The difference was that 2008 QE was in the midst of the Great Recession. QE-1 was thus justified by the extreme conditions of the economy. But QE-2 was probably already too much considering the recovery of the economy by end of 2010/2011 but QE-3 in 2012-2015 was just nonsense/addiction to easy money (both in length and scope).
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Yes and today I paid my highest price for premium gas, $5.89. Right around the corner of $6.00…
But that’s California!
Need something? Anything? Buy it now before the price goes up.
From Bloomberg:
Risk of a 1970s-Style Inflation Shock is Rising
Global price rises risk turning into 1970s-style inflation shock, which eventually led to recession and high unemployment, according to hedge fund giant Brevan Howard Asset Management.
“This combination of high inflation, tight labour markets, and uncertain inflation expectations introduces the prospect of a 1970’s style wage-price spiral which proved very costly to reverse during the Volcker Era”
Brevan Howard, one of the best-known macro hedge fund firms with about $19 billion in assets, invoked a period of crippling inflation decades ago when former Federal Reserve Chairman Paul Volcker delivered the so-called Saturday Night Special, a radical – and unexpected – tightening of monetary policy on an October weekend in 1979. Volcker’s tightening of monetary policy led to a recession and high unemployment but ultimately reined in spiraling inflation.
Right now, the Fed is “significantly” behind the curve in raising rates, which should be between 4% to 6% based on traditional approaches to monetary policy, the firm said in a rare comment on the market outlook, adding that both risk assets and fixed income tend to underperform in such an environment.
My personal opinion:
4% to 6% would not be sufficient to do the trick. But not to worry. At this rate it’ll be an eternity before the Fed gets anywhere close to those rates of interest. Do not forget Biden is appointing strong, outspoken, doves to the Fed.
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Too soon – everyone will forget it by then.
As I noticed this news and the prices I was reminded that the only action needed is the mere threat of action. The prices can come down without actually touching the reserve.
Kind of like how long term interest rates (like 30-yr mortgages) went up 2.5% in anticipation of FED actions.
And yet there was no inflation from any of those QEs.
hard to say tho, right? I mean, how much more devastating would the deflation have been during those recessions if they hadn’t printed like mad? It’s like a failed government program, say the $1T war on poverty that’s definitely failed to eliminate poverty, but it’s proponents can claim that it would have (will?) succeed if only you spend 2x as much. Unfalsifiable logic.
Speculations about what might have happened in the past, especially in macro economics, are all just guesswork.
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Too many charts about the oil reserve and such.
Trafigura Group’s Chief Economist told Bloomberg TV, that the potential SPR release will actually discourage future oil output and could drive forward prices higher, and added that the US is only capable of delivering 400,000 to 500,000 barrels a day of oil from the strategic reserve.
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Maybe take a look at jet fuel. It hasn’t (as of two weeks ago) reflected the Biden fuel price hike. I only call it that because of what he’s calling it, which is nonsensical.
Bonus points to anyone who can video @pattyb53 driving thru the airport asking about jet fuel. 
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The hail, you say!! President Johnson eliminated poverty when he got Congress to pass that bill in … 64?, I think. We haven’t had poverty in this county since then, 'er, except during [any Republican presidency]. How many “poverty” reports did you see during the Clinton admin, except when the Republican Congress forced him to reign in welfare spending … which he promptly took credit for.
Granted, you didn’t see too many “poverty ads” while President Trump was in office. He was on offense despite the Hillary offensive, for which, she just got fined.
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More of that deep monetary theory stuff
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It’s coming down a bit around here. Back in the $3.70-3.80 range for regular. Hopefully the trend continues.
It’s not always straight correlation but increasing the money supply can only put upward pressure on inflation. If the state of the economy at the time was deflationary, QE basically balanced these trends. Also the monetary base increase was used by banks to shore up their balances sheets after the losses from the defaults of the Great Recession. They did not just use the proceeds of QE to increase lending which would have been money creation.
Plus the money printing was limited by the fact that QE was not paired with too much fiscal stimulus. But during the pandemic with Fed balance sheets having been kept elevated (near constant since end of QE3 in 2015), the substantial (and IMO excessive fiscal stimulus) is what’s fueling today’s inflation. Fed should have reduced its balance sheet way earlier than now.
And will you look at that - the release dates run from May until October, just in time for midterms.
The first 90 million barrels will be released between May and July, through two notices of sale totaling 70 million barrels, and 20 million barrels already scheduled to be released in May 2022. The remaining 90 million barrels will be released between August and October 2022.
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I don’t disagree. But you then also have to agree that
the state of the economy in 2020 was also deflationary due to lockdowns everywhere, people being out of work and losing jobs in huge numbers, and the injecting of this free money leading to inflation was not as obvious as it may be now, in hindsight. They probably did not want to reduce their balance sheet because they feared deflation.
By fiscal stimulus, I presume you mean spending in excess of what was budgeted. My memory is slightly light on recent events, but didn’t the Obama admin have a cash for clunkers program, a huge “shovel-ready” jobs u̶n̶i̶o̶n̶ ̶m̶o̶n̶e̶y̶ ̶l̶a̶u̶n̶d̶e̶r̶i̶n̶g̶ ̶p̶r̶o̶g̶r̶a̶m̶ stimulus package, and at least one other stimulus program, a̶l̶t̶h̶o̶u̶g̶h̶ ̶i̶t̶ ̶m̶a̶y̶ ̶h̶a̶v̶e̶ ̶b̶e̶e̶n̶ ̶f̶o̶r̶ ̶H̶u̶n̶t̶e̶r̶ ̶w̶i̶t̶h̶ ̶o̶n̶l̶y̶ ̶1̶0̶%̶ ̶b̶a̶c̶k̶ ̶t̶o̶ ̶t̶h̶e̶ ̶b̶i̶g̶ ̶g̶u̶y̶ ̶.̶.̶.̶ ̶maybe it was Chinese solar related, or Ukrainian oil related, but I forget. I believe these added up to at least $2T.
Granted its only a couple of trillion, but a trillion here, a trillion there, and before you know it, you’re talking about real money.
But those were not general trends they were trying to fight. It was the direct result of a specific, and obviously temporary, catalyst.
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Oil probably going higher in the medium term.
What makes the backdrop today substantially more bullish than in 2010-2014 is that demand today is higher by roughly 10 million barrels per day, the Organization of the Petroleum Exporting Countries (OPEC) is nearing the exhaustion of its spare capacity, and we are eight years into a lack of sufficient investment in new productive capacity by the supermajors.
And that’s not due to greed. It’s due to practicality and a very uncertain regulatory future.
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I am reminded of something the guys on Red Eye Radio mention nearly every night:
A large segment of the Democrat base WANTS higher prices for fossil fuels of all sorts. This is because they view such a higher prices outcome as being supportive of their hoped-for renewables nirvana.
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Higer prices makes the whole “tax the greedy billionaires!” argument easier to sell to the general public, which they need to raise the funds to pay for all their racist ‘targeted’ hand-outs.
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The way things are going, I think NYMEX natural gas could hit six bucks.
At the least, it is certainly headed in that direction for now.
Thought of six buck natural gas certainly concentrates one’s mind. Whoda thunk!
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