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Powell: Fed to keep hiking rates until it controls inflation

7 Comments
By CHRISTOPHER RUGABER

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7 Comments
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The inflation should be coming down after China and Russia get their acts together and goods and commodities flow again.

0 ( +1 / -1 )

Deglobalisation could see interest rates of 10%, 15% or more. And there is no guarantee that rises will influence inflation. It is a joystick in an era of controller pads. They will just inflate the cost of loans and mortgages, spreading the pain wider.

Anyone who has locked themselves into a mortgage with a low interest rate should give themselves a pat on the back.

Folk can make money off shares going down as easily as off shares going up, so (inevitably) the wealthy will get wealthier without doing anything of social value. Everyone else suffers.

Unemployment wasn't an issue. Most of the G7 were at or under 5% pre-pandemic, which was always regarded as 'full employment'. Those who weren't working either didn't need to, didn't want to, were temperamentally unfit to, or were transitioning between careers.

Now we don't have enough staff for pretty much anything, so stuff isn't getting done. I was on hold to my bank's fraud dept. for 90 minutes last night before giving up. Stuff doesn't work any more. That's not a 'strong labour market', it's an economic train wreck. People who are simply incapable of reliably undertaking jobs are being employed by desperate employers with the inevitable results.

The markets are not 'functioning', they are now dysfunctional courtesy of nationalist politics, from Brexit to the invasion of Ukraine. The worst is yet to come.

0 ( +2 / -2 )

The inflation should be coming down after China and Russia get their acts together and goods and commodities flow again.

I don’t think the CCP and Putin were the primary cause of the persistent inflation, but good luck waiting for them to get their act together.

One Larry Summers had been warning of inflation a year back, but no one in his team wanted to listen (and now his team want to blame the CCP and Putin too, rather than listen to Summers).

there is no guarantee that rises will influence inflation

When Volcker slayed inflation, high interest rates did the trick.

The FOMC will probably have no success if they timidly raise rates to levels that are, say, still 5% below the rate of inflation.

But if they raise rates above the rate of inflation, together with decent fiscal policy to allow the supply side of economies to produce an abundance of goods and services, I’d bet that inflation will come down in a year or two thereafter.

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I don’t think the CCP and Putin were the primary cause of the persistent inflation,

One in 5 of the world's cargo container ships is stuck in port. Shanghai, one of the world's biggest ports, has been closed for a while now, Ukraine provides the world with much of its wheat and Russia with its energy and many other key natural resources. Ever stop to think what kind of impact this unprecedented situation is having on economies and prices?

Or is keeping faith in an outdated ideology more important than, um, you know, reality?

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Not sure the place you got your ideology, but inflation was up from last year, long before Putin’s murderous moves in Ukraine, and it had been still low after the first year of the pandemic.

Remember, back when Powell was saying that the inflation was just “transitory”. Or does your ideological source prefer to whitewash the ah, reality…

-1 ( +0 / -1 )

This for example, months before Putin lost his mind:

https://www.cnbc.com/amp/2021/12/13/el-erian-says-transitory-was-the-worst-inflation-call-in-the-history-of-the-fed.html

0 ( +0 / -0 )

People,it just straight up price gouging,these prices will never go down, complaining not gonna help

-1 ( +0 / -1 )

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