My personal portfolio is perhaps foolishly overweight natural gas pipeline companies. Therefore I'm sensitive to spot prices of natgas.
Contrast ridiculously cheap natgas in the US to ridiculously expensive natgas in Europe. So while we pad the pockets of US weapon makers here in the US by sending things that go boom to Ukraine, US politicians care not a whit about whether our European friends will freeze this winter. The proof is right there in your charts.
I will preface this comment by saying that I am not an economist and do not what the hell I am talking about. However, it seems to my simple mind that the current inflation situation is a result of two root causes: oversupply of money and an under-supply of goods. Shrinking the fed’s balance sheet and raising interest rates does nothing to address the under-supply of goods. In fact, higher interest rates may inhibit production of goods and exacerbate under-supply. Raising corporate income taxes also penalizes supply. So my question is: Has anyone proposed addressing under-supply by providing incentives for production like tax credits for the production of energy and food?
The cure for high prices is high prices. Recent examples of it are the drops in prices of crude oil and gasoline.
Likewise the cure for under-supply is under-supply.
Whatever governments do, for example tax credits, only keeps supply and demand out of balance for that much longer. Balance promotes overall prosperity.
You hit on an important point: the undersupply of goods.
While classic monetarist theories hold that inflation is all about too much money, the reality is that the severest inflationary episodes are catalyzed by supply side shocks. This was true even in the 1970s.
The catch 22 is that spending to increase the supply of goods gooses both demand AND supply -- meaning it can easily end up making inflation even worse.
However, it is certain that interest rate hikes do nothing to address the undersupply of goods.
I'd say you have a better grasp of the issues than the "experts" at the Fed.
Thank you, but these days that does not seem to be a very high bar. I’m guess I’m just frustrated. Every “anti-inflation” action that the fed or government has taken (interest rate increases; higher taxes) to date suppresses production/supply and just makes the situation worse. Government is the cause of the problem and not the fix.
My personal portfolio is perhaps foolishly overweight natural gas pipeline companies. Therefore I'm sensitive to spot prices of natgas.
Contrast ridiculously cheap natgas in the US to ridiculously expensive natgas in Europe. So while we pad the pockets of US weapon makers here in the US by sending things that go boom to Ukraine, US politicians care not a whit about whether our European friends will freeze this winter. The proof is right there in your charts.
I will preface this comment by saying that I am not an economist and do not what the hell I am talking about. However, it seems to my simple mind that the current inflation situation is a result of two root causes: oversupply of money and an under-supply of goods. Shrinking the fed’s balance sheet and raising interest rates does nothing to address the under-supply of goods. In fact, higher interest rates may inhibit production of goods and exacerbate under-supply. Raising corporate income taxes also penalizes supply. So my question is: Has anyone proposed addressing under-supply by providing incentives for production like tax credits for the production of energy and food?
The cure for high prices is high prices. Recent examples of it are the drops in prices of crude oil and gasoline.
Likewise the cure for under-supply is under-supply.
Whatever governments do, for example tax credits, only keeps supply and demand out of balance for that much longer. Balance promotes overall prosperity.
You hit on an important point: the undersupply of goods.
While classic monetarist theories hold that inflation is all about too much money, the reality is that the severest inflationary episodes are catalyzed by supply side shocks. This was true even in the 1970s.
The catch 22 is that spending to increase the supply of goods gooses both demand AND supply -- meaning it can easily end up making inflation even worse.
However, it is certain that interest rate hikes do nothing to address the undersupply of goods.
I'd say you have a better grasp of the issues than the "experts" at the Fed.
Thank you, but these days that does not seem to be a very high bar. I’m guess I’m just frustrated. Every “anti-inflation” action that the fed or government has taken (interest rate increases; higher taxes) to date suppresses production/supply and just makes the situation worse. Government is the cause of the problem and not the fix.
My husband workplace keeps layoff people... 🤷♀️
If you have read my articles on the BLS and their Lou Costello Labor Math you already know my thoughts on the labor situation.
I hope your husband doesn't get caught up in the layoffs.