Can someone explain to me why we have such high inflation now?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ Understanding the CARES Act
At $2.2 trillion, the CARES Act stands as the largest financial rescue package in U.S. history. The 2009 Recovery Act was $831 billion, the Consolidated Appropriations Act (CAA) was $910 billion, and the American Rescue Plan Act (ARPA) comes closest at $1.9 trillion.”

+1 add onto that all the money that some people actually saved during the shutdown. For many, like me, had no commuting/office costs, childcare costs, gas, kids activities, etc. I didn’t qualify for any cares act cash, but I saved hundreds a month by everything shutting down. Once everything opened, we entered the world with a lot of disposable savings looking to buy vacations and things we’ve put off, which for me is furniture and a new car

This describes us too, but I’m still not going to pay $55k for a car that was $40k 2 years ago. Why are people so willing to pay these exorbitant prices, just because they have a little extra money? [/quo

Some have no choice, because they must buy what they need, some of these things are necessities. Others are conditioned to think it's the new normal and wont' be waiting for prices to drop. Sort of like gas, when it was super high people still drove, they just paid more. They didn't just give up driving or moved to a 1 bedr in the city. Not everyone got extra money either, prices really hurt a lot of people who were already making ends meet barely before this.

[Anonymous]

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

[Anonymous]

Anonymous wrote:I take some comfort in rising interest rates in that it gives the Fed bullets to deal with the next downturn. How would the government juice the economy if interest rates are close to zero?

They aren't close to zero anymore. Do you want rates to get so high that nobody can afford to take out any loans? This isn't great either for businesses and economy. Housing market isn't the only thing that's a problem, but it seems like it's the focus of this strategy, as if having people panic over losing their equity and savings and feeling poorer is really the solution to every crisis.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

Where did the stimulus money go and did this really enrich anyone? And if this spending enriched some people or companies (I am sure there were those benefiting from it) then they effectively stole this money from your average tax payer and home owner?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

So, you are basically saying that having peasants have more money, assets, and control in the labor market is bad. I see. Too much money in the hands of regular people is bad, they feel too comfortable, start demanding things, spending, and don't want to work too hard or work at all. It's great that there is little wealth for the people and when they are outbidding each other for crappy wages en masse, right?

Except everything is opposite of what you are wasting your breath over. The 'peasants' actually have LESS real money now because of inflation. That's what feeble minds like yours cannot comprehend - the fact that more money =/= more wealth and buying power. Need proof?

https://www.bls.gov/news.release/realer.nr0.htm

Real earnigns are decreasing. What simp minds like your cannot understand is that if the labor market is too hot, wages rise too fast. Do you think business owners eat the losses? No, they'll just increase prices, which ultimately causes wage-price spirals. In the end, sure, wages rise, but actual real earnigns go down and all you're doing in the process is ruining everyone's entire life's savings in the process, thereby decreasing wealth for everyone in the middle class. The Fed is actually extraordinarily concerned with data showing a decline in real earnings, because it is bad for Americans. An overly tight labor market they is not productive is actually terrible for the economy and everyone in the country because wage price spirals will crush savers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

What was the size of the stimulus relative to the whole economy (eg GDP)?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

Stimulus + more stimulus + more stimulus + condoning a massive amount of debt + restricting gas + restricting oil + threatening companies (supply) with a myriad new regulations and taxes = Bidenomics

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

Stimulus + more stimulus + more stimulus + condoning a massive amount of debt + restricting gas + restricting oil + threatening companies (supply) with a myriad new regulations and taxes = Bidenomics

Half the stimulus was done under your guy.

[Anonymous]

Years upon years of runaway government spending.

[Anonymous]

What amuses me about this whole situation is how the Fed will take credit for taming a problem that is largely their creation. They've been injecting so much money into the financial system year after year to keep Wall Street happy; it was just a matter of time before inflation skyrocketed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I take some comfort in rising interest rates in that it gives the Fed bullets to deal with the next downturn. How would the government juice the economy if interest rates are close to zero?

They aren't close to zero anymore. Do you want rates to get so high that nobody can afford to take out any loans? This isn't great either for businesses and economy. Housing market isn't the only thing that's a problem, but it seems like it's the focus of this strategy, as if having people panic over losing their equity and savings and feeling poorer is really the solution to every crisis.

DP. Interest rates cant go too high due to the enormous amount of federal debt we have, much of which is short term and will mature within the next 5 years, and the additional interest paid would add a considerable amount to our existing debt. I've thought about this nightmare for a while now, there is no good solution. The fed will have to accept higher baseline inflation at lower rates because otherwise higher rates are probably more inflationary (due to interest paid). We're basically F'd.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

What was the size of the stimulus relative to the whole economy (eg GDP)?

The Fed's balance sheet expansion was $9,000,000,000,000 alone. That's almost half the entire amount of GDP. To put it into perspective, the Fed's balance sheet was only about $800B around 2008.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences? The US gov have away multiple trillion dollar+ stimuli. The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008). When you have that much cash and credit liquidity in the system you get persistent inflation. How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing? It's because people have too much money. The stamina for price hikes that Americans have is absurd. It means inflation is sticky and very difficult to dislodge.


The latest CPI report tanked the markets. It was very bad. It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints. Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy. Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.

Amen. Can’t believe how many people thought the stimulus money would have little effect. So dumb.

What was the size of the stimulus relative to the whole economy (eg GDP)?

The Fed's balance sheet expansion was $9,000,000,000,000 alone. That's almost half the entire amount of GDP. To put it into perspective, the Fed's balance sheet was only about $800B around 2008.

And in the middle of this Joe decides to burn another trillion on student loan forgiveness that only benefits a small amount of Americans. FFS.

[Anonymous]

With the BoJ currency intervention and now running away global sovereign yields, the pain is only just beginning

[Anonymous]

Anonymous wrote:With the BoJ currency intervention and now running away global sovereign yields, the pain is only just beginning

Dollar milkshake theory coming true to life before our eyes.