I wish
It’s true the inflation rate could decrease and prices for food and energy could come down as well. But if core inflation commences to fall the Fed will catch hair on fire, scream “OMG deflation!”, and do all in their power to support the higher core prices.
The entire paradigm sucks.
space flights up 80%, what’s the world coming to? better escape as soon as they get a bigger rocket.
$450k to get high …out of control inflation indeed. In my days, … nm.
Wrong thread?
Yellen Says Fed Wouldn’t Allow Repeat of 1970s-Level Inflation
At least the old girl is honest.
October numbers should be coming in hot
It has happened:
CNBC: Treasury yields jump after inflation data comes in hotter than expected
Bidenomics: One Godawful mess and becoming worse with each passing day.
This is harming a great many people at the lower end of the economic spectrum. Fortunately for me I’m not there. But I have found over many years that my own life is better when everybody has a chance, not just those wealthy enough to weather such inflation as this.
NPR! Seriously? NPR is about as left wing as anything out there, yet they are lambasting Biden over this inflation. I believe this is happening because NPR realizes such inflation as this can weaken Biden tremendously politically, thereby threatening their broad liberal agenda. But get a load of what they are saying:
Surging prices are steadily chipping away at Americans’ buying power – as well as President Biden’s approval rating.
The Labor Department reported Wednesday that consumer prices were 6.2% higher in October than a year ago. That’s the sharpest increase since November of 1990. Price increases were widespread, with energy, shelter, food and vehicles all costing more. Excluding volatile food and energy costs, prices were up 4.6%
I certainly agree with NPR that a core inflation increase of 4.6% is, indeed, worrying. And only God knows how much that number will further inflate if Biden is successful in passing his “Build Back Better” socialist spending scheme.
Here is more from NPR:
The Energy Department forecasts that heating bills will be up to 54% higher this winter than last, as a result of higher energy prices and somewhat cooler temperatures.
Stubbornly high inflation is turning into a liability for the president and Democrats as they head into midterm elections next year after losing this month’s Virginia gubernatorial election.
As I wrote in my earlier post, many Americans simply do not have enough money on hand to deal with something of this nature. If Biden is trying to increase dependence on government handouts:
It’s working.
You can read the NPR piece in its entirety here:
NPR is very negative on this inflation and on the economy generally
BIDEN SAYS HE IS COMMITTED TO INDEPENDENCE OF FED TO MONITOR INFLATION AND COMBAT IT
but apparently not that committed to the FTC -
BIDEN SAYS HAS ASKED FTC TO PUSH BACK ON ANY MARKET MANIPULATION OR PRICE GOUGING IN ENERGY SECTOR
Biden showing his communist tendencies - clearly we just need some price controls to keep everything affordable, right? I mean high prices when they’re bad for your political situation are always due to “gouging” and not the lack of supply and excess demand due to your poor policies.
meanwhile elsewhere today,
FED’S DALY: INFLATION IS HIGH, WE HAVE A CHALLENGE RIGHT NOW
FED’S DALY: EVEN THOUGH IT’S TEMPORARY, HIGH INFLATION HURTS
FED’S DALY: IT WOULD BE PREMATURE TO CHANGE CALCULATION ON RAISING RATES
FED’S DALY: HIGHER INFLATION READINGS HAVE MY ATTENTION
on the bright side, the longer this inflation is bad and the Build Back Bigger bill languishes, the more obvious the inflationary issues are and the more opposition it may face from Manchin and others.
MANCHIN: THREAT POSED BY RECORD INFLATION IS NOT ‘TRANSITORY’
MANCHIN SAYS CANNOT ‘IGNORE THE ECONOMIC PAIN’ OF INFLATION
The narrative is shifting to where instead of “print whatever we want so we can spend it on Bigger Better Government”, now inflation is a threat to the ordinary poor worker who doesn’t own inflating assets but sees their wages rising more slowing the prices.
Where’s that “dual mandate” of the Fed helping out the average person again? More pressure to act, and perhaps on the politicians to spend less.
I was just going to ask this, when everyone was hoping that inflation would kill the spending bill. Doesnt high inflation just get spun into justifying them spending even more, to (alledgedly) help people afford their stuff?
Maybe with the far left, who think spending more money is always the answer, but some of the moderates realize it’s a real problem. if even a couple of them decide it’s serious, they have to get placated or bought off or the spending dialed back before the bill can pass.
Aside from the extended economic pain from the 2020 mishandling of covid debacle, there is a strong argument that much of US infrastructure is crumbling and well past it’s expected usage life. And it was built out during prior large spending deals. We need massive federal government spending to repair and upgrade that infrastructure. Why federal government? because that infrastructure is part of what the federal government is specifically charged with doing.
(Electric grid and transportation related infrastructure being some of them). It will still take another spending bill. Yes, these amounts needed are massive but they’ve not really just been accrued this year, they’ve been accumulated slowly over the past 50/70/100 years to the point where the prior infrastructure is outright failing due to age.
From the Wall Street Journal:
Several key takeaways:
The current spike in inflation is no accident. It’s the result of reckless policies that squeeze the supply of goods and services—notably energy.
Inflation is good for the government
individuals are pushed into higher tax brackets giving the feds another windfall
politicians prosper while average Americans struggle
inflation is a regressive tax
Congress ignores inflation because it doesn’t want to admit that its policies are causing it
How so? Income tax brackets are also adjusted for inflation. There are a few items that are not “brackets” and are not adjusted, and they don’t affect most people.
Regardless of tax brackets, interest on savings accounts and CDs and bonds is fully taxable even though a part of it is to compensate for inflation. The government also taxes the increase in principal of treasury inflation protected securities due to inflation. inflation is indeed a windfall for the government.
https://www.treasurydirect.gov/indiv/research/indepth/tips/res_tips_tax.htm
Interest payments from Treasury Inflation-Protected Securities (TIPS), and increases in the principal of TIPS, are subject to federal tax,
No disagreement there. The question was about the quoted statement regarding being pushed into higher tax brackets.
Source: Barrons
The 6.2% year-over-year surge in consumer prices during October stunned economists, rattled investors, and likely horrified policy makers. It marked the fifth straight month that the consumer-price index exceeded 5%, and signaled the largest jump in consumer price inflation since July 1982.
While some of the pricing pressures stem from reopening bottlenecks, there is more to the story. Transitory inflation components account for one to 1.5 percentage points of core CPI, which excludes food and energy, says Aneta Markowska, chief economist at Jefferies. That means so-called sticky inflation is running well above the Federal Reserve’s longstanding 2% target.
Read the remainder of this Barrons piece here:
It’s not just food and fuel . . .
If you’re retired or approaching retirement, pay heed. 14.5% is a serious increase. This is from CNBC:
A good quick read from a top financial journalist
Inflation only matters when it matters — but when it does, nothing else counts.
To the extent that inflation is supply-chain driven, there is no sign of the supply chain becoming unsnarled.
chairman of the Council of Economic Advisers under George W. Bush. Mankiw said, “The Fed is struggling with the question of whether the high inflation rate is only a transitory supply-chain problem or a more fundamental overheating of the economy. So far, they have leaned toward the former hypothesis. But various indicators, such as the large number of job openings, suggest that the economy is running quite hot right now.
“Of course, employment is still well below the pre-pandemic peak. But the pandemic may have changed things, such as inducing earlier retirement for some people,” rendering the former peak irrelevant.
“Putting everything together,” Mankiw sums up, “The Fed should — and likely will — tighten sooner than they previously anticipated. “I worry that they might move too slowly, as any rapid change in policy would in effect admit that their previous thinking was mistaken. And the Fed, like everyone else, hates admitting error.”
I think Mankiw, quoted above and towards the end of the article, has the right read on the situation.
