"Shrinking paychecks are a recession for most people. Amazingly, the “experts” do not understand this. They confine their perspective to the the top-level macroeconomic data and claim the economy is growing."
You are 100% correct about that. Nothing makes me more angry than watching a news program that says we don't have to worry about a recession because consumer spending has been "resilient" and people are spending more than before. Well, duh! They HAVE to spend more than before because everything costs more than it did before. They aren't buying more, they are just spending more for the same (or less) stuff.
Between her proposed housing subsidies, promised housing construction spending, and price controls, her economic policy is a Nixonian mishmash of market distortions and countercyclical stimulus which is guaranteed to destabilize prices all over again.
Will that trigger fresh hyperinflation? That depends entirely on the magnitude of any energy price shock.
What we have seen is a replay of the same pricing pressures both in energy markets and in the consumer price index as we saw during the 1970s and early 1980s. Which means that Volker's interest rate squeezes didn't do a damn thing about inflation then, and Powell's rate hikes haven't done a damn thing about inflation since 2022.
Which makes Trump's "Drill Baby Drill" the correct economic policy for the next administration. Energy independence and a low price for oil and energy domestically will keep hyperinflation at bay.
However, the lingering question of what happens to all the dollars currently sloshing around in the economy if money velocity ever returns to pre-pandemic levels remains. At current money supply levels, any small uptick in money velocity is going to push prices up.
It is possible we can stave off hyperinflation. We probably should not be surprised to see inflation oscillating between 3-5% for most of the next few years even with a Trump Presidency.
Reading today’s post again, well, I’m always calling you brilliant and insightful. I think the gushing adjective du jour is ‘astute’. You would be one seriously astute analyst for Trump, Peter. Thanks for all you do!
I would guess that most people heading to the voting booths aren’t very analytical. Instead, they just have a vague sense of if they’ve been better off lately ....or not. Can I afford to eat dinner in restaurants more? Uh, no. Are groceries costing noticeably more? Oh, yeah. Okay, I’m voting for a different bunch of people!
Assuming the Democrats don’t get away with massive cheating, this could decide things. As a gut level, people are pretty smart!
They will definitely go some massive cheating, and they will likely get away with it, but I think they will still lose. There is only so much cheating you can do before it becomes ridiculously obvious, and I think they have reached that level.
A dozen regular eggs (not Cage Free, organic etc) cost me $3.77 at Aldi!! $7 for a dozen eggs and 3 peppers, goodnight!
"Shrinking paychecks are a recession for most people. Amazingly, the “experts” do not understand this. They confine their perspective to the the top-level macroeconomic data and claim the economy is growing."
You are 100% correct about that. Nothing makes me more angry than watching a news program that says we don't have to worry about a recession because consumer spending has been "resilient" and people are spending more than before. Well, duh! They HAVE to spend more than before because everything costs more than it did before. They aren't buying more, they are just spending more for the same (or less) stuff.
Inflation always means people spend more to buy less.
Peter, I’m spitballing here, does this look like the beginning of hyper-inflation to you?
If Kamala gets in, you will definitely see hyper-inflation again.
That is almost certainly true.
Between her proposed housing subsidies, promised housing construction spending, and price controls, her economic policy is a Nixonian mishmash of market distortions and countercyclical stimulus which is guaranteed to destabilize prices all over again.
I don't think we can make that assertion just yet.
We did have a hyper-inflationary cycle in 2022. However, that has largely subsided.
What we are seeing right now is the disinflation trend bottoming out, driven in no small part by the ending of energy price deflation.
If energy prices move significantly to the upside, we will see a definite rise in overall inflation, just as we saw briefly this past spring.
https://newsletter.allfactsmatter.us/p/oil-prices-are-climbing-inflation
Will that trigger fresh hyperinflation? That depends entirely on the magnitude of any energy price shock.
What we have seen is a replay of the same pricing pressures both in energy markets and in the consumer price index as we saw during the 1970s and early 1980s. Which means that Volker's interest rate squeezes didn't do a damn thing about inflation then, and Powell's rate hikes haven't done a damn thing about inflation since 2022.
Which makes Trump's "Drill Baby Drill" the correct economic policy for the next administration. Energy independence and a low price for oil and energy domestically will keep hyperinflation at bay.
However, the lingering question of what happens to all the dollars currently sloshing around in the economy if money velocity ever returns to pre-pandemic levels remains. At current money supply levels, any small uptick in money velocity is going to push prices up.
It is possible we can stave off hyperinflation. We probably should not be surprised to see inflation oscillating between 3-5% for most of the next few years even with a Trump Presidency.
Reading today’s post again, well, I’m always calling you brilliant and insightful. I think the gushing adjective du jour is ‘astute’. You would be one seriously astute analyst for Trump, Peter. Thanks for all you do!
Thank you for your kind words.
Who knows, maybe the Trump Team will call. Stranger things have been known to happen!
I would guess that most people heading to the voting booths aren’t very analytical. Instead, they just have a vague sense of if they’ve been better off lately ....or not. Can I afford to eat dinner in restaurants more? Uh, no. Are groceries costing noticeably more? Oh, yeah. Okay, I’m voting for a different bunch of people!
Assuming the Democrats don’t get away with massive cheating, this could decide things. As a gut level, people are pretty smart!
They will definitely go some massive cheating, and they will likely get away with it, but I think they will still lose. There is only so much cheating you can do before it becomes ridiculously obvious, and I think they have reached that level.
“If you would persuade, you must appeal to interest rather than intellect.”
Ben Franklin
I find this helpful. I like analysis. It was my job. But BF is correct.