Inflation and a recession are now here :(

[noble cane]

Largely due to gas prices and associated transport costs. That’s a value that has nothing to do with any stimulus. (At least since refined product demand isnt substantially higher than it was before Covid)

Core inflation which excludes food and energy rose 0.7% which was above wall street’s forecast but the rate of that core rate increase is actually slowing. Hopefully that points to us moving towards an Inflection point in price increases.

People always like to separate energy costs out.. not realizing that everything hinges on energy.

Since energy is traded on a global commodities market, it is directly tied to fiscal policy and used as hedges against inflation by investors world wide.

 

[astonmartin708]

Did you read the article? He says the stimulus will cause inflation. Even mentions interest rates at 10% post stimulus. He’s talking about Wall Street not Main Street. Not a single word about the effect on consumers. Simply the inflation which will be triggered by the stimulus will be good for stocks due to much higher interest rates. He was correct about the effects.

Meanwhile, extremely tough times for the lower and middle class who are seeing the greatest reduction in terms of real income in decades.

"critical to recovery"

 

[lawpoke87]

"critical to recovery"

Of stocks.

Not one mention of the effect 10% interest rates which he believes the stimulus may cause will have on the poor and middle class. His entire rational is centered around the investing class not the working class. Read again.

 

[astonmartin708]

Of stocks.

Not one mention of the effect 10% interest rates which he believes the stimulus may cause will have on the poor and middle class. His entire rational is centered around the investing class not the working class. Read again.

Supporting the investment class long term should benefit the working class. It very well might mean higher interest rates even job losses, but the economy will be better for it than if we had stuck ourselves in a prolonged downturn related to harm that Covid caused to the investment sector.

Jeez. I sound like a Republican. Gross.

 

[aTUfan]

the road recovery starts with energy independence; again

 

[lawpoke87]

Supporting the investment class long term should benefit the working class. It very well might mean higher interest rates even job losses, but the economy will be better for it than if we had stuck ourselves in a prolonged downturn related to harm that Covid caused to the investment sector.

Jeez. I sound like a Republican. Gross.

Someone is going to have to explain to me how 10% interest rates is going to be good for the working class. Their buying power will be dramatically reduced as will their corresponding quality of life. Everyone should understand the inflation rate 10% interest rates would correspond to in 2022.

I was glad to see the head of Morgan Stanley comment on the inflationary effects of a $2T stimulus. Goes right along with what some of us have been saying for the past two years. We made this bed. Just think…Biden wanted another $2T just six months ago. Truly economic madness. Imagine what the Fed would have to now do with an additional $2T in the system.

 

[astonmartin708]

Someone is going to have to explain to me how 10% interest rates is going to be good for the working class. Their buying power will be dramatically reduced as will their corresponding quality of life. Everyone should understand the inflation rate 10% interest rates would correspond to in 2022.

I was glad to see the head of Morgan Stanley comment on the inflationary effects of a $2T stimulus. Goes right along with what some of us have been saying for the past two years. We made this bed. Just think…Biden wanted another $2T just six months ago. Truly economic madness. Imagine what the Fed would have to now do with an additional $2T in the system.

A stimulus that he asked for.…

Also, if the investment banks (or investment class) fails or Even significantly struggles, then you have a different kind of economic crisis on your hands akin to what we had in 2008. That’s why the stimulus was necessary. The inflation we can deal with. Rebuilding our entire investment economy at the same time we try to deal with Russia and China is something we can’t really do.

 

[lawpoke87]

A stimulus that he asked for.…

Also, if the investment banks (or investment class) fails or Even significantly struggles, then you have a different kind of economic crisis on your hands akin to what we had in 2008. That’s why the stimulus was necessary. The inflation we can deal with. Rebuilding our entire investment economy at the same time we try to deal with Russia and China is something we can’t really do.

So you’re now arguing the stimulus was necessary to help the investment banks and supporting the same? I would argue the greatest risk to investment banks are collapsing real estate values. We’ve seen it again and again. If interest rates hit 10% you will see just that. Very short sighted argument. In any event, such interest rates and corresponding inflation is is obviously very bad for the working class. The smart guys apparently knew the stimulus would cause run away inflation and supported it any way to protect their stock holdings. Screw the working people. I’m frankly shocked you’re on the investment banker side here. They don’t give a damn about us and never have.

Crazy that Biden wanted an additional $2T of stimulus even after the effects of the prior money injection was being seen. Do we have Manchin to thank that we don’t have a total economic collapse?

 

[astonmartin708]

So you’re now arguing the stimulus was necessary to help the investment banks and supporting the same? I would argue the greatest risk to investment banks are collapsing real estate values. We’ve seen it again and again. If interest rates hit 10% you will see just that. Very short sighted argument. In any event, such interest rates and corresponding inflation is is obviously very bad for the working class. The smart guys apparently knew the stimulus would cause run away inflation and supported it any way to protect their stock holdings. Screw the working people. I’m frankly shocked you’re on the investment banker side here. They don’t give a damn about us and never have.

Crazy that Biden wanted an additional $2T of stimulus even after the effects of the prior money injection was being seen. Do we have Manchin to thank that we don’t have a total economic collapse?

So why would an investment banker ask for stimulus, acknowledging an uptick in inflation (and interest rates) would be the outcome, if he thought it would be bad for his industry?

 

[lawpoke87]

So why would an investment banker ask for stimulus, acknowledging an uptick in inflation (and interest rates) would be the outcome, if he thought it would be bad for his industry?

You do understand that banks make more money when interest rates are high…right ? He wanted higher rates because banks benefit by a higher interest rate environment. Again….he doesn’t give a damn about you and I.

 

[astonmartin708]

You do understand that banks make more money when interest rates are high…right ? He wanted higher rates because banks benefit by a higher interest rate environment. Again….he doesn’t give a damn about you and I.

I concur, but what I’m saying is that the banks can survive a housing downturn (they’re already reallocating profits… saving for mortgage failures) they’ll always get theirs even when the volume of loans they are backing is low.

What I’m saying is that if they expected a housing crash to hurt them after the stimulus raised inflation, then why would they ask for the stimulus? They would benefit in the short term but be detrimented in the long term. There has to be another reason they wanted it...

 

[lawpoke87]

I concur, but what I’m saying is that the banks can survive a housing downturn (they’re already reallocating profits… saving for mortgage failures) they’ll always get theirs even when the volume of loans they are backing is low.

What I’m saying is that if they expected a housing crash to hurt them after the stimulus raised inflation, then why would they ask for the stimulus? They would benefit in the short term but be detrimented in the long term. There has to be another reason they wanted it...

I would assume they believe the growth in the spread between their cost of money and what they can charge borrowers as interest rates rise outweighs the risks of a repeat of 08. Mortgage back securities are extremely complicated. I know more than most but I still don’t fully understand the measures the investment banks are doing to ensure they don’t get stuck with a bunch of non performing paper or more risky the derivatives associated with the same.

 

[watu05]

I concur, but what I’m saying is that the banks can survive a housing downturn (they’re already reallocating profits… saving for mortgage failures) they’ll always get theirs even when the volume of loans they are backing is low.

What I’m saying is that if they expected a housing crash to hurt them after the stimulus raised inflation, then why would they ask for the stimulus? They would benefit in the short term but be detrimented in the long term. There has to be another reason they wanted it...

Short term concerns always outweigh long term concerns, especially in US politics and economics.

 

[lawpoke87]

I’ve talked about what would happen with our debt service costs if interest rates rose for years on this board. Now we are here. Oh….43% of all US debt comes due in the next two years. If rates continue to increase a reduction in spending will be required due to increase debt service costs. Why the treasury didn’t convert more of our debt to long term to take advantage of historically low interest rates is beyond me.

Federal Debt When Interest Rates Rise

When interest rates rise, how much will the interest cost of the federal debt increase? The Federal Reserve is increasingly talking about tapering its long-term securities purchases. After that they are likely to raise short-term interest rates, pushing up U.S. interest expense.

www.forbes.com

 

[aTUfan]

maybe our gov should do like our family is doing; pay our bills first, no vacation, no eat out, no outside donations, no new loans, no new debt, no cosigning, . . .

 

[URedskin54]

Your Nobel prize winner

 

[lawpoke87]

Same guy who said the internet was a passing fad back in the day. We all saw issue with supply chains early on with companies shut down and no one working. Well….except for this guy.

 

[watu05]

Most people expected Biden to rescind the Trump China tariffs by now, but anything that hints of 'favoring' China these days is a non starter. Unfortunately these tariffs are a regressive tax that only helps fuel inflation that hurts the US. But the US government can use the revenue.

Importers paid $32 bln in U.S. tariffs on China tech imports-industry report

Importers of technology products from China paid over $32 billion worth of tariffs imposed by President Donald Trump between mid-2018 to the end of 2021, a new trade group report showed on Tuesday as the Biden administration continues to deliberate over whether to remove some duties.

www.reuters.com

 

[lawpoke87]

Joe said we aren’t in a recession. Numbers come out Thursday. Assume he has some insight?

 

[URedskin54]

Joe said we aren’t in a recession. Numbers come out Thursday. Assume he has some insight?

View embedded media

 

[lawpoke87]

That won’t fly. The definition of a recession has been around for decades

 

[lawpoke87]

Figure I would reflect back to the comments from our Treasury Secretary on May 4, 2021 regarding inflation. I started this thread 8 days later. She still has her job btw despite knowing less than a dumb lawyer on the crossfire board

Yellen sees no inflation problem after rate hike comments roil Wall Street

U.S. Treasury Secretary Janet Yellen said on Tuesday she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as President Joe Biden's spending plans boost growth.

www.reuters.com

 

[HuffyCane]

Figure I would reflect back to the comments from our Treasury Secretary on May 2, 2021 regarding inflation. I started this thread 8 days later. She still has her job btw despite knowing less than a dumb lawyer on the crossfire board

Yellen sees no inflation problem after rate hike comments roil Wall Street

U.S. Treasury Secretary Janet Yellen said on Tuesday she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as President Joe Biden's spending plans boost growth.

www.reuters.com

The Baghdad Bob act out of the White House really needs to stop.

 

[aTUfan]

That won’t fly. The definition of a recession has been around for decades

its a radical right wing conspiracy theory.

 

[URedskin54]

The palace guards are earning their pay

 

[lawpoke87]

CNN….Recessions are racist. Can anyone imagine we would be where we are now twenty years ago? Politicians changing the meaning of recessions. The AP being their mouthpiece. CNN playing the race card….on a recession. We are lost.

Who decides if the US is in a recession? Eight economists you've never heard of

In the United States, the economy isn't broadly and officially considered to be in a recession until a relatively unknown group of eight economists says so.

amp.cnn.com

 

[lawpoke87]

GDP -0.9%. Welcome to the recession of 2022. Was hoping Joe knew what he was talking about on Tuesday when he stated we would not see a recession when 2nd quarter GDP came out. He did not. So much for the soft landing. Why Yellen still have a job is beyond me.

 

[lawpoke87]

Credit card balances up 30% YOY. Assume we’re about to start seeing defaults.

Inflation begins to strain finances of young, low-income Americans

As high inflation forces Americans to spend more on gas and bills, young and low-income consumers are starting to feel financial pressure. Generation Z consumers and those with low credit scores are falling behind on credit card and auto loan bills and accumulating credit card debt at a pace...

www.yahoo.com

 

[astonmartin708]

I just think the boogeyman finger pointing on recession is reactionary. We’re not the only developed country in the world that has been having inflation, shrinking GDP’s etc…

 

[watu05]

Raising interest rates to a fraction of what inflation is won't get us very far. But ratcheting back on money supply will eventually slow things down. It take's longer though. Jamie Diamond thinks 6 months before it really bites.

 

[lawpoke87]

Raising interest rates to a fraction of what inflation is won't get us very far. But ratcheting back on money supply will eventually slow things down. It take's longer though. Jamie Diamond thinks 6 months before it really bites.

We’ve already seen two consecutive quarters of negative GDP growth. Raising the fed fund rate obviously translates into a reduction of the money supply. I believe we’re at a point where we have to be careful of overreacting. Interest rates will eventual come down in a recessionary period. The ten year treasury yield is down over a 1/2 point in the last 30 days. The market is pricing in inflation coming down. Time for caution from the fed. Are you referring to Jamie Dimon ?

 

[aTUfan]

congress just passed the inflation reduction act. Why stop at a few billion for reduction? they should have made it bigger to eliminate inflation all together.

i'm going to follow the gov lead. when i get bills i cant pay, i'll just go spend more.

why is the dems answer to all problem to just throw money at it and sdd more gov reliance

 

[lawpoke87]

Have no words.

 

[URedskin54]

In a narrow sense he’s correct. Month to month inflation was flat. Year over year it was still very high.

 

[lawpoke87]

Probably the most important chart

 

[watu05]

The Fed, Money Supply and inflation.

M2 Money Supply Growth vs. Inflation - Updated Chart | Longtermtrends

The M2 Money Supply is a measure for the amount of currency in circulation. This chart plots the yearly M2 Growth Rate and the Inflation Rate.

www.longtermtrends.net

 

[aTUfan]

congress passed the inflation reduction act, even thought economists say it will do the opposite. Why is the Democrats only solution to any issue, just throw money at it?

 

[watu05]

13-Week Money Supply Growth Hits Multi-Decade Low

Money Supply growth was positive in July at $42B but sits well below the $161B seen last year. As the chart below shows, Money Supply growth has collapsed since February. Last year started with 5 straight months above $200B whereas 2022 has only seen one month above $100B and that was January.

schiffgold.com

 

[lawpoke87]

Inflation rises despite a substantial drop on gasoline prices. Somewhat surprising and obviously not good news. Inflation is “transitory” so at least there’s that

2-year Treasury yield rockets above 3.79%, highest since 2007

U.S. Treasury yields spiked on Tuesday after a hot August inflation report.

www.cnbc.com

 

[Gmoney4WW]

Inflation rises despite a substantial drop on gasoline prices. Somewhat surprising and obviously not good news. Inflation is “transitory” so at least there’s that

2-year Treasury yield rockets above 3.79%, highest since 2007

U.S. Treasury yields spiked on Tuesday after a hot August inflation report.

www.cnbc.com

It takes time for everything else to catch up with the fuel prices.