INFLATION--FED announces 0.50% interest rate cut

Monahorns said:
When the Fed created $1 Trillion and then $2 Trillion in 2020 and 2021, that money goes to big banks. That money then gets distributed to the politically connected banks, corporations, NGOs, etc. They benefit from the money creation and spend it before the price inflation occurs.
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Are you referring to PPP money during Covid?
 
Monahorns said:
Inflation is giving the non-productive money in hand to go buy things. This isn't just people on the low end of class either. The upper class gets great benefit way more than any welfare recipient does. The welfare recipient doesn't get 100s of thousands and millions through the central bank. The welfare class gets pittances which become less valuable as more money is created out of thin air. I guarantee their payments don't keep up with inflation. I guarantee that the wealthy recipients of the new money aren't as punished by inflation.
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Yep, and this is why I say there are winners with high inflation. The country in general obviously loses, but some (including some very powerful interests) do very well. Frankly, that's why it's happens. Inflation is a choice. We don't have to have it. We decide to through policy that some interests want.

It's a little like the EITC. Superficially, poor people benefit, but the real winners are companies like Walmart and McDonald's. The poor who get it are getting an extra few grand. They like it, but it's not life-changing money. They're still poor. The companies are making billions by having their labor costs subsidized by the government. They are the real winners.
 
Chop said:
Yellen says U.S. inflation 'unacceptable' but likely to stay high

Yellen has come under fire from Republicans after admitting she was "wrong" last year in forecasting that inflation would be transitory and quickly subside. She will face more tough questions on the issue in a House Ways and Means Committee hearing on Wednesday.
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To fix it, she would have to renounce most of her prior assumptions about economics. Not gonna happen.

But she can quit her job.
 
Here's the wiggle room:

As pointed out way back in this thread, if you establish a long enough time frame, almost everything is "transitory"...
 
Garmel said:
Isn't it funny how we have so called experts in charge of our economy who don't have a basic understanding of economics?
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What really makes it tough is that they are highly credentialed, so they think they should be trusted and listened to. In reality, they are mal-educated. To borrow Reagan's comment, they know a lot that isn't so.
 
Well, housing inflation is grinding to a halt in many markets. We will likely see housing deflation in plenty of bubble markets.
 
Chop said:
Well, housing inflation is grinding to a halt in many markets. We will likely see housing deflation in plenty of bubble markets.
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'THAT'S RIGHT. I MADE HOUSING MORE AFFORDABLE.'
(in case there are any exceptionally thick lurkers out there: this is not an actual quote, just a prediction of the spin...)
 
Meanwhile, the stock market continues to slide because of inflation fears. And retirees on a fixed income are feeling the pinch - and this is not a good time to liquidate stock holding to generate income. Thank you, Joe Biden - you have really taken good care of the American people. :brickwall:
 
https://www.usnews.com/news/economy/articles/2022-06-10/inflation-soars-in-may-with-consumer-prices-up-8-6#:~:text=June 10, 2022, at 8:59 a.m.&text=Inflation worsened in May, rising,Labor Statistics reported on Friday.&text=The monthly gain was 1,an 8.3% increase in April.

Consumer price index for May, 2022 pushes upwards even more--to 8.6% annualized. This exceeded expectations, following an 8.3% increase in April.

Core inflation (strips out food and energy) rose to 6.0% annualized.

"Inflation remains stubbornly high in the United States, reflecting global food and energy shortages caused by the Russia-Ukraine conflict, as well as the high momentum of domestically-determined prices like house prices, rents, and medical care," said Bill Adams, chief economist at Comerica Bank.

One area where inflation is starting to abate is online spending. In May, online prices increased just 2.06% from a year ago, down from April’s 2.9% rise and March’s 3.6% jump, according to data collected by Adobe Analytics.

Electronic goods and apparel led the slowdown, with drops of 6.5% and 9% from year-ago levels. One category that did not decline was groceries, which rose 11.7% in May."

 
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The big miss here is this inflation is driven by two factors. Not only is massive spending a problem, but $20+ hr wages are here to stay. All costs are passed along. People think raising minimum wage helps people when all it does is make everything more expensive making minimum wage "unlivable" again. The solution is to get more people to learn a skill.
 
The Fed has no good purpose. Get rid of it now. Let the market go to the neutral rate by itself. Inflation will go way down. Historically 0. Government spending will have to come way down. Government ability to control your life will go way down.

From the article:
"But why 75? When asked during the press conference to quantify how 75 basis points is better than 50, Powell had no answer beyond saying the committee simply decided to speed up the time frame of rate increases. The standard employed for coming to this conclusion, according to Powell himself, came down to “75 [basis points] seemed like the right thing at this meeting.” Needless to say, this didn’t answer the question of what we are to expect from that additional 25 basis points.

Moreover, although many Fed watchers are now framing Fed policy as exceptionally hawkish, Powell himself stated that in his opinion, “right now our policy rate is well below neutral” and that a target rate of 1.75 is only “moderately restrictive.”"

The Fed Is Winging It: A 75 Basis-Point Hike "Seemed Like the Right Thing" | Ryan McMaken
 
The reason the fed is making 0.75 point bumps is because it waited too long to start raising the rate in the first place. Playing catch up.
 
Chop said:
The reason the fed is making 0.75 point bumps is because it waited too long to start raising the rate in the first place. Playing catch up.
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Yes and it insures a hard landing. Morons.
 
Chop said:
The reason the fed is making 0.75 point bumps is because it waited too long to start raising the rate in the first place. Playing catch up.
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And it all started to support Biden’s Covid lockdown strategy.
 
Chop said:
The reason the fed is making 0.75 point bumps is because it waited too long to start raising the rate in the first place. Playing catch up.
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OMG. The rate will have to be 10% before it has any effect on interest. Y'all keep acting like this was a big step. It's tiny.
 
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