Get ready for democrats to blame the Fed for the failing economy

[Mac1958]

I appreciate the perspective. I get the general consensus that I am swimming upstream against. People think the answer to the current inflation cycle is raising interest rates to hurt the economy enough to cause a demand crash and massive unemployment. Here is why I think differently.

The current inflation cycle and employment cycle are super unique. Labor is a shortage. Its not that there are too many jobs, there are too few workers. Crashing the economy is a temporary bandaid to not enough workers. It will just recover and we are back.

Likewise the product inflation isnt from a demand spike. Again, everyone is selling less stuff. Hurting demand of stuff that is already in low demand is again only a temporary band aide.

We need more laborer's and more production to return to historical norms. That actually takes investment which the interest rate kikes hurts. Again... I get that all that flies in the face of common practice but this is a unique problem not solved with common solutions.

GOOD NEWS: In 6-12 months one of us can pull up this exchange and rib the other one about who was right.

Yeah, you make an important point, at least as I'm perceiving it. Something doesn't feel right about the labor market, and I wonder how much the shutdowns of COVID are responsible. It's as if people stopped working, decided that they could find a way to live without that job, and just said "fuck it".

Supply chains are in much better shape, but they're still not fully open. The economy is too strong to put much of a drag on inflation.

Certainly Powell is trying to walk a tightrope between stopping inflation and killing the economy. If you don't like the way they're increasing rates, what would your solution be?

 

[citygator]

Yeah, you make an important point, at least as I'm perceiving it. Something doesn't feel right about the labor market, and I wonder how much the shutdowns of COVID are responsible. It's as if people stopped working, decided that they could find a way to live without that job, and just said "fuck it".

Supply chains are in much better shape, but they're still not fully open. The economy is too strong to put much of a drag on inflation.

Certainly Powell is trying to walk a tightrope between stopping inflation and killing the economy. If you don't like the way they're increasing rates, what would your solution be?

Mine would be simply to let time pass so the supply and demand forces can work. It’s hard not to do something though…takes courage of conviction.

 

[Mac1958]

Mine would be simply to let time pass so the supply and demand forces can work. It’s hard not to do something though…takes courage of conviction.

It's supposedly happening slowly, though I don't have much material evidence of that. I also can't get inside the heads of the Fed members, but I'd suspect that they don't have the patience. Especially now that we're in Capitalism 2.0, where the Fed is expected to fix every last fucking thing overnight.