American Economics Thread

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LesAdieux

Junior Member
to tighten or not to tighten?

fed is officially behind the curve now. it has made it known that it will take the Greenspan approach in dealing with inflation, that is: let the bubble run its course.

nonetheless, the April CPI is still a little bit scaring, the market hasn't seen inflation at this level for a while. the transitory narrative is nearly perfect in explaining away everything, but it ostensibly left QE out the picture, maybe they can tame inflation with printing.

inflation is like covid, you cannot hide it, and you cannot wish away it either. by the second half of the year, if inflation stays elevated, Powell will have to do Modi's job.
 
T

Tam

Brigadier
Registered Member
A good example of the Jones Act screwing the US up. The Jones Act, which was passed in 1933, stipulates that only US made and US citizen crewed ships are allowed to transit and serve between two points of the US.

Because of this, shipping freight transit between the US to areas like Alaska, Hawaii, Guam, Puerto Rico, the US Virgin Islands, American Samoa, are more expensive from the US than it was from a foreign country. It also becomes more expensive, to say, ship from Houston to New York by sea. Oh do inland freight instead? Anyone who knows freight logistics also knows that sea freight beats inland freight anytime in costs. This is why export nations have a large coast and factories catering for export are much nearer to the ports. This is so evident when you see China. The cost of transporting things from A to B in the US affects your cost structure including your manufacturing.

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hkbc

Junior Member
hashtagpls said:
Gotta say, the entire stock market and crypto markets have been taking a smashing today. Even gold is down.

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That inflation the Fed tells everyone not to worry about, everyone's worried! Spin meets reality!

With the money printing presses doing overtime, deficits and accumulated government debt running at record levels and interest rates almost at the bottom, the only way left to curb inflation is to raise interest rates, but that might tank the economy. Trying to power through by growth would only work if you can convince someone to buy your bonds as a sort of bridging loan while you sort things out but then who wants to buy something that pays next to no interest in the hope that things will get better, might as well put it on the favourite at the Kentucky derby, so again interest rates need to go up. Don't curb it and you'd have Weimar Germany

Sentiment amongst even Joe Public is interest rates will rise given the amount of personal debt that's been repaid.
 
siegecrossbow

siegecrossbow

General
Staff member
Super Moderator
LesAdieux said:
to tighten or not to tighten?

fed is officially behind the curve now. it has made it known that it will take the Greenspan approach in dealing with inflation, that is: let the bubble run its course.

nonetheless, the April CPI is still a little bit scaring, the market hasn't seen inflation at this level for a while. the transitory narrative is nearly perfect in explaining away everything, but it ostensibly left QE out the picture, maybe they can tame inflation with printing.

inflation is like covid, you cannot hide it, and you cannot wish away it either. by the second half of the year, if inflation stays elevated, Powell will have to do Modi's job.
Click to expand...

I think that it is up to Biden to figure out which strategy to follow. He could either let it fail fast and fail big while it is still possible for him to pin the problem (rightly) on Trump or he could keep the current policy till the next election and hope it doesn’t blow up before then.
 
V

voyager1

Captain
Registered Member
siegecrossbow said:
I think that it is up to Biden to figure out which strategy to follow. He could either let it fail fast and fail big while it is still possible for him to pin the problem (rightly) on Trump or he could keep the current policy till the next election and hope it doesn’t blow up before then.
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No way he will let it blow now, before the midterms Congress elections

If he does, then the Democrats are toast and expect Pompeo/Cotton making a run for the presidency in 2024
 
In4ser

In4ser

Junior Member
hkbc said:
That inflation the Fed tells everyone not to worry about, everyone's worried! Spin meets reality!

With the money printing presses doing overtime, deficits and accumulated government debt running at record levels and interest rates almost at the bottom, the only way left to curb inflation is to raise interest rates, but that might tank the economy. Trying to power through by growth would only work if you can convince someone to buy your bonds as a sort of bridging loan while you sort things out but then who wants to buy something that pays next to no interest in the hope that things will get better, might as well put it on the favourite at the Kentucky derby, so again interest rates need to go up. Don't curb it and you'd have Weimar Germany

Sentiment amongst even Joe Public is interest rates will rise given the amount of personal debt that's been repaid.
Click to expand...
The scary thing is many Americans believe in Modern Monetary Theory which claims that the US can print money indefinitely because it's a reserve currency and fiat currency.

Now's the best time to take out loans and mortgages and lock in interest rates before they go up. It's strange but debt is becoming an asset and cash and savings are a liability due to the USD's depreciation.
 
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