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    Default Re: Interest rates in the coming months

    Quote Originally Posted by Eric Stoner View Post
    I am literally on a tightrope with this one but historically Congress LOVES inflation. A lot of money has to be borrowed to cover the shortfall between revenue and spending but it is paid back in dollars that are worth a lot less thanks to inflation.
    That's the case with regular treasury bonds, but not with inflation-adjusted ones. Also, when inflation increases, the interest rates on treasury bonds being issued also increases.

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    Default Re: Interest rates in the coming months

    ^^^ Yes, but the dollars used to pay the interest on those bonds are worth less than the dollars that were used to purchase those bonds.
    There is also "bracket creep " as taxpayers are pushed into higher tax brackets without any real increase in their actual spending power.
    Stand by for the return of "The Misery Index ".

    Some good news : Lumber prices are going down as supply increases. Ditto for oil as OPEC has decided to increase production. Let's see if it lasts.
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    Default Re: Interest rates in the coming months

    Quote Originally Posted by Eric Stoner View Post
    Stand by for the return of "The Misery Index ".
    Most people here were not alive during the inflation spikes of the 70s and early 80s. I was only a young lad myself, but I remember. My parents were working class folks and we very much felt the impacts.

    This is why, since the mid 80s, the number one mission of the Fed was to control inflation by getting ahead of it, but this Fed has completely abandoned that approach. Today they no longer want to hear that MV=PQ is as valid now as it ever was and in fact is playing out almost exactly as expected. Instead they continue to help pump endless M (money) into the economy with the belief that they will be bailed out by increasing Q (quantities) once supply chain constraints erode so that P (prices) will stabilize. IMHO they are dramatically under-estimating the long-term impact not only all of the money already sloshing around in the system, but the trillions in future additional spending that is being contemplated.

    We are already seeing big increases in the prices of groceries and basic goods. Just wait until basic proteins like beef are completely out of reach for many and even certain cuts of chicken become a luxury. Or when working class folks go to renew their leases once eviction moratoriums are done and find their rents jacked up by 10-20%. Or when people can't afford to replace their sneakers or other clothes. We have forgotten how much high price inflation hurts the working class because it has been so long since we've had it, but IMHO those lessons may soon be back.

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    Default Re: Interest rates in the coming months

    The main reason for current inflation, as well as the inflation of the 1970s was that supply could not keep up with demand. When that happens, prices increase. There is currently a microchip shortage, which has had a major impact on the supply of automobiles. There has been a pent up demand for travel, which has been pushing up the price of airline tickets and hotel and lodge stays.

    From:
    https://www.cnbc.com/2021/07/13/surg...inflation.html
    Excluding price increases in used cars, new cars, lodging and transportation services, the core CPI would have risen only by 0.18% month over month, which in normal times would be a relatively healthy increase in prices, according to Bank of America.
    The inflation of the 1970s was also caused by supply shortages. The Arab oil embargo of 1973 resulted in the price of gas close to quadrupling from 1973 to 1974. That would be like the price of gas increasing to $11 or $12 a gallon today. There was also a major grain shortage, which resulted in significant increases in the price of food. In 1972 there was a massive drought in the Soviet Union, which greatly reduced their food output, which led to the Soviet Union buying massive amounts of grain from the US, and resulted in major increases in the price of food. Besides that, there was a major population increase in Europe and the US, as a result of the baby boom following World War 2. This greatly increased the demand for products, which led to prices going up. In addition to all of this, Nixon implement wage and price controls, which led to pent up demand and major price increases, once the controls were lifted. All of these factors causing the inflation of the 1970s, are not occurring today.
    Last edited by eagle2; 07-24-2021 at 01:35 PM.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    The main reason for current inflation, as well as the inflation of the 1970s was that supply could not keep up with demand. When that happens, prices increase. There is currently a microchip shortage, which has had a major impact on the supply of automobiles. There has been a pent up demand for travel, which has been pushing up the price of airline tickets and hotel and lodge stays.

    From:
    https://www.cnbc.com/2021/07/13/surg...inflation.html


    The inflation of the 1970s was also caused by supply shortages. The Arab oil embargo of 1973 resulted in the price of gas close to quadrupling from 1973 to 1974. That would be like the price of gas increasing to $11 or $12 a gallon today. There was also a major grain shortage, which resulted in significant increases in the price of food. In 1972 there was a massive drought in the Soviet Union, which greatly reduced their food output, which led to the Soviet Union buying massive amounts of grain from the US, and resulted in major increases in the price of food. Besides that, there was a major population increase in Europe and the US, as a result of the baby boom following World War 2. This greatly increased the demand for products, which led to prices going up. In addition to all of this, Nixon implement wage and price controls, which led to pent up demand and major price increases, once the controls were lifted. All of these factors causing the inflation of the 1970s, are not occurring today.
    There's more than one way to create inflation. If you run the printing presses long enough, you get inflation. Just about every country in the world that ever had runaway inflation knows that lesson all too well. The jump in housing prices, very much ignored in your article, is one of the biggest current concerns.

    MV=PQ

    Slosh around enough money in the system (M) and people keep spending it at the same clip (V) then prices (P) and or quantities (Q) have to rise. Since quantities rarely keep up in response to demand spikes, prices inevitably rise.

    The housing market is a textbook exhibit. The Fed is keeping mortgage rates artificially low by depressing the interest rates and gobbling up 40 billion per month in mortgage bonds. The painfully predictable result is higher mortgage activity and, since housing supplies cannot rise easily in response, higher housing prices.

    We also have hundreds of billions stimulus money already sloshing around in the system and potentially trillions more coming down the pike. What happens when all that M hits the hands of consumers is pretty predictable, especially when done in tandem with the Fed gobbling up $80 billion per month in general treasuries AND continuing to make borrowed money artificially cheap. This will impact a variety of sectors.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    The main reason for current inflation, as well as the inflation of the 1970s was that supply could not keep up with demand. When that happens, prices increase. There is currently a microchip shortage, which has had a major impact on the supply of automobiles. There has been a pent up demand for travel, which has been pushing up the price of airline tickets and hotel and lodge stays.

    From:
    https://www.cnbc.com/2021/07/13/surg...inflation.html


    The inflation of the 1970s was also caused by supply shortages. The Arab oil embargo of 1973 resulted in the price of gas close to quadrupling from 1973 to 1974. That would be like the price of gas increasing to $11 or $12 a gallon today. There was also a major grain shortage, which resulted in significant increases in the price of food. In 1972 there was a massive drought in the Soviet Union, which greatly reduced their food output, which led to the Soviet Union buying massive amounts of grain from the US, and resulted in major increases in the price of food. Besides that, there was a major population increase in Europe and the US, as a result of the baby boom following World War 2. This greatly increased the demand for products, which led to prices going up. In addition to all of this, Nixon implement wage and price controls, which led to pent up demand and major price increases, once the controls were lifted. All of these factors causing the inflation of the 1970s, are not occurring today.
    Oh boy ! This is a toughie to respond to while avoiding politics. What you say is true but breathtakingly incomplete. It totally ignores Nixon taking us off the gold standard ( in isolation, not a bad thing but at the time destined to increase inflationary pressure , which it did ). It also takes no heed of the idiotic policies of Arthur Burns at the Fed. Rather than get lost in the weeds, suffice to say that he permitted M1 and M2 ( they didn't really track M3 back then ) to go up in fits and starts with a fixation on interest rates and not the overall money supply. It eventually resulted in double digit inflation and double digit interest rates by the end of the decade. Remember the "Prime Interest " rate ? Something you almost never hear about these days. One reason Nixon gets an "F" in economics from me was his imposition of wage and price controls. How the hell he did it without Congressional approval or any court challenges is best left for another day I suppose. Anyway , he compounded the pain by lifting price controls first and then wage controls. As usual with artificial manipulation of economic forces the government got it wrong and we all had to pay the price. It took years for basic equilibrium to be restored.

    Volcker came in as Fed Chairman in 1979 and crudely but effectively brought inflation under control mostly by raising interest rates which gave us a two year recession that was deep and painful.

    You are also correct that there was a lot of pent up demand but that was actually seen much more in the early and mid 1980's when for instance the average age of the American car was almost 10 years old. Why ? Because car loans cost as much as 20% in interest charges. When rates came down there was an explosion of new car buying among other consumer spending.

    With the Soviet grain purchases we had a dimwit named Earl Butz as Agriculture Secretary ( remember him ? ) who specialized in bad jokes and other groaners. Among other things he didn't give farmers enough flexibility to increase grain and other production until it was too late. At the time, Federal agricultural policy was fixated on price and supply to guarantee high farm incomes for um , er , oh dear !, ( whispering ) political reasons to secure votes in the Midwest and Farm Belt. We had a meat shortage ; a paper shortage and a milk and butter shortage. How many people got heart disease by switching to partially hydrogenated fats i.e. margarine ? As grain prices went up the Soviets actually offered to sell us back our own grain ! Carter actually tried to bring some sanity to farm policy with at least some consideration for consumers with mixed results.

    A reason the Arab Oil Embargo and follow up price increases had such an impact were Federal policies that limited domestic supply. I can still remember Carter sitting in the White House wearing a sweater telling everyone to lower their thermostats during a record setting cold winter ! Remember the Spot Oil Market and folks having conniptions when prices hit 30 and then $40 a barrel ? Increased supply and liberalized drilling under Reagan and Bush The Brighter led to lower prices. Reagan deregulated oil and gas and there suddenly was plenty of both. In real terms we had our best oil and gas prices under Clinton when domestic drilling coupled with OPEC and Russia producing at full capacity led to a worldwide glut. In 1998 gas averaged less than $1 a gallon.

    Correct me if I am mistaken Eagle but from your posts it seems that you think supply and demand are the only economic forces at play. That is not always the case. The Soviets in the 70's had money and consumer demand with very limited supply but zero inflation. Yes, yes there was a "black market".

    Today we have "New Monetary Theory " vs. classic Monetarism and "you know who " in the White House trying to tell us that multi-trillion dollar deficits will not be inflationary ? That they will be "anti-inflation" ! While trying to avoid any political argument does anyone know or understand just how that is supposed to work ? Rather than argue the "whys and wherefores" can anyone point to a single historical example where massive borrowing and massive government spending resulted in genuine economic growth without runaway inflation ?

    More to the point, why are these temporary blockages and shortages in the supply chain having such a disparate impact on prices compared to past bottlenecks and shortages ? What is different now compared to then ? Rick and I are arguing that it is, in large part, too much easy cash . Too much money chasing too few goods and services.

    Why are labor costs going up ( where employers can find someone to take the job ) ? Why are so many jobs going begging ? Depending on who you talk to there are anywhere from 4 to 5 million jobs with no takers.
    Last edited by Eric Stoner; 07-26-2021 at 11:40 AM.
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    Default Re: Interest rates in the coming months

    Quote Originally Posted by rickdugan View Post
    The housing market is a textbook exhibit. The Fed is keeping mortgage rates artificially low by depressing the interest rates and gobbling up 40 billion per month in mortgage bonds. The painfully predictable result is higher mortgage activity and, since housing supplies cannot rise easily in response, higher housing prices.
    The main reason for the increase in housing cost, is supply is down. There was a dramatic decline in new construction 2nd qtr 2020.



    As you said, housing supplies cannot rise easily, so it's going to take time to make up for the drop in new construction during the pandemic. There's no easy or quick fix. Raising interest rates could potentially bring the price of houses down, but it would increase the amount of interest home buyers would have to pay on their mortgage, so either way, it's going to be more costly to buy a house if you're going to finance it.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by Eric Stoner View Post
    Correct me if I am mistaken Eagle but from your posts it seems that you think supply and demand are the only economic forces at play. That is not always the case. The Soviets in the 70's had money and consumer demand with very limited supply but zero inflation. Yes, yes there was a "black market".
    In the Soviet Union, prices were set by the government, not the market. If demand for a product exceeded the supply, instead of raising the price, the government would just ration the product, and people would wait in long lines to get it.

    Quote Originally Posted by Eric Stoner View Post
    More to the point, why are these temporary blockages and shortages in the supply chain having such a disparate impact on prices compared to past bottlenecks and shortages ? What is different now compared to then ? Rick and I are arguing that it is, in large part, too much easy cash . Too much money chasing too few goods and services.
    Because the shortages and supply chain issues we're having now, are far worse than anything we've had in the past, except perhaps in the 1970s during the oil embargo.

    Quote Originally Posted by Eric Stoner View Post
    Why are labor costs going up ( where employers can find someone to take the job ) ? Why are so many jobs going begging ? Depending on who you talk to there are anywhere from 4 to 5 million jobs with no takers.
    There were approximately 800,000 jobs created in June. If this trend continues, a lot of the open positions will eventually be filled.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    In the Soviet Union, prices were set by the government, not the market. If demand for a product exceeded the supply, instead of raising the price, the government would just ration the product, and people would wait in long lines to get it.



    Because the shortages and supply chain issues we're having now, are far worse than anything we've had in the past, except perhaps in the 1970s during the oil embargo.



    There were approximately 800,000 jobs created in June. If this trend continues, a lot of the open positions will eventually be filled.
    Give yourself an A+ on the Soviet economy lol.

    Are they ? We had shortages of everything during W.W. II . But we also had rationing and price controls. We had shortages of a lot of things after W.W. II as the economy switched gears from wartime to peacetime. We had some inflation and a LOT of unemployment which didn't finish finding any real stability until after LBJ got JFK's Tax Cuts passed.

    Will they ? Won't be easy when folks can still make the same money or close to it by staying home and collecting benefits. Including the new Child Care Tax Credit. Which btw, will put additional pressure on housing prices. Unemployment actually crept up from May to June from 5.8% to 5.9.

    Care to take a stab at my other questions ?
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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    The main reason for the increase in housing cost, is supply is down. There was a dramatic decline in new construction 2nd qtr 2020.



    As you said, housing supplies cannot rise easily, so it's going to take time to make up for the drop in new construction during the pandemic. There's no easy or quick fix. Raising interest rates could potentially bring the price of houses down, but it would increase the amount of interest home buyers would have to pay on their mortgage, so either way, it's going to be more costly to buy a house if you're going to finance it.
    And what about the effect of all the extra money on housing prices ? Every analyst I have seen has said that home prices are inflated , in part , because of loose Fed policy AND Federal handouts. Demand exceeding supply is certainly a big part of it but it is not the whole story.
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    Default Re: Interest rates in the coming months

    I think your problem is that you're focusing too much on the money supply and interest rates, rather than the supply problem. If there are 1/2 million Americans who want to buy a house and/or a car, but aren't able to, what difference does it make if the reason why, is because the price is too high or the interest rate is too high? The only practical solution to the high price of houses and vehicles, is too build more houses and vehicles. If we were at full employment, then it would make sense to raise interest rates and/or decrease the money supply, but we currently have a lot of excess capacity in the economy. The unemployment rate is close to 6%. Building more houses and cars would both help solve the supply problem we're having, and the unemployment problem.
    Last edited by eagle2; 07-27-2021 at 11:12 PM.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    I think your problem is that you're focusing too much on the money supply and interest rates, rather than the supply problem. If there are 1/2 million Americans who want to buy a house and/or a car, but aren't able to, what difference does it make if the reason why, is because the price is too high or the interest rate is too high? The only practical solution to the high price of houses and vehicles, is too build more houses and vehicles. If we were at full employment, then it would make sense to raise interest rates and/or decrease the money supply, but we currently have a lot of excess capacity in the economy. The unemployment rate is close to 6%. Building more houses and cars would both help solve the supply problem we're having, and the unemployment problem.
    My "problem " ? And in another thread you accused me of being condescending ?

    Why have home prices gone up so much, so fast ? In Florida it is clearly from increased demand generated by an influx of people leaving high tax Blue states. And excess money printed by the Fed available at artificially low interest rates is definitely having an effect on demand. Btw, as I noted previously , lumber prices have been going down. Hopefully housing starts will start going up. It would also help if employers could fill all their openings. It's not just the skilled trades but truck drivers to get materials and equipment to job sites ; warehouse workers ; sawmill workers etc. etc.

    We could be and should at or near full employment. I join in arguing that we are not because the incentives have been skewed by government policy. If people can make the same money by staying home than they could by working, why would they get a job ? Or collect the benefits and work somewhere off the books ? Depending on who is doing the measuring and counting we have anywhere from 4 to 6 million jobs that are currently unfilled. We are 25% short on truck drivers alone. Many restaurants remain half open because they just don't have the staff. Something I have personally experienced several times in New Jersey and New York. I had to wait for a table while the restaurant was HALF full ! Both states have extended unemployment benefits. Florida opted out and the restaurants are packed and running at full capacity.
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    Default Re: Interest rates in the coming months

    Okay. Perhaps I could have worded it better, but raising interest rates and tightening the money supply isn't going to solve the problem for people who want to buy a house, but are currently unable to do so. Who said Florida restaurants are operating at full capacity?

    https://abc-7.com/news/2021/07/09/se...-back-to-work/

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    Okay. Perhaps I could have worded it better, but raising interest rates and tightening the money supply isn't going to solve the problem for people who want to buy a house, but are currently unable to do so. Who said Florida restaurants are operating at full capacity?

    https://abc-7.com/news/2021/07/09/se...-back-to-work/
    I was focused on inflation caused in part by the ballooning of the money supply. Which btw can be brought back to sanity without raising rates. In fact I have long argued that the Fed should let the markets set rates.

    The Florida restaurants I was in (from SoBe up to Delray ) were all packed and fully staffed.

    The N.J. and N.Y. restaurants I referenced are all known for great , not good, GREAT tips so why don't you take a whack at why they are still short -staffed ?
    Last edited by Eric Stoner; 07-29-2021 at 08:54 AM.
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    Default Re: Interest rates in the coming months

    According to the article, a lot of restaurants in Florida are short of staff.

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    Default Re: Interest rates in the coming months

    YOUR article looked at two towns both on the Gulf Coast. I was talking about Dade and Broward Counties on the Atlantic Coast. And several well known and popular restaurants in Manhattan and on the Jersey Shore.


    In Florida, DeSantis cut off the enhanced Unemployment benefit two months early. With a resultant drop in unemployment.
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    Default Re: Interest rates in the coming months

    Why are there 25 states with lower unemployment than Florida? Why are Florida restaurants on the Gulf Coast having trouble finding staff?

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    Default Re: Interest rates in the coming months

    The unemployment rate is a lagging indicator. Let's see where Florida ranks a few months from now.

    According to the BLS Florida had the largest job gains of any state for June ,2021 - 81,300.

    The following states all have extended unemployment incentives NOT to work and all have unemployment rates higher than Florida : California, Illinois , Connecticut , N.Y. , N.J., Arizona, Nevada and Pennsylvania.

    Florida's economy is heavily dependent on tourism which is still getting up off the floor after the Covid lockdowns.

    I had my own observations from three recent trips to So Fla. I did not visit the Gulf Coast and do not know why employers ( according to you ) are having trouble finding employees.
    Last edited by Eric Stoner; 08-02-2021 at 11:34 AM.
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    Default Re: Interest rates in the coming months

    Adjusted for population, AZ and NV had larger job gains than Florida.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    Adjusted for population, AZ and NV had larger job gains than Florida.
    Nevada's unemployment rate is 7.8 %. One of the highest in the country. Arizona's is 6.8 %. Florida's is 5%.

    All 3 have comparable labor force participation rates ( 77.5 , 74.3 and 75.6 % ) but the BLS only counts people between the ages of 20 and 64. Florida has a LOT of people over age 64 working at least part time. To get max Social Security benefits you have to wait until at least age 68 and you get the most by retiring at age 70.
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    Default Re: Interest rates in the coming months

    Which measurement are you going to go by? When you talked about Florida's unemployment rate, I mentioned it is higher than 25 other states, and you switched to talking about job creation in FL. When I pointed out that AZ and NV created more jobs than FL, when adjusted for population size, you then go back to unemployment.

    By practically every measurement, the US economy is doing great. We've now had two consecutive quarters where GDP growth exceeded 6%. Over 800,000 jobs were created in June. Wages increased at a rate of more than 10% for three months in row. Do you really think the economy would be doing better if interest rates were higher and government wasn't giving out stimulus checks?

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    Which measurement are you going to go by? When you talked about Florida's unemployment rate, I mentioned it is higher than 25 other states, and you switched to talking about job creation in FL. When I pointed out that AZ and NV created more jobs than FL, when adjusted for population size, you then go back to unemployment.

    By practically every measurement, the US economy is doing great. We've now had two consecutive quarters where GDP growth exceeded 6%. Over 800,000 jobs were created in June. Wages increased at a rate of more than 10% for three months in row. Do you really think the economy would be doing better if interest rates were higher and government wasn't giving out stimulus checks?
    Yes I do.
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    Default Re: Interest rates in the coming months

    It's been decades since we've had 2 consecutive quarters of GDP growth exceeding 6%, so I think that's unlikely. Also, the last time the Fed increased the money supply, your prediction of inflation turned out to be wrong.

    From 2009:

    Quote Originally Posted by Eric Stoner View Post
    The Fed and the Treasury are two totally different things. The Treasury collects and doles out Federal Government funds. The Fed prints the money; holds accounts for major banks; lends those banks money; buys and sells U.S. Government bonds and other securities.

    We are not experiencing hyperinflation ( 100 % ; 50 % or even 20% ) and inflation has not struck. Yet. But if you add up all the money that has been printed and borrowed in the last year, there is an inflation piper that MUST be paid somewhere down the line. Inflation is caused by too much money chasing too few goods. The Fed is creating the money and industry is not creating the goods.
    The inflation that you predicted never materialized. I think you have money confused with demand. Inflation is caused by too much demand chasing too few goods. It doesn't matter how much the Fed increases the money supply. If consumers aren't buying, prices won't increase. This isn't hypothetical. It's exactly what happened in 2009 - 2010.

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    Default Re: Interest rates in the coming months

    Quote Originally Posted by eagle2 View Post
    It's been decades since we've had 2 consecutive quarters of GDP growth exceeding 6%, so I think that's unlikely. Also, the last time the Fed increased the money supply, your prediction of inflation turned out to be wrong.

    From 2009:



    The inflation that you predicted never materialized. I think you have money confused with demand. Inflation is caused by too much demand chasing too few goods. It doesn't matter how much the Fed increases the money supply. If consumers aren't buying, prices won't increase. This isn't hypothetical. It's exactly what happened in 2009 - 2010.
    True BUT you ignore productivity increases despite the sluggish growth. And the deficits while large then are but a fraction of what they are now. More importantly the asset purchases by the Fed THEN are a small fraction of what they are doing now.

    We will see. At present the Fed and the Government are acting like someone who took on a big mortgage , a luxury car loan, financed a cabin cruiser and is maxing out on all their credit cards. Yes, for a while there will be a lot of spending and consumption. There will be money put into the economy. Until the bills start coming due and a huge chunk of the monthly budget goes just to pay interest on the debt that was accumulated. I have looked at the out year numbers and they are not pretty. We do NOT ( as some silly folks say ) owe the money to ourselves but to China , other sovereign wealth funds and large institutions.

    Of course there is a key difference between our hypothetical spendthrift and the Federal government. The consumer cannot print his own money.

    You also ignore the effects of Anticipatory Inflation. That is wage and price increases based not on supply and demand but on expectations that inflation will continue and/or increase.
    Last edited by Eric Stoner; 08-03-2021 at 11:51 AM.
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    Default Re: Interest rates in the coming months

    Quote Originally Posted by Eric Stoner View Post
    True BUT you ignore productivity increases despite the sluggish growth. And the deficits while large then are but a fraction of what they are now. More importantly the asset purchases by the Fed THEN are a small fraction of what they are doing now.

    We will see. At present the Fed and the Government are acting like someone who took on a big mortgage , a luxury car loan, financed a cabin cruiser and is maxing out on all their credit cards. Yes, for a while there will be a lot of spending and consumption. There will be money put into the economy. Until the bills start coming due and a huge chunk of the monthly budget goes just to pay interest on the debt that was accumulated. I have looked at the out year numbers and they are not pretty. We do NOT ( as some silly folks say ) owe the money to ourselves but to China , other sovereign wealth funds and large institutions.

    Of course there is a key difference between our hypothetical spendthrift and the Federal government. The consumer cannot print his own money.

    You also ignore the effects of Anticipatory Inflation. That is wage and price increases based not on supply and demand but on expectations that inflation will continue and/or increase.
    The deficits for 2020 and 2021 are exceptionally large because of the pandemic and the stimulus, which is temporary. The budget deficit is projected to fall to $800 billion by 2023.

    Wages and prices are always based on supply and demand, except in cases where there are laws regulating them, such as minimum wage laws or contracts. In most cases, businesses are going to price their products at the highest possible price their customers are willing to pay for the quantity they hope to sell, regardless of whether or not they anticipate inflation. For example, if Ford is producing and selling one million pickup trucks a year, and they determine that they can increase the price of their pickup trucks by $5,000, and still sell one million of them, they will most likely increase the price. If they determine that increasing the price of their trucks by $5,000 will result in decreasing the number of trucks sold by 400,000, then they most likely won't increase the price by that much. If there are issues that result in Ford not being able to produce one million trucks, such as supply chain issues, or plants being temporarily shut down because of a pandemic, and they're only able to produce 600,000 trucks instead of one million, then they would be more likely to increase the price by $5,000, if they determine they could sell all of the trucks they produce at that price.

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