American Economics Thread
- Thread starter Bernard
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It's way above 2% when you factor in housing.
Also fed has to cut interest rates not because inflation is solved, because high interest rates are becoming a burden on banks and on the US govt due to extremely high interest payments which is quadrupling due to sharp increase in debt
US dollar has only strengthened artificially due to interest rate hikes which attracts capital towards US, thus inflating the dollar
Once the FED cuts interest rates, the dollar will tank and inflation will go through the roof as a strong artificial dollar was keeping inflation relatively low but still not to an acceptable standard.
We can see the record price of gold as an indicator that US dollar suffers from bleak prospects.
Housing is actually decreasing in price. Rents are falling () but the CPI uses the average all all rents paid (instead of current market rents) so as leases expire and reset at lower levels, that will continue to push the CPI down for months in the future.
No. Interest payments as a share of GDP are at their 1990s level. That is nowhere near fiscal dominance. Banks are very profitable - the “burden” is shared among only a handful of banks with niche customer bases and mismanaged balance sheets.
Long-run exchange rates are determined by interest rate parity. The dollar will go back to the levels of DXY in 2018-2019? Wow. Such wow. The main mechanism by which a depreciating currency is inflationary is through more expensive imports but that is simply not very relevant to the U.S. because imports are a small portion of U.S. GDP
3% inflation has been a very standard historical norm and inflation has totally fallen off the list of things people care about. It’s very much an “acceptable” standard -https://news.gallup.com/poll/1675/most-important-problem.aspx
The U.S. “national debt” is on an unsustainable path but solving it can be done without much macroeconomic impact and is presently not causing many problems.
Finding niche microeconomic panel data or random time series and then saying that “this thing is the end of the world” when exactly 18 people knew of its existence a week ago is pure silliness.
Housing prices are still unaffordable and historic high.
Inflation is occuring due to US productivity not matching the money printing. When you have too little productivity relative to the paper, the paper gets devalued.
US dollar's value depends mostly on interest rates. Higher interest rates attract more capital and vice versa. Fed can't keep interest rates at current level so US dollar is bound to go down
If inflation isn't worrying for Americans. Why are majority of the Americans dissatisfied with Bidenomics??
Inflation is the first derivative of prices with respect to time. The price level is the integral of inflation over all time periods. Two different concepts. Deflation is also bad so the price hikes from 2021-22 are permanent. Of course, housing is very dependent on who you are - most people bought their houses years ago and have regular fixed mortgage payments since Freddie Mac and Fannie Mae are responsible for inventing the 30yr fixed rate mortgage; renters are facing declining rents, and the small minority of prospective buyers are facing fairly high costs
again, we know what DXY looks like when the U.S. short term interest rate is at 0. That happened in 2020. It’s not the disaster you think it is.
Americans are broadly satisfied with their own financial conditions but their approval over macroeconomic financial conditions is highly sensitive to media coverage
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This is clearly nonsense. At a 10% inflation rate, prices should double every 7 years. What price doubled between 2009 and 2016?