“Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment.” That’s not so bad! It’s a heck of a lot better than the inflation under the Biden administration. We’re in the thick of the midterm elections campaign flurry, so the best news of the day is that the Democrats cannot run ads screaming that we’re all going to die from Trump’s tariff-and-war hyperinflation. It hasn’t happened!
You’re right, Peter, there are still ominous signs that we are on track for serious economic problems if the Iranian war continues. But if the economy can remain fairly stable for the next weeks, Trump could end up with the time span he needs to fix these. For a Monday morning, this is pretty optimistic news!
I very much appreciate your continued factual reporting and level-headed analysis, Peter. Thank you, as always!
What the Fed has forgotten is that "price stability" was never precisely defined in the Federal Reserve Reform Act of 1977. The Fed is merely tasked with pursuing "stable prices."
For Alan Greenspan, that meant inflation was low enough that people didn't think about it on a regular basis, and it didn't play a role in purchasing decisions.
After Ben Bernanke made the FOMC's 2% internal gauge a public inflation target, "price stability" has become defined as "inflation above 2%".
The flaw in that thinking, as Bernanke never learned, nor Yellen, nor Jay "Too Late" Powell, is that 25bps tweaks of the federal funds rate lack the shock firepower necessary to achieve dramatic rapid alterations of consumer price inflation.
The conundrum that leaves for Warsh is that cooling core inflation means there is no reason for a large rate hike. This isn't even 2022, let alone 1979 or 1973.
Since the FOMC can't make a case for a full percentage point rate hike, it has no case for a rate hike at all.
It's cold comfort, but the ECB is in thrall to the same lunacy. Last week they did their own 25bps rate hike, and are similarly presented with cooling core inflation.
Why? Because 2% inflation, because reasons, because Volcker did it, yada yada yada.
“Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment.” That’s not so bad! It’s a heck of a lot better than the inflation under the Biden administration. We’re in the thick of the midterm elections campaign flurry, so the best news of the day is that the Democrats cannot run ads screaming that we’re all going to die from Trump’s tariff-and-war hyperinflation. It hasn’t happened!
You’re right, Peter, there are still ominous signs that we are on track for serious economic problems if the Iranian war continues. But if the economy can remain fairly stable for the next weeks, Trump could end up with the time span he needs to fix these. For a Monday morning, this is pretty optimistic news!
I very much appreciate your continued factual reporting and level-headed analysis, Peter. Thank you, as always!
What the Fed has forgotten is that "price stability" was never precisely defined in the Federal Reserve Reform Act of 1977. The Fed is merely tasked with pursuing "stable prices."
For Alan Greenspan, that meant inflation was low enough that people didn't think about it on a regular basis, and it didn't play a role in purchasing decisions.
After Ben Bernanke made the FOMC's 2% internal gauge a public inflation target, "price stability" has become defined as "inflation above 2%".
The flaw in that thinking, as Bernanke never learned, nor Yellen, nor Jay "Too Late" Powell, is that 25bps tweaks of the federal funds rate lack the shock firepower necessary to achieve dramatic rapid alterations of consumer price inflation.
The conundrum that leaves for Warsh is that cooling core inflation means there is no reason for a large rate hike. This isn't even 2022, let alone 1979 or 1973.
Since the FOMC can't make a case for a full percentage point rate hike, it has no case for a rate hike at all.
It's cold comfort, but the ECB is in thrall to the same lunacy. Last week they did their own 25bps rate hike, and are similarly presented with cooling core inflation.
Why? Because 2% inflation, because reasons, because Volcker did it, yada yada yada.