:43 AM PST by CFW
Inflation is finally starting to fall, but it would be "dangerous" to assume the problem is fully behind the U.S. economy.
That's according to top economist Mohamed El-Erian, who warned in an op-ed for Project Syndicate this week that there is a 75% chance of inflation either remaining abnormally high, or rebounding and spiking again this year.
The new year began with a bout of optimism that the painful chapter of high inflation in the U.S. was finally coming to a close after the Labor Department reported that the consumer price index fell 0.1% in the month of December and rose just 6.5% from the previous year, the slowest pace since 2021.
(Excerpt) Read more at foxbusiness.com ...
The House Republicans will have to be adults and slam the brakes.
Of course it does. Much of the “COVID Relief money” (joke) has yet to be spent. Once it gets into the economy M2 will shoot up again and inflation will be off and running.
Indeed inflation is finally starting to fall it’s at 5.5% and cost of things up by 14% true left math 9x9 = 0.
In spite of his name, Mohamed El-Erian is a serious man who is worth listening to.
Yes.
I don’t doubt this is true but does any “economist” have a great track record?
What most folks (including economists) do not understand is that inflation is like a rock thrown in a small pond.
The ripples don’t just stop on a dime—they continue for a long time as the original impact creates second, third, fourth order effects that can last for many years.
Each vendor in the supply chain tries to pass on their higher costs—in a seemingly endless doom loop.
The only way to “stop” the ripples in a full blown depression.
“Slowing them down” requires a serious recession.
Otherwise the ripples just keep on flowing....
Sure...high inflation means things are going great. Everyone has more money to buy more stuff.
/bidenlogic.
And the “inflation reduction act” has just started to do its damage. These ripples will be felt for a long time.
Couple this with lots of debt, all around, which can be destabilizing.
(I'm not an economist, corrections invited.)
Nothing will change until the oceans of fiat money being created is stopped and reversed.
Of course the “solution” will be a shiny new CBDC (Central Bank Digital Currency), still backed by nothing, but with the added benefit of no transactional privacy at all.
Good points—the “ripples” can easily create a “chaos effect” where businesses cannot accurately predict the future.
When risk is higher then they must get higher returns to offset that risk.
If the market cannot support their higher prices then then many businesses will fail—and it is chaotic affecting random sectors at random times.
“Slowing them down” requires
changing the definition of inflation”
Just got my semi-annual auto insurance bill. It has increased by about $75 over the $350 in 2019. Same vehicle, 5 years older.
Natural gas for heating/water heater is 3X over what is was 2 years ago.
My preferred store brand of coffee has increased from 23-cents per oz to 43-cents per oz in the last 2 years.
When I am in the grocery store, there are many items I check the price on and walk on by.
I know someone whose business is primarily to help banks deal with CRA/HMDA regulators. The regulators are completely out of control, and are making impossible demands. These banks are begging him for help, and aren’t even asking what the fee is anymore. Great for his business, bad for the country.
One such bank is 150+ years old and is in a lightly populated part of the northeast. They happen to have ONE branch on the edge of a medium to large post-industrial city. Based on that, the regulators want this bank to include the entire messed-up city in the assessment area, which will immediately put them well out of compliance.
Think of things like that happening in hundreds of agencies in every corner of activity, and more inflation is inevitable.
“Just got my semi-annual auto insurance bill. It has increased by about $75 over the $350 in 2019. Same vehicle, 5 years older.”
++++++
Every single monthly expense in my budget has increased. My cell phone plan went up by $10 per month, as did my house phone. It doesn’t sound like much, but add in the increase in the electricity bill, the car insurance, the grocery costs, etc. and it starts to add up to hundreds per month.
I’ve read that car repossessions are at the level they were in 2009, and companies can’t hire enough people to do all the repossessions that are scheduled. At the price of both new and used cars, I hope mine lasts a few more years. However, once those repossessed cars hit the market, the used car prices may come down a bit.
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