U.S. Inflation Hits New Four-Decade High of 9.1%

https://www.wsj.com/articles/us-inflation-june-2022-consumer-price-index-11657664129

by fortran77 • 4 years ago

44 23 4 years ago

Realistically, what are the viable directions from here, and what are their outcomes?

mercy_dude2• 4 years ago

Fed can’t hike rates as fast as they need to bring down the inflation so it’s going to last till 2023 or beyond. If economy enters into recession, which there is a solid chance of, Fed will have to stop rate hikes and start back QE (like ECB) and that means inflation is here to stay. The only good thing is it will also inflate away the 33 trillion debt we have.

toomuchtodo2• 4 years ago

Benchmark rate is a blunt tool. It won't print more oil and food supply, nor can it print more housing stock (sectors where inflation is currently focused). This is where targeted fiscal policy would be most beneficial (mandating remote work where able, encouraging more rapid uptake of EVs to not be beholden to a global oil market while one of the largest suppliers is engaged in a land war and has sanctions applied to it), but that is unlikely to arrive with the current authorities of fiscal policy.

Asset price destruction is also a likely outcome, and will bring down home and equities prices, allowing for those on the margins to get into homes where prices were too high before, as well as get exposure to the stock market for wealth accumulation. This, in my humble opinion, is a desired outcome. TLDR Deflate the asset bubbles.

A light recession would be welcome for price stability, and with labor participation rate where it is at, I think the data shows some reliable indicators that unemployment won't spike when the Fed starts banging away with their rate hammer on the broader economic system. A million people, for a variety of reasons, left the labor force during the pandemic, while 10k Boomers retire per day. The US economy faces an ongoing labor shortage well into the next decade [1].

[1] https://www.youtube.com/watch?v=LI4mDQeo9eE

rendang• 4 years ago

Why would you expect inflation in a recession especially when fuel is driving a lot of the inflation and fuel demand goes down in recessions?

ab_testing• 4 years ago

I agree with you and don't understand why you are being downvoted. If the second quater GDP growth comes back negative and it proves that we are in a recession, then the fed will have to halt the interest rate hikes. That will prolong the high inflationary period.

imtringued• 4 years ago

Stop QE and do a debt brake. If you are adventurous introduce a land value tax to pay off debt.

selimthegrim• 4 years ago

Related discussion here: https://news.ycombinator.com/item?id=32081779

acd• 4 years ago

Here is a 2020 history blog post about QE quantative easing:

https://www.brookings.edu/blog/ben-bernanke/2020/01/04/the-n...

mhneu• 4 years ago

Rupert Murdoch's WSJ. Just be a little careful as Murdoch has pressured/selected editors that will spin news in the way he wants.

yucky• 4 years ago

Rupert Murdoch isn't making up the inflation numbers. They're reported by the Biden Administration. The inflation is very real.

QuadmasterXLII• 4 years ago

Useful info for guessing at the cause of this: the exchange rates to the euro, pound, and yuan are all shifting toward strong dollars and yet the real value of dollars is still plummeting.

U.S. Inflation Hits New Four-Decade High of 9.1%

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