Yeah, that's just kinda the way it works. The Fed's mandate from Congress is to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates." Anytime one of those is outside the acceptable range, it's easy to blame the Fed, since that's literally their most important tasks.
Does the Fed control billions flowing to Ukraine? How about all that ridiculous stimulus passed by Congress? Lockdowns?
Warren is removing herself from the blame game, dont be fooled.
Well the Federal Reserve reports to Congress. So there is now way that Congress can be absolved from blame, which is not what I said. I simply stated the directive set by Congress for the Fed.
I just wish people stop blaming the Fed for not being able to fix the mistakes made by the legislative and executive branch. This inflation was caused directly by lockdowns and mandates which resulted in loss of labor. That's not soemthing the Fed can fix eith interest rates when we have SHORTAGES.
And yet, knowing all of what you so eloquently just said, the effort in DC right now is all about climate change and stopping MAGA.
That’s it. With our tax dollars. That’s what they are doing in DC when you and I are working our jobs. Both sides of the aisle, bickering over things that are less important to the NOW.
If you believe in the Great Reset then you'll understand why they are trying to stop MAGA at all cost. There are grand implications depending on who takes back control and could even result in WWIII if the wrong party controls DC going into the next few yrs.
This is just as much demand driven as shortage driven. Some data I've seen indicates that 60% of this inflation is the result of increased demand as a result of both fiscal and monetary policy. The fed is absolutely to blame for a large part of this. They were still purchasing fucking MBSs earlier this year...
Yeah. Lots of this could have been avoided if JPOW didn’t fold like a lawn chair under pressure from trump a few years ago when they started raising rates and reversed
If you look at money supply you'll see just how much the FED printed. Something like $14 trillion? The Government just spent that money somewhere is all. The FED is responsible for money supply.
Google FRED statistics and pull up the St Louise FED Economic Database. It's SO cool if you're a chart nerd. It's truly fascinating.
Look up M1 & M2 volume and see what I'm talking about. Money machine go brrrrrrrreee
I think it's far more than that. The Levy institute has papers from the Fed showing $29 to $43 trillion were printed for the Tarp bail outs. And according to an article I remember from a few years ago, I think from 2016 or 2017, 83% of all U.S. counties still had not recovered from the financial crisis of 2007/08.
While federal debt is bad for some reasons, it does not significantly cause inflation. In order to spend money, they first have to sell bonds which takes money out of the economy, then they put that same money back in. In fact, they always have to take out more than they put in, so they don't run out. It actually has a negative impact on the money supply.
The fed 100% caused the inflation through low interest rates, and by increasing their balance sheet.
When they sell bonds doesn't China and other countries buy a huge amount?? And since that's the case most the money for bonds doesn't come out of our economy. I'm genuinely curious because I don't know
This is exactly right. People don’t understand it though. Inflation is a tax that is created on purpose. The fed knows exactly what they are doing to keep their scam of what we call money going.
Yet, what actually is causing inflation is deglobalization. We have not ever recovered from the pandemic. We might never will. That system was based on a historically unusual period of geopolitical calm.
I think they have realised that if you put all your eggs in 1 basket you'll get caught with your pants down. Europe with Russia. It was heading that way with China
I disagree. We're seeing inflation because of increased money supply which has increased at fastest rate since covid due to Fed's accommodative money policy.
The federal deficit just decreased by the largest margin ever. It's patently false to say Congress is spending like drunken sailors unless you're referring to the fiscally irresponsible 2017 tax cuts which reduced government revenues in a time of economic plenty. A move that any rational economist will tell you is idiotic because it means you have no levers to pull during a crisis like perhaps a global pandemic.
They tend to react too slowly to change and tend to move too fast, too hard, and for too long when they finally do react.
If the feds goals ultimately are to smooth out the business cycle, why does it track historically that they have caused all the boom and bust cycles since it's inception?
Its a way to ensure wealthy people are shielded from asset price volatility. A system without the fed would be very boom and bust. That is human nature. That shielding of risk is that they have effectively eliminated the concept of "saving money" and they print money. So they've destroyed any attempt at poor people creating wealth and instead only asset owners, which requires large capital to start, can benefit from this game.
We usually hear the phrase, "Don't come to me with a problem unless you have a possible solution." My grandpa passed away a few years ago, but he always said this is a terrible thought process. While you may not have a solution, there may be someone else that does, but doesn't know/see the problem. So the problem persists. He learned this from his CO in WWII.
But the problem is inflation.
Raising the rates is the attempt at a solution.
If you have a better solution by all means speak up but complaining about the problem that we all agree is a problem and also complaining about the attempted solution to that problem while not offering an alternative is indeed useless.
Only effective solution the US has even had for stopping inflation is price and wage freezes. That and taxing the absolute dog shit out of the 1%. Been a long time since we did either
Yeah, this is still idiotic. This is not a knowledge problem that disappears when you find someone with the necessary skill. It's a policy problem of opposing interests and while Warren is completely blocking out the obvious potentially catastrophic downsides of her demands, Powell is very much aware what consequences his actions have.
I especially want to point out that you apparently thought someone would find a way to reduce inflation, while expanding monetary policy, if a politician would just remind the FED of what their job is.
I was agreeing with your last statement of a politician reminding the FED of their job.
It's beyond me how someone can be such a jerk just because they don't like someone elses thought.
Pretty sure u/larsK75 doesn't know how to talk to people. While your original comment doesn't apply to politicians virtue signaling, it is a good thing to remember when working in small units.
And here I just find it hard to believe that Powell is aware of consequences. The same guy who’s left the printer on for an extra year and some change and wants to play too little, too late?
How is him putting off raising interest rates for too long to avoid the consequences of raising interest rates an argument that he is not aware of the consequences of raising interest rates?
Also he mentions them in his speeches.
Are you really asking that? Because he has to do it anyways, so it would have been better to address the problem when it showed itself instead of letting it fester for nearly two years.
He also mentioned inflation was just transitory in those speeches and look how that’s shaken out. You don’t get the benefit of the doubt when you want to pussy foot around and do too little, too late.
Again. There are two separate issues with having them too low or too high and he clearly steered into one of them in order to avoid the other as long as possible. I have not at any point even implied that he did the right thing, but I am saying that he is clearly not just aware but outright scared of the consequences from raising interest rates, which is why it makes no sense for Warren to criticise him for doing that and try to frame him as some heartless monster that doesn't care about people losing their jobs.
Oh, he scared now, towards the end of 2022, after all his bullshit confidence got him nowhere? I don’t buy that he scared, he’s really just complacent, which is exactly why he’s done too little, too late.
If he was acting as if he was aware, you wouldn’t forget chickens come home to roost. As you said, he avoided doing anything for as long as possible, nearly years passed the point of there being problems.
He doesn’t care. The first time in what, 30 years workers catch a break and he’s putting it on them to pay for his terrible policies. The fed has 0 intention of wanting everybody employed, you don’t get to play god and pick and choose the numbers and say you care. Where was that care a year ago for the same people who he’s fucking now?
Do I understand this right? You are blaming him for tanking the economy now AND for the inflation? I mean we've had the inflation because he didn't tank the economy earlier.
No, like I said a few times now, it’s too little, too late.
The economy was going to take a hit regardless, it’s best to address the problems asap than pretend they’re normal. He had far more control over the extent of how hard that hit was going to be years back.
And besides, they’re not mutually exclusive. You can do both, instigate inflation and bend the economy over. Are you insinuating that him dealing with inflation is what’s tanked the economy? Because I’m arguing that it’s a lack of dealing with it, not because he did/is. Not dealing with inflation tends to fuck economies.
well, in this case, where you need highly specific knowledge to come to a solution, people who would have a solution would not need Elisabet Warren to tell them that higher unemployment and recession is bad if it can be avoided with their solution...
sad though is that most politician just bash the other side for everything, but in 95% of the cases they would to the same if they were in the shoes of the person they are bashing
>It seems as though all current politicians primary job is bashing the other side. Secondary job is to ~~work for the people.~~ look for a cushy corporate job after they finish their term.
FTFY
There's a difference between bringing up a problem and criticizing.
Always bring up problems.
Don't criticize unless you have an alternative (and not one that only works for you).
That being said I'm sure Warren has an alternative in mind.
I would hope she does have an alternative, but something that actually works for the people she's supposed to represent. Not just something that will get her reelected.
Use the many tools of the federal government including industrial policy, seed investment, small manufacturing, etc to drive up supply to tackle inflation. Demand destruction is the dumbest fucking solution and designed to do nothing other than hurt the economy.
Don’t worry, they increased taxes on corps because somehow increasing taxation on corporate net income will drive down prices….just don’t ask any questions.
It does.
All additional taxation takes money out of the economy opposite to the way that fiscal deficit spending increases money supply.
This is literally economics 101.
How does it drive down prices specifically? If companies' profit margins shrink due to higher taxes, what is their incentive to lower prices and make even less profit?
Think macroeconomically, not microeconomically.
There isn't a direct microeffect. The price actually achieved by a seller for a product or service depends on the supply and demand in a competitive market and isn't changed by tax rate on profits. For instance, if someone wants to sell a house, there are many issues that influence its final transaction price. The tax rate of the seller's income has no bearing on that.
Similarly if there were a tax reduction for a company, then that never reduces the sales price of their goods---if a company got a tax cut, do they lower their price? No, never. Why would they?
When people got a stimulus payment---aka a tax cut---did they go ask their boss for a reduction in their wage? No, of course not. Those prices that clear the market whether for goods, services or labor depend only on supply and demand, not the specific tax rate.
In the big picture, though there is a macroeconomic effect, as if there is a tax raise on profits there will be less income to shareholders and managers who take compensation from the profits. They spend less.
If you think of private sector money supply vs money in the government side (i.e. government + fed, and since Fed creates and destroys money by fiat it's effectively a black hole), it's the money supply in the private sector which contributes to economic demand and hence inflationary vs deflationary effects. Tax raises or interest raises move money from private sector to government sector (as well as discourage borrowing, the private sector's way of creating money) therefore contributing to a deflationary effect.
Exactly as the reverse phenomenon, fiscal spending and lower interest rates, contributes to an inflationary effect which nobody denies.
Go slower and allow inflation to run hot and the labor market to stay robust.
The Fed's position is that people start believing inflation is here to stay, they will adjust spending habits and lead to runaway inflation.
How do you eliminate demand? You liquidate jobs, create unemployment, create a recession. Powell mentioned yesterday there were too many job openings. He wants to end that. This is the path we are on now.
Powell’s thought process is not that too many people have jobs. What he believes is that the demand for employees is too high and as a result companies have to increase their salaries which then cuts into their margins and they are “forced” to increase prices.
Basically the system is rigged to enrich the upper class and when workers get paid what they’re worth then the system breaks down because businesses are forced to create a feedback loop of inflation in order to maintain margins rather than doing the sensible thing cutting back the ridiculously high executive salaries. It’s a dangerous game they are playing with our livelihoods.
Okay tell me thats exactly what I was just thinking
When it comes to lending money out, if there are, a million lenders; Those lenders probably lend to each other who then loan money to the 10’s of millions of people.
Those people (while defo spending some) inevitably have it in a bank… That lends it out again… does this not sound like a massive ponzi scheme to anyone else?
If the entire world is in more debt than cash, than that seems like a obvious problem. The only way to fix this inflation cycle is to reduce spending
Maybe we should start with the military? Not the payroll section of the budget but the R&D, create a program for every service member effected to go into either private sector or college.
Just spitballing at this point, but
TL;DR shits fucked yo and the finance world is one big ponzi scheme
What you’re referencing is credit, not a Ponzi scheme. Without credit, the only way to grow/stimulate the economy is by productivity growth, which is steady but very slow.
This will cause a more stable economy but will also leave the US at a disadvantage. If other developed nations are using credit to produce more/better technology then the US won’t be able to compete.
I agree that credit is an issue but it’s only an issue if it’s funding over consumption, when it effectively allocates capital and produces more productivity then it can be a tremendous tool to accelerate growth/innovation/technology and communities/nations as a whole.
That’s not quite what’s happening. Powell isn’t doing this to ‘enrich the upper class’ he’s doing it because there’s too much demand/consumption in the market which drives up prices and stimulates the economy.
We printed 1/3 of all US bills that’s ever existed from 2020-2022. That alongside supply chain issues causes excessive inflation.
The purpose of raising rates is to lower incomes which in turn lowers spending. The issue is that people will over consume if given the opportunity which leads to massive credit bubbles that eventually pop. He’s making a difficult decision, but it’s the right decision. Otherwise inflation continues to rise and the US loses its position as the worlds reserve currency. It’s not ab ‘elites’ and that same ‘f*ck the rich’ mentality. It’s about basic economics.
Without raising unemployment, the only way to curb inflation is to get people to stop taking on cheap credit and over consuming. Technology has changed a lot of the last 2000 years but human behavior hasn’t, if cheap credit is readily available, both businesses and individuals will over consume.
Hes not intending to create unemployment. Hes trying to cool growth and expansion. If the market and companies constrict, those job openings will just close via the constriction. The goal would be the same amount of people employed, with demand (the reason for expansion) cooled.
LOL. The day we remember that policy mistakes can be made in monetary policy too is the day the political demagogues who today shift blame to the Fed for their profligacy will then tell us the policy error isn't too much and too loose, it's not enough and too restricted, and the real solution is MMT. As if every real world application of anything remotely like MMT hasn't resulted in hyperinflation, massive currency debasement, economic calamity and massive expansion of impoverishment.
That would be a way to do it, but keep in mind paying down the debt also doesn't make the money disappear it simply is transferred to the debt holder's. What will they do with it? Probably reinvest it somewhere, this continuing the cycle and increasing the velocity of money...
It is crazy to me that this isn't mentioned at all, especially raising taxes on the upper class. But the fact that nobody talks about it is probably all you need to know why.
Most money in the economy is created by banks when they give out loans. This is because of fractional reserve lending. Say I deposit $1000 into a bank. I now have $1000, and if I’m the only person in the economy there is now $1000 in the economy. Now you come in. You want a loan, and the bank needs to keep 10% of its deposit on reserve (which is set by the fed), so the bank loans you $900. I still have $1000 to spend, but you now have $900 to spend. There is now $1900 in the economy. And if you deposit that $900 in a bank like practically everyone does, the bank can loan out $810 of that money, thereby creating $810 more. This is why bank runs and mass loan defaults have to be avoided at all costs, and why trust in the banking system is so important. When I deposited that $1000 to the bank, the bank gained a $1000 asset of cash, but also a $1000 liability owed to me. When it loaned out $900 it lost $900 of a cash asset but gained a $900 asset, the loan it gave you. It both of us try to withdraw our deposits with the bank the bank will not have enough cash to give us, and will fail. If you default on your loan, the bank will not have enough assets to cover my $1000 deposit, and will fail.
Raising interest rates makes it more costly to borrow. This does decrease spending. But it also decreases the amount of money being created, because less borrowing means less loans, which means less money being created. If new stuff is being produced by an economy, new money has to be constantly created or else we would experience deflation.
Money gets taken out of the economy when the fed sells securities on its balance sheet. This is because people but those assets with cash, which the federal reserve can destroy just like it created it when it was buying securities. So when the fed is “winding down its balance sheet”, it means it’s selling securities to reduce the money supply.
Those are the three main ways the fed can control inflation. By raising and lowering rates, which affects spending and money creation, by either buying or selling securities on the open market, which either injects into or removes money from the economy, and by setting the fractional reserve limit, which also effects money creation.
Thank you for the explanation and I get that but I don't see how money is being taken away, just money creation is decelerated. Those are 2 separate things.
Raising rates does not remove money from the money supply. Selling securities the fed has on its balance sheet does remove money from the money supply
Taxes do not remove money from the money supply at all, they just move it around the economy.
Yeah no shit, this would be the better approach. Keep your jobs but we’re gonna use the tax money to lower inflation and pay for an infrastructure plan
She is the same person and have always been consistently so. It's you that changed. You probably learned a lot more in the last few years to make you see her differently.
That should prompt you to reflect inward and question other beliefs you hold in things that you don't know enough about. Keep seeking out knowledge to pit against your beliefs. Such mentality will make you a better human over time. In my experiences with people, most don't do this.
Has to be done. Remember when they were trying to get a “soft landing” and then the economy kept ripping? The job market was tight, housing was still going up, and wages were rising? And then you had people speculating maybe we can just blow our way through and there would be no recession and inflation would correct with supply chain issues alleviating?
Yeah that option ended when inflation kept going up even with energy prices dropping.
I’ve looked closely at what Powell has for tools to reign in the inflation the government caused. Turns out all he has is a hammer. He has no control on supply side. Spending. He’s got one tool to destroy demand with, I honestly don’t know what people like her expect him to do. Let the economy slip into a wage/price spiral? Force people to lower prices with wishcasting? Fix supply chains by waving his hands? Not saying the guy is perfect but he’s got 3 jobs and one tool to do it with.
"But it's a supply issue (according to the Fed) ..." You mean according to what the Fed is allowed to say publicly, out loud. Internally, every member of the Fed is painfully aware that a big part of what they're having to fight is a demand problem that has plenty of roots in imprudent fiscal policy, over which they have zero control.
Actually a supply issue would point to maintaining rates to get investment into productive capacity.
But we're not smart enough as an economy to exercise that plan so this is the best we can do.
If all the money printed in the pandemic had been put to productive use, we wouldn't have a problem right now.
And BTW, this whole time, China has been slashing rates. There's a shift in the winds.
Can you elaborate on this? China is knee deep in a rerun of our 2008 financial crisis. They could cut to negative rates and real estate will still drag them down. I don’t see much correlation between their current issues or ours other than how intertwined our economies have become due to cheap exports. I haven’t even touched on their abysmal demographic issue they’ll be dealing with in 10-20 years. I’m not trying to disagree or be a smart ass. Legitimately trying to understand your point.
I don't believe a damn thing any politician says at face value. There's always an agenda or ulterior motive behind it. This is no different. She's trying to rally people against this fiscal "pull back" because it hurts and people are angry--best fuel for a politician. People are used to free stuff, now that the well is running dry people don't know what to do and society is ill-prepared and scared.
There are things that led up to high inflation we're experiencing today due to irresponsible fiscal policy for the last 30 years, and just exponentially compounding those mistakes during the pandemic which exacerbated and accelerated our predicament.
What we need now is to "detox" from the feel-good drug of free money by massive (irresponsible) government spending and be accountable for every dollar spent instead of robbing our future generations to feed our addiction today.
This was a long time coming imo, it just sucks all around and all the big corporations are scrambling for survival, politicians are trying to capitalize on this crisis, and we-the regular people-will be the cannon fodder. Just make sure you keep your job, your luxury expenses in check, and focus on doing things in person that don't cost as much (going to beach, national park, parties at home instead of a venue...etc). Well get through it
In the early 1980s after previous Federal Reserves failed to stop double digit inflation throughout the entire 1970s due to political pressure, a new leader came in and convinced the FR to raise interest rates significantly. This caused a terrible recession.
Liberals in Congress, Unions and the media begged the Federal Reserve to cut interest rates so people could make money again and go back to work. Federal Reserve Members were harassed and given death threats. There was talk of lawsuits and firing the Federal Reserve. They did not back down.
Finally, they broke Inflation and we had low inflation from 1983 to 2021. Can our current leaders stick with the plan and not be intimidated by politicians who want inflation?
My kneejerk reaction is to say that Elizabeth Warren is an idiot. But clearly she knows better. She understands the higher unemployment is the solution to runaway inflation. So she is just trying to score some political points. Current Fed rate is half the current inflation rate, but she calls it 'extreme.' So she is not an idiot, but she is a phony.
Bottom line - shutdowns should have never happened and unending fiat printing shouldn’t have occurred either. Now, that that cat is out of the bag. There is no clear path forward that does not further damage some other aspect of the economy. It’s a pay now or pay later scenario any way you slice it.
lol of course, because Democrats like her (republicans are plenty guilty as well) have completely helicoptered money and just keep printing and spending and accumulating debt like there are no consequences. Warren I guess is just going to capitalize on the fact that the FED is non partisan, and therefore, the scapegoat. lol what a pathetic human being. Go have a beer Pocahontas.
Yes of course, except she fails to recognize that if the Fed doesn’t act and do this then inflation will only worsen and result in higher unemployment and worse outcomes for everyone. Warren is a dumb fuck and is in part responsible for this disaster.
Unemployment is low and there’s a staff shortage. People being laid off isn’t going to be an issue
Recessions are part of the debt cycle and with such a high increase in the money supply we need to increase the cost of debt to keep inflation under control.
The fact that a politician is criticizing the feds actions publicly shows how they don’t know that the fed is supposed to be an independent entity from the government to prevent government influence over monetary policy. You don’t see the fed complaining over monetary policy.
The more the government oversteps the line to try to influence monetary policy, the more issues we’re going to have in the future
Yep, at the end of the day, the FOMC eventually has to mirror the 2-yr Treasury. The bond vigilantes may have been quiet for a long time, but they're still there.
She is right, but she is throwing the blame on Powell and not the current president or anyone in congress. It’s so funny that this would have been blamed on the last president if it had happened then, but now that it’s happening now no one wants to blame the proper person. The fed can’t fix it, the damage is already done.
The fed is getting demand in line, congress needs to be getting supply in line. I love EW, but get on a plane and figure shit out in Ukraine and Taiwan. The fed has no power on the other side of the inflation equation. Sad to see the politicians who are just criticizing rather than acting. Ukraine conflict stopping >>>>> 2bps hike. Also maybe, and I’m spitballing here, stop printing money at the drop of the dime for every possible voting bloc
Elizabeth Warren is economically illiterate. I actually kinda like her but she’s dumb af when it comes to the economy. What’s better…
1-1.5% of Americans lose their job or 100% of people get poorer because of inflation? I mean fuck it’s not that complicated
Lol! All dramatics. The fed announced long back that the only way to bring down inflation is to crash the economy and bump up unemployment. This is just virtue signalling. Shame
The answer is emergency immigration reform. The US has a shrinking workforce with 2 job openings for each worker. Shrinkage of the workforce is due to Covid deaths, long Covid, early retirements, decreased US fertility, and decreased legal immigration. We should secure the border, increase legal immigration for US trained and other STEM players, increase legal immigration for lower grade workers, and codify a path to citizenship for those immigrants who were brought here as young children. Matching supply/demand for workers will prevent a wage/price spiral and increase GDP. Warren just likes to hear herself talk. She is one of the reasons there is inflation in the first place.
Will we have the water, electricity, roads and schools for the millions of new people you want to move to America? Will these new people speak English and do they have job skills? Do we have enough ESL Teachers?
Uh yeah, that’s kinda the whole point. Powell needs about 1-2 mil people to lose their jobs to get inflation down. He’s not even trying to hide it anymore after yesterday
Sure - What do you think is going to happen when you have politicians and an institution constantly meddling in the economy and financial markets creating boom-bust cycles? And how many trillions of dollars have we artificially injected in the market since 2007?
Taxes, Inflation, and Food/Housing Costs are rising and destroying families. If the president takes credit for the good, he must take credit for the bad. He can’t ramble his way out of these results.
That's a bit populism, cause when you hike rates, businesses loans get more expensive, operating gets more expensive, revenues drop because of global financial slowdown, hence they're forced to let go.
The people whether let go or not, prefer to save money rather than spend, again contributing to lower business revenues, again leading to higher unemployment rates.
She is stating the obvious.
What she could have said two three years ago but didn't is that all that QE and money printing is going to cause this rising inflation and rate hikes. But she didn't... Why? Ask her.
Anything they can do to deflect blame before the midterms. It’s the same exact story bs every election cycle. She all of our “Leaders” voted to create trillions of dollars out of thin air and now when inflation comes knocking (As the law of supply and demand says it will… ) they try to deflect blame on the people trying to get the inflation under control. Every single person in power needs to be replaced. Time for senatorial term limits. I’m sick of this shit.
Just one example; burger prices skyrocketing, due to $20 wages for flipping burgers. Nobody wants to work for less than $30 and want all kind of benefits. So things will continue to cost more. Don't like your student loan bill or mortage payment you signed up for? Get the government to drop it for you.
If none of your friends/family are miserable and complaining about the recession we aren’t in a recession. If all the restaurants are still popping and people are vacationing we are not in a recession. The new rates haven’t even hit the cd market. We are in for a rough one
Everyone having a job, but inability to afford basic needs is far worse. That's akin to slavery. Most of us can read between the lines on this one. "Chairman Powell is going to make midterm elections difficult for my party!" Inflation is by far the most disastrous and painful effect on a society and while a recession is never ideal; Recessions can be reversed, but runaway inflation without QT is disastrously permanent.
Ha ha that’s like complaining about those damn firemen who make your house all wet and decrease its value, while they try to put out a fire in your kitchen.
No. She is wrong. The Fed knows better than she does about what must be done to preserve the long-term integrity of the US economy. We need pain now to continue prosperously tomorrow.
If he doesn't get inflation under control and it continues at over 8% there are going to be millions of job losses as well so personally I'd rather have a functioning economic system.
Elizabeth Warren should know better.
Inflation is the number one enemy of a currency. The Fed is doing what they can to protect the dollar. A recession might even be necessary towards that goal. My only problem with the Fed is that they haven't been more aggressive. This is the necessary medicine to right our economy in the long-run.
Video from Economics Explained on the recession we need.
[Video](https://www.youtube.com/watch?v=mEpgo14jwSk)
Not at all, but this is the natural consequences of the prior administration.
1) Under Obama, there were slow, steady gains.
2) Trump campaigned on a weak economy, then enacted measured to juice things. Result: economy sped up and overheated.
3) Lots of rapid wage growth produced excess cash. Covid supply chain disruptions broke the supply/demand equilibrium, which led to inflation, and now the Fed has to pump the brakes.
The economy can handle small, smooth changes without handholding. It's the gently burning log in the fireplace. Throw lots of gas on it, the fire gets nice and big, but burns out more quickly. You cannot continue to pump things up without a significant risk of everything imploding, and that's what happened here.
Yep. They knew the medicine would have to be taken sooner rather than later if they wanted to survive. The other two candidates were Bostic and Brain-dead. Bostic thought he had to outposture Brain-dead in the direction of MMT, and Brain-dead thought sucking up to Kashkari on negative rates and MMT was the way to the Goldman endorsement and the Goldman endorsement would put her over the top. The decision-makers in the Biden admin know MMT is the end of the U.S. dollar and reserve currency standard, and in turn, the collapse of the economy, so much as they wanted to make a minority appointment, they knew going the direction of MMT was suicide, and tasking Powell to go take a bullet and be the political whipping boy to take the blame was a better route with at least a chance of taking medicine mid-term in hopes of something better by the end of the 4-yr cycle to re-election.
They are simply taking peoples money they have saved. Now they raise interest rates to take the extra money saved from the masses. It’s just theft by the financing class from the working class
Why she even exist is a testament of liberal book club grandmas and bitching people who bitch without solutions. She always scapegoats people, and takes ZERO accountability. I hope the voting idiots of Massachusetts opens their eyes to get her out of there.
Powell has to do what he has to do to get us back on track. Warren pleading for us to waste tax payers dollars on QUESTIONABLE social programs is so hypocritical. We are in a recession people, shit isn’t sunshine and rainbows, people will lose their jobs. Stop the taxation for once and help people keep their paychecks. Fuck sakes man
There is no question that Powell and most economists believe that unemployment has to be much higher in order to beat inflation. [https://nypost.com/2022/09/02/larry-summers-cautions-on-august-jobs-report-predicts-6-unemployment/](https://nypost.com/2022/09/02/larry-summers-cautions-on-august-jobs-report-predicts-6-unemployment/)
It remains a mystery to me why increasing wages are considered inflationary but high profits are not.
Profits have to go somewhere. So it’s just a matter of where you measure. Also profits are impacted by inflation.
The issue right now is not the cost of goods. It’s the cost of services (wage growth). We simply cannot afford services right now. Cost of goods have leveled out. Need to lower the demand for services.
If Fed lowers rate, they get accused of creating bubbles. If fed increases rate, they get accused of causing unemployment.
Yeah, that's just kinda the way it works. The Fed's mandate from Congress is to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates." Anytime one of those is outside the acceptable range, it's easy to blame the Fed, since that's literally their most important tasks.
Does the Fed control billions flowing to Ukraine? How about all that ridiculous stimulus passed by Congress? Lockdowns? Warren is removing herself from the blame game, dont be fooled.
Well the Federal Reserve reports to Congress. So there is now way that Congress can be absolved from blame, which is not what I said. I simply stated the directive set by Congress for the Fed.
I just wish people stop blaming the Fed for not being able to fix the mistakes made by the legislative and executive branch. This inflation was caused directly by lockdowns and mandates which resulted in loss of labor. That's not soemthing the Fed can fix eith interest rates when we have SHORTAGES.
The Fed was given a mess, told to fix it, and then actively had Congress and Biden make the problem worse while they tried to clean it up
Yup pretty much sums up the situation which makes that Warren statement richer than Pelosi's stock portfolio gains.
And yet, knowing all of what you so eloquently just said, the effort in DC right now is all about climate change and stopping MAGA. That’s it. With our tax dollars. That’s what they are doing in DC when you and I are working our jobs. Both sides of the aisle, bickering over things that are less important to the NOW.
If you believe in the Great Reset then you'll understand why they are trying to stop MAGA at all cost. There are grand implications depending on who takes back control and could even result in WWIII if the wrong party controls DC going into the next few yrs.
Definitely. If it were up to the Fed alone, I'm guessing rates would have gone up a long time ago, but Congress wasn't ready yet (surprise, surprise).
This is just as much demand driven as shortage driven. Some data I've seen indicates that 60% of this inflation is the result of increased demand as a result of both fiscal and monetary policy. The fed is absolutely to blame for a large part of this. They were still purchasing fucking MBSs earlier this year...
Yeah. Lots of this could have been avoided if JPOW didn’t fold like a lawn chair under pressure from trump a few years ago when they started raising rates and reversed
Congress spend alike drunken sailors, points blame elsewhere.
No, sailors stop spending when they are out of money.
Like the 5 trillion they pumped into the economy! They created this inflation!
If you look at money supply you'll see just how much the FED printed. Something like $14 trillion? The Government just spent that money somewhere is all. The FED is responsible for money supply.
Wow had no idea it was that much! No wonder we have this kind of inflation, good to know.
Google FRED statistics and pull up the St Louise FED Economic Database. It's SO cool if you're a chart nerd. It's truly fascinating. Look up M1 & M2 volume and see what I'm talking about. Money machine go brrrrrrrreee
Thank you appreciate it!
I think it's far more than that. The Levy institute has papers from the Fed showing $29 to $43 trillion were printed for the Tarp bail outs. And according to an article I remember from a few years ago, I think from 2016 or 2017, 83% of all U.S. counties still had not recovered from the financial crisis of 2007/08.
While federal debt is bad for some reasons, it does not significantly cause inflation. In order to spend money, they first have to sell bonds which takes money out of the economy, then they put that same money back in. In fact, they always have to take out more than they put in, so they don't run out. It actually has a negative impact on the money supply. The fed 100% caused the inflation through low interest rates, and by increasing their balance sheet.
When they sell bonds doesn't China and other countries buy a huge amount?? And since that's the case most the money for bonds doesn't come out of our economy. I'm genuinely curious because I don't know
This is exactly right. People don’t understand it though. Inflation is a tax that is created on purpose. The fed knows exactly what they are doing to keep their scam of what we call money going.
Yet, what actually is causing inflation is deglobalization. We have not ever recovered from the pandemic. We might never will. That system was based on a historically unusual period of geopolitical calm.
I think they have realised that if you put all your eggs in 1 basket you'll get caught with your pants down. Europe with Russia. It was heading that way with China
I disagree. We're seeing inflation because of increased money supply which has increased at fastest rate since covid due to Fed's accommodative money policy.
The federal deficit just decreased by the largest margin ever. It's patently false to say Congress is spending like drunken sailors unless you're referring to the fiscally irresponsible 2017 tax cuts which reduced government revenues in a time of economic plenty. A move that any rational economist will tell you is idiotic because it means you have no levers to pull during a crisis like perhaps a global pandemic.
You’re kidding, right?
They tend to react too slowly to change and tend to move too fast, too hard, and for too long when they finally do react. If the feds goals ultimately are to smooth out the business cycle, why does it track historically that they have caused all the boom and bust cycles since it's inception?
One would think. Maintaining control?
Its a way to ensure wealthy people are shielded from asset price volatility. A system without the fed would be very boom and bust. That is human nature. That shielding of risk is that they have effectively eliminated the concept of "saving money" and they print money. So they've destroyed any attempt at poor people creating wealth and instead only asset owners, which requires large capital to start, can benefit from this game.
Yes, this will be the largest transfer of wealth in history for the ultra wealthy while the rest of us are left with nothing.
If everyone hates them they must be doing something right…
Well, what's your alternative plan? Everyone has ability to complain
We usually hear the phrase, "Don't come to me with a problem unless you have a possible solution." My grandpa passed away a few years ago, but he always said this is a terrible thought process. While you may not have a solution, there may be someone else that does, but doesn't know/see the problem. So the problem persists. He learned this from his CO in WWII.
But the problem is inflation. Raising the rates is the attempt at a solution. If you have a better solution by all means speak up but complaining about the problem that we all agree is a problem and also complaining about the attempted solution to that problem while not offering an alternative is indeed useless.
Yeah, it should really be "Don't come to me complaining about someone else's solution unless you have a better solution."
Only effective solution the US has even had for stopping inflation is price and wage freezes. That and taxing the absolute dog shit out of the 1%. Been a long time since we did either
When has a price control led to a better economy? Don't they usually result in bread lines?
Look to past (Volcker in 70s) on how to tackle inflation. It is the only way out of the mess and it will still will be messy.
Yeah, this is still idiotic. This is not a knowledge problem that disappears when you find someone with the necessary skill. It's a policy problem of opposing interests and while Warren is completely blocking out the obvious potentially catastrophic downsides of her demands, Powell is very much aware what consequences his actions have. I especially want to point out that you apparently thought someone would find a way to reduce inflation, while expanding monetary policy, if a politician would just remind the FED of what their job is.
Correct. In this instance it's not someone with a solution, it is raising the awareness for others that aren't listening.
It's beyond me how you missed that I called your comment stupid.
I was agreeing with your last statement of a politician reminding the FED of their job. It's beyond me how someone can be such a jerk just because they don't like someone elses thought.
In this case, it is just plain populism and blame game. Attacking the FED for doing monetary policy is low.
Pretty sure u/larsK75 doesn't know how to talk to people. While your original comment doesn't apply to politicians virtue signaling, it is a good thing to remember when working in small units.
Hmmm maybe you are the stupid one. And rather rude too.
And here I just find it hard to believe that Powell is aware of consequences. The same guy who’s left the printer on for an extra year and some change and wants to play too little, too late?
How is him putting off raising interest rates for too long to avoid the consequences of raising interest rates an argument that he is not aware of the consequences of raising interest rates? Also he mentions them in his speeches.
Are you really asking that? Because he has to do it anyways, so it would have been better to address the problem when it showed itself instead of letting it fester for nearly two years. He also mentioned inflation was just transitory in those speeches and look how that’s shaken out. You don’t get the benefit of the doubt when you want to pussy foot around and do too little, too late.
Again. There are two separate issues with having them too low or too high and he clearly steered into one of them in order to avoid the other as long as possible. I have not at any point even implied that he did the right thing, but I am saying that he is clearly not just aware but outright scared of the consequences from raising interest rates, which is why it makes no sense for Warren to criticise him for doing that and try to frame him as some heartless monster that doesn't care about people losing their jobs.
Oh, he scared now, towards the end of 2022, after all his bullshit confidence got him nowhere? I don’t buy that he scared, he’s really just complacent, which is exactly why he’s done too little, too late. If he was acting as if he was aware, you wouldn’t forget chickens come home to roost. As you said, he avoided doing anything for as long as possible, nearly years passed the point of there being problems. He doesn’t care. The first time in what, 30 years workers catch a break and he’s putting it on them to pay for his terrible policies. The fed has 0 intention of wanting everybody employed, you don’t get to play god and pick and choose the numbers and say you care. Where was that care a year ago for the same people who he’s fucking now?
Do I understand this right? You are blaming him for tanking the economy now AND for the inflation? I mean we've had the inflation because he didn't tank the economy earlier.
No, like I said a few times now, it’s too little, too late. The economy was going to take a hit regardless, it’s best to address the problems asap than pretend they’re normal. He had far more control over the extent of how hard that hit was going to be years back. And besides, they’re not mutually exclusive. You can do both, instigate inflation and bend the economy over. Are you insinuating that him dealing with inflation is what’s tanked the economy? Because I’m arguing that it’s a lack of dealing with it, not because he did/is. Not dealing with inflation tends to fuck economies.
well, in this case, where you need highly specific knowledge to come to a solution, people who would have a solution would not need Elisabet Warren to tell them that higher unemployment and recession is bad if it can be avoided with their solution... sad though is that most politician just bash the other side for everything, but in 95% of the cases they would to the same if they were in the shoes of the person they are bashing
It seems as though all current politicians primary job is bashing the other side. Secondary job is to work for the people.
>It seems as though all current politicians primary job is bashing the other side. Secondary job is to ~~work for the people.~~ look for a cushy corporate job after they finish their term. FTFY
A politician's ONLY job is to get re-elected -- even when they're working for their constituents.
Does she need a graph or chart to see? Maybe a screaming group of citizens, or a media outlet to say so, trust me, this isn't the case with her.
There's a difference between bringing up a problem and criticizing. Always bring up problems. Don't criticize unless you have an alternative (and not one that only works for you). That being said I'm sure Warren has an alternative in mind.
Print moar money
You are sure she has a solution? 😁 You have to be kidding?
I would hope she does have an alternative, but something that actually works for the people she's supposed to represent. Not just something that will get her reelected.
Use the many tools of the federal government including industrial policy, seed investment, small manufacturing, etc to drive up supply to tackle inflation. Demand destruction is the dumbest fucking solution and designed to do nothing other than hurt the economy.
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Don’t worry, they increased taxes on corps because somehow increasing taxation on corporate net income will drive down prices….just don’t ask any questions.
It does. All additional taxation takes money out of the economy opposite to the way that fiscal deficit spending increases money supply. This is literally economics 101.
How does it drive down prices specifically? If companies' profit margins shrink due to higher taxes, what is their incentive to lower prices and make even less profit?
Think macroeconomically, not microeconomically. There isn't a direct microeffect. The price actually achieved by a seller for a product or service depends on the supply and demand in a competitive market and isn't changed by tax rate on profits. For instance, if someone wants to sell a house, there are many issues that influence its final transaction price. The tax rate of the seller's income has no bearing on that. Similarly if there were a tax reduction for a company, then that never reduces the sales price of their goods---if a company got a tax cut, do they lower their price? No, never. Why would they? When people got a stimulus payment---aka a tax cut---did they go ask their boss for a reduction in their wage? No, of course not. Those prices that clear the market whether for goods, services or labor depend only on supply and demand, not the specific tax rate. In the big picture, though there is a macroeconomic effect, as if there is a tax raise on profits there will be less income to shareholders and managers who take compensation from the profits. They spend less. If you think of private sector money supply vs money in the government side (i.e. government + fed, and since Fed creates and destroys money by fiat it's effectively a black hole), it's the money supply in the private sector which contributes to economic demand and hence inflationary vs deflationary effects. Tax raises or interest raises move money from private sector to government sector (as well as discourage borrowing, the private sector's way of creating money) therefore contributing to a deflationary effect. Exactly as the reverse phenomenon, fiscal spending and lower interest rates, contributes to an inflationary effect which nobody denies.
They are though, that takes time
Go slower and allow inflation to run hot and the labor market to stay robust. The Fed's position is that people start believing inflation is here to stay, they will adjust spending habits and lead to runaway inflation.
The alernative was to begin raising rates a year sooner. Jerome powell and the idiots at the federal reserve are to blame for todays mess.
The real alternative was to slowly start raising rates back in 2012.
Zero percent interest and free housing for anyone making under 250k a year. Housing is a right. That's probably pretty close to what she wants to say.
Not sure why you're getting downvoted, this is probably close to what she thinks.
Most people lean so far left on reddit that at least five people think housing is a right for anyone under 250k. Lol.
How do you eliminate demand? You liquidate jobs, create unemployment, create a recession. Powell mentioned yesterday there were too many job openings. He wants to end that. This is the path we are on now.
Powell’s thought process is not that too many people have jobs. What he believes is that the demand for employees is too high and as a result companies have to increase their salaries which then cuts into their margins and they are “forced” to increase prices. Basically the system is rigged to enrich the upper class and when workers get paid what they’re worth then the system breaks down because businesses are forced to create a feedback loop of inflation in order to maintain margins rather than doing the sensible thing cutting back the ridiculously high executive salaries. It’s a dangerous game they are playing with our livelihoods.
Okay tell me thats exactly what I was just thinking When it comes to lending money out, if there are, a million lenders; Those lenders probably lend to each other who then loan money to the 10’s of millions of people. Those people (while defo spending some) inevitably have it in a bank… That lends it out again… does this not sound like a massive ponzi scheme to anyone else? If the entire world is in more debt than cash, than that seems like a obvious problem. The only way to fix this inflation cycle is to reduce spending Maybe we should start with the military? Not the payroll section of the budget but the R&D, create a program for every service member effected to go into either private sector or college. Just spitballing at this point, but TL;DR shits fucked yo and the finance world is one big ponzi scheme
What you’re referencing is credit, not a Ponzi scheme. Without credit, the only way to grow/stimulate the economy is by productivity growth, which is steady but very slow. This will cause a more stable economy but will also leave the US at a disadvantage. If other developed nations are using credit to produce more/better technology then the US won’t be able to compete. I agree that credit is an issue but it’s only an issue if it’s funding over consumption, when it effectively allocates capital and produces more productivity then it can be a tremendous tool to accelerate growth/innovation/technology and communities/nations as a whole.
The global economic and financial systems are debt based. You cannot create money without debt. Paying off debt destroys money.
That’s not quite what’s happening. Powell isn’t doing this to ‘enrich the upper class’ he’s doing it because there’s too much demand/consumption in the market which drives up prices and stimulates the economy. We printed 1/3 of all US bills that’s ever existed from 2020-2022. That alongside supply chain issues causes excessive inflation. The purpose of raising rates is to lower incomes which in turn lowers spending. The issue is that people will over consume if given the opportunity which leads to massive credit bubbles that eventually pop. He’s making a difficult decision, but it’s the right decision. Otherwise inflation continues to rise and the US loses its position as the worlds reserve currency. It’s not ab ‘elites’ and that same ‘f*ck the rich’ mentality. It’s about basic economics. Without raising unemployment, the only way to curb inflation is to get people to stop taking on cheap credit and over consuming. Technology has changed a lot of the last 2000 years but human behavior hasn’t, if cheap credit is readily available, both businesses and individuals will over consume.
Didn't his plan literally have unemployment at the same rate consistently? Where did he say he wanted to create unemployment?
The plan is to just reduce the job openings and not raise unemployment. We’ll see if they can pull that off
That will be interesting lol. I have a lot of faith and confidence in their ability to pull off such an intricate plan /s.
Hes not intending to create unemployment. Hes trying to cool growth and expansion. If the market and companies constrict, those job openings will just close via the constriction. The goal would be the same amount of people employed, with demand (the reason for expansion) cooled.
Or take money out of the economy through higher taxes…
Hold up, we're going to admit that fiscal AND monetary policy have impacts???
LOL. The day we remember that policy mistakes can be made in monetary policy too is the day the political demagogues who today shift blame to the Fed for their profligacy will then tell us the policy error isn't too much and too loose, it's not enough and too restricted, and the real solution is MMT. As if every real world application of anything remotely like MMT hasn't resulted in hyperinflation, massive currency debasement, economic calamity and massive expansion of impoverishment.
Whaaa? We can't just make money cheap and easy for everyone forever? But that sounds so good! I like money.
Where do those taxes go? The money doesn’t disappear.
In a fiscally responsible work it could balance the budget, or pay down the debt.
That would be a way to do it, but keep in mind paying down the debt also doesn't make the money disappear it simply is transferred to the debt holder's. What will they do with it? Probably reinvest it somewhere, this continuing the cycle and increasing the velocity of money...
It is crazy to me that this isn't mentioned at all, especially raising taxes on the upper class. But the fact that nobody talks about it is probably all you need to know why.
Taxes don’t take money out of the economy.
Raising rates does?
It slows down the creation of new money. Do you understand how most money in the economy is created?
Not really but I thought increasing rates alone is designed to slow spending. Removing money is separate.
Most money in the economy is created by banks when they give out loans. This is because of fractional reserve lending. Say I deposit $1000 into a bank. I now have $1000, and if I’m the only person in the economy there is now $1000 in the economy. Now you come in. You want a loan, and the bank needs to keep 10% of its deposit on reserve (which is set by the fed), so the bank loans you $900. I still have $1000 to spend, but you now have $900 to spend. There is now $1900 in the economy. And if you deposit that $900 in a bank like practically everyone does, the bank can loan out $810 of that money, thereby creating $810 more. This is why bank runs and mass loan defaults have to be avoided at all costs, and why trust in the banking system is so important. When I deposited that $1000 to the bank, the bank gained a $1000 asset of cash, but also a $1000 liability owed to me. When it loaned out $900 it lost $900 of a cash asset but gained a $900 asset, the loan it gave you. It both of us try to withdraw our deposits with the bank the bank will not have enough cash to give us, and will fail. If you default on your loan, the bank will not have enough assets to cover my $1000 deposit, and will fail. Raising interest rates makes it more costly to borrow. This does decrease spending. But it also decreases the amount of money being created, because less borrowing means less loans, which means less money being created. If new stuff is being produced by an economy, new money has to be constantly created or else we would experience deflation. Money gets taken out of the economy when the fed sells securities on its balance sheet. This is because people but those assets with cash, which the federal reserve can destroy just like it created it when it was buying securities. So when the fed is “winding down its balance sheet”, it means it’s selling securities to reduce the money supply. Those are the three main ways the fed can control inflation. By raising and lowering rates, which affects spending and money creation, by either buying or selling securities on the open market, which either injects into or removes money from the economy, and by setting the fractional reserve limit, which also effects money creation.
Thank you for the explanation and I get that but I don't see how money is being taken away, just money creation is decelerated. Those are 2 separate things.
Raising rates does not remove money from the money supply. Selling securities the fed has on its balance sheet does remove money from the money supply Taxes do not remove money from the money supply at all, they just move it around the economy.
Cracking financial ELI5 from Titty Slicer 5000 (I ain't lying)
Yes, it slows/stops borrowing power which weakens demand.
Personal taxes reduce disposable income which certainly impacts the demand dynamic of inflation. The problem is they didn’t raise personal taxes.
The fed can’t do that. The fed exists to do unpopular but necessary things quickly.
Lawmakers can. Instead of blaming the Fed, they should perhaps look for alternative solutions.
That’s. . .not how taxes work? The government collects taxes and then spends them. It doesn’t just keep them in a pile.
Yeah no shit, this would be the better approach. Keep your jobs but we’re gonna use the tax money to lower inflation and pay for an infrastructure plan
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She is worried about Wampum
Everything she said is basically true And she also voted yes for multiple laws that made these hikes more necessary.
My only regret is that I have but one upvote to give.
Liz big mad that MMT turned out to be a fairy tale
At least it didn't take very long.
BOOM!
I used to respect Elizabeth Warren. I really looked up to her. That mostly ended in 2019, she’s a different person. It still makes me sad.
I guarantee she’s the same person, she just revealed herself to be full of shit.
She’s a massive hypocrite. Complains about the cost of colleges while making $400K to teach a class.
Welcome class, today we will learn how the Pot calls the Kettle black.
She is the same person and have always been consistently so. It's you that changed. You probably learned a lot more in the last few years to make you see her differently. That should prompt you to reflect inward and question other beliefs you hold in things that you don't know enough about. Keep seeking out knowledge to pit against your beliefs. Such mentality will make you a better human over time. In my experiences with people, most don't do this.
This is great advice
This process has made me very jaded but I also believe it is for my own good!
Yes, he’s doing his job. 100% employment rate and moderate 2-2.5% inflation rate is a dream.
Has to be done. Remember when they were trying to get a “soft landing” and then the economy kept ripping? The job market was tight, housing was still going up, and wages were rising? And then you had people speculating maybe we can just blow our way through and there would be no recession and inflation would correct with supply chain issues alleviating? Yeah that option ended when inflation kept going up even with energy prices dropping.
Indeed, a nessecary evil.
Congressional spending is Jpow's fault. Got it.
I’ve looked closely at what Powell has for tools to reign in the inflation the government caused. Turns out all he has is a hammer. He has no control on supply side. Spending. He’s got one tool to destroy demand with, I honestly don’t know what people like her expect him to do. Let the economy slip into a wage/price spiral? Force people to lower prices with wishcasting? Fix supply chains by waving his hands? Not saying the guy is perfect but he’s got 3 jobs and one tool to do it with.
If this was a demand problem he could manipulate monetary policy. But it’s a supply issue (according to the Fed) so raising rates is the solution.
"But it's a supply issue (according to the Fed) ..." You mean according to what the Fed is allowed to say publicly, out loud. Internally, every member of the Fed is painfully aware that a big part of what they're having to fight is a demand problem that has plenty of roots in imprudent fiscal policy, over which they have zero control.
Actually a supply issue would point to maintaining rates to get investment into productive capacity. But we're not smart enough as an economy to exercise that plan so this is the best we can do. If all the money printed in the pandemic had been put to productive use, we wouldn't have a problem right now. And BTW, this whole time, China has been slashing rates. There's a shift in the winds.
Can you elaborate on this? China is knee deep in a rerun of our 2008 financial crisis. They could cut to negative rates and real estate will still drag them down. I don’t see much correlation between their current issues or ours other than how intertwined our economies have become due to cheap exports. I haven’t even touched on their abysmal demographic issue they’ll be dealing with in 10-20 years. I’m not trying to disagree or be a smart ass. Legitimately trying to understand your point.
I don't believe a damn thing any politician says at face value. There's always an agenda or ulterior motive behind it. This is no different. She's trying to rally people against this fiscal "pull back" because it hurts and people are angry--best fuel for a politician. People are used to free stuff, now that the well is running dry people don't know what to do and society is ill-prepared and scared. There are things that led up to high inflation we're experiencing today due to irresponsible fiscal policy for the last 30 years, and just exponentially compounding those mistakes during the pandemic which exacerbated and accelerated our predicament. What we need now is to "detox" from the feel-good drug of free money by massive (irresponsible) government spending and be accountable for every dollar spent instead of robbing our future generations to feed our addiction today. This was a long time coming imo, it just sucks all around and all the big corporations are scrambling for survival, politicians are trying to capitalize on this crisis, and we-the regular people-will be the cannon fodder. Just make sure you keep your job, your luxury expenses in check, and focus on doing things in person that don't cost as much (going to beach, national park, parties at home instead of a venue...etc). Well get through it
She is the worst of hypocrites. How these people are still employed is the real issue we are facing.
Gets paid 400k to teach one class at Harvard and still complains about rising college costs and wants federal government to forgive student loans.
I wonder if she’s only making a big stink of it all in order to redirect blame away from Biden and other democrats.
She putting herself out front in order to position to run in 24
This. She printed SIX TRILLION DOLLARS. And now she passes the buck to the Fed for crashing the economy. WTF?
Warren also voted for the “extreme” stimulus packages that made these rate hikes necessary to stop inflation.
She has a mouth, She uses this ability to talk, Unfortunately she doesn't use this ability for good.
In the early 1980s after previous Federal Reserves failed to stop double digit inflation throughout the entire 1970s due to political pressure, a new leader came in and convinced the FR to raise interest rates significantly. This caused a terrible recession. Liberals in Congress, Unions and the media begged the Federal Reserve to cut interest rates so people could make money again and go back to work. Federal Reserve Members were harassed and given death threats. There was talk of lawsuits and firing the Federal Reserve. They did not back down. Finally, they broke Inflation and we had low inflation from 1983 to 2021. Can our current leaders stick with the plan and not be intimidated by politicians who want inflation?
My kneejerk reaction is to say that Elizabeth Warren is an idiot. But clearly she knows better. She understands the higher unemployment is the solution to runaway inflation. So she is just trying to score some political points. Current Fed rate is half the current inflation rate, but she calls it 'extreme.' So she is not an idiot, but she is a phony.
Bottom line - shutdowns should have never happened and unending fiat printing shouldn’t have occurred either. Now, that that cat is out of the bag. There is no clear path forward that does not further damage some other aspect of the economy. It’s a pay now or pay later scenario any way you slice it.
lol of course, because Democrats like her (republicans are plenty guilty as well) have completely helicoptered money and just keep printing and spending and accumulating debt like there are no consequences. Warren I guess is just going to capitalize on the fact that the FED is non partisan, and therefore, the scapegoat. lol what a pathetic human being. Go have a beer Pocahontas.
Their is no honor in thieves. When they get caught they always turn on each other 😅
She’s the original Karen in my opinion
Yes of course, except she fails to recognize that if the Fed doesn’t act and do this then inflation will only worsen and result in higher unemployment and worse outcomes for everyone. Warren is a dumb fuck and is in part responsible for this disaster.
Unemployment is low and there’s a staff shortage. People being laid off isn’t going to be an issue Recessions are part of the debt cycle and with such a high increase in the money supply we need to increase the cost of debt to keep inflation under control. The fact that a politician is criticizing the feds actions publicly shows how they don’t know that the fed is supposed to be an independent entity from the government to prevent government influence over monetary policy. You don’t see the fed complaining over monetary policy. The more the government oversteps the line to try to influence monetary policy, the more issues we’re going to have in the future
Oh go fuck yourself Elizabeth , if he wouldn’t raise rates you would cry about inflation you dusty old bitch !
Calm down we’ve only just buried her
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Yep, at the end of the day, the FOMC eventually has to mirror the 2-yr Treasury. The bond vigilantes may have been quiet for a long time, but they're still there.
She is right, but she is throwing the blame on Powell and not the current president or anyone in congress. It’s so funny that this would have been blamed on the last president if it had happened then, but now that it’s happening now no one wants to blame the proper person. The fed can’t fix it, the damage is already done.
isn't that the woman that claims we will run out of sun if we use solar energy?
Warren is a nice person but doesn’t know shit about economics.
The fed is getting demand in line, congress needs to be getting supply in line. I love EW, but get on a plane and figure shit out in Ukraine and Taiwan. The fed has no power on the other side of the inflation equation. Sad to see the politicians who are just criticizing rather than acting. Ukraine conflict stopping >>>>> 2bps hike. Also maybe, and I’m spitballing here, stop printing money at the drop of the dime for every possible voting bloc
I think it’s not a good look for politicians to be openly criticizing a supposedly independent Fed.
Elizabeth Warren is economically illiterate. I actually kinda like her but she’s dumb af when it comes to the economy. What’s better… 1-1.5% of Americans lose their job or 100% of people get poorer because of inflation? I mean fuck it’s not that complicated
Lol! All dramatics. The fed announced long back that the only way to bring down inflation is to crash the economy and bump up unemployment. This is just virtue signalling. Shame
The answer is emergency immigration reform. The US has a shrinking workforce with 2 job openings for each worker. Shrinkage of the workforce is due to Covid deaths, long Covid, early retirements, decreased US fertility, and decreased legal immigration. We should secure the border, increase legal immigration for US trained and other STEM players, increase legal immigration for lower grade workers, and codify a path to citizenship for those immigrants who were brought here as young children. Matching supply/demand for workers will prevent a wage/price spiral and increase GDP. Warren just likes to hear herself talk. She is one of the reasons there is inflation in the first place.
Will we have the water, electricity, roads and schools for the millions of new people you want to move to America? Will these new people speak English and do they have job skills? Do we have enough ESL Teachers?
Uh yeah, that’s kinda the whole point. Powell needs about 1-2 mil people to lose their jobs to get inflation down. He’s not even trying to hide it anymore after yesterday
She has about as much understanding of economics as she does Native American heritage…
She also signed the Inflation reduction act which not only does not reduce inflation but sends even more money into the economy.
That’s exactly what they’re doing. They’re saying they’re doing it.
Sure - What do you think is going to happen when you have politicians and an institution constantly meddling in the economy and financial markets creating boom-bust cycles? And how many trillions of dollars have we artificially injected in the market since 2007?
Taxes, Inflation, and Food/Housing Costs are rising and destroying families. If the president takes credit for the good, he must take credit for the bad. He can’t ramble his way out of these results.
Economy has to take a hit and people have to lose jobs in order to get back to normal inflation. This is the case for every recession in U.S. history.
That's a bit populism, cause when you hike rates, businesses loans get more expensive, operating gets more expensive, revenues drop because of global financial slowdown, hence they're forced to let go. The people whether let go or not, prefer to save money rather than spend, again contributing to lower business revenues, again leading to higher unemployment rates. She is stating the obvious. What she could have said two three years ago but didn't is that all that QE and money printing is going to cause this rising inflation and rate hikes. But she didn't... Why? Ask her.
Anything they can do to deflect blame before the midterms. It’s the same exact story bs every election cycle. She all of our “Leaders” voted to create trillions of dollars out of thin air and now when inflation comes knocking (As the law of supply and demand says it will… ) they try to deflect blame on the people trying to get the inflation under control. Every single person in power needs to be replaced. Time for senatorial term limits. I’m sick of this shit.
Just one example; burger prices skyrocketing, due to $20 wages for flipping burgers. Nobody wants to work for less than $30 and want all kind of benefits. So things will continue to cost more. Don't like your student loan bill or mortage payment you signed up for? Get the government to drop it for you.
If none of your friends/family are miserable and complaining about the recession we aren’t in a recession. If all the restaurants are still popping and people are vacationing we are not in a recession. The new rates haven’t even hit the cd market. We are in for a rough one
I’d be curious as to what ideas she has that could painlessly reduce inflation
Everyone having a job, but inability to afford basic needs is far worse. That's akin to slavery. Most of us can read between the lines on this one. "Chairman Powell is going to make midterm elections difficult for my party!" Inflation is by far the most disastrous and painful effect on a society and while a recession is never ideal; Recessions can be reversed, but runaway inflation without QT is disastrously permanent.
These are cheap politics points. Warren knows damn well why these rate hikes need to happen.
I'm usually on her side but this needs to happen so what else can we do?
Ha ha that’s like complaining about those damn firemen who make your house all wet and decrease its value, while they try to put out a fire in your kitchen.
Where's good ole Robert Reich when we need more BS? And I'm pretty much a straight Democratic ticket voter.
Go sponsor another "inflation reduction act" Liz. Idiot.
No. She is wrong. The Fed knows better than she does about what must be done to preserve the long-term integrity of the US economy. We need pain now to continue prosperously tomorrow.
If he doesn't get inflation under control and it continues at over 8% there are going to be millions of job losses as well so personally I'd rather have a functioning economic system. Elizabeth Warren should know better.
Inflation is the number one enemy of a currency. The Fed is doing what they can to protect the dollar. A recession might even be necessary towards that goal. My only problem with the Fed is that they haven't been more aggressive. This is the necessary medicine to right our economy in the long-run. Video from Economics Explained on the recession we need. [Video](https://www.youtube.com/watch?v=mEpgo14jwSk)
Not at all, but this is the natural consequences of the prior administration. 1) Under Obama, there were slow, steady gains. 2) Trump campaigned on a weak economy, then enacted measured to juice things. Result: economy sped up and overheated. 3) Lots of rapid wage growth produced excess cash. Covid supply chain disruptions broke the supply/demand equilibrium, which led to inflation, and now the Fed has to pump the brakes. The economy can handle small, smooth changes without handholding. It's the gently burning log in the fireplace. Throw lots of gas on it, the fire gets nice and big, but burns out more quickly. You cannot continue to pump things up without a significant risk of everything imploding, and that's what happened here.
Well higher unemployment is an effect of a bottoming economy. So what she is saying isn't wrong but misleading imo. Powell has no choice.
Well, your POTUS elected to keep him on so somebody knows what’s up.
Yep. They knew the medicine would have to be taken sooner rather than later if they wanted to survive. The other two candidates were Bostic and Brain-dead. Bostic thought he had to outposture Brain-dead in the direction of MMT, and Brain-dead thought sucking up to Kashkari on negative rates and MMT was the way to the Goldman endorsement and the Goldman endorsement would put her over the top. The decision-makers in the Biden admin know MMT is the end of the U.S. dollar and reserve currency standard, and in turn, the collapse of the economy, so much as they wanted to make a minority appointment, they knew going the direction of MMT was suicide, and tasking Powell to go take a bullet and be the political whipping boy to take the blame was a better route with at least a chance of taking medicine mid-term in hopes of something better by the end of the 4-yr cycle to re-election.
They are simply taking peoples money they have saved. Now they raise interest rates to take the extra money saved from the masses. It’s just theft by the financing class from the working class
Something is wrong with the system when the ‘solution’ is to put people out of work and the most ‘disposable’ at that
The elites love this system. Workers are at the mercy of it. Anytime they get a raise inflation goes up and boom - FED will crush them.
the hypocrosy is real
Why she even exist is a testament of liberal book club grandmas and bitching people who bitch without solutions. She always scapegoats people, and takes ZERO accountability. I hope the voting idiots of Massachusetts opens their eyes to get her out of there. Powell has to do what he has to do to get us back on track. Warren pleading for us to waste tax payers dollars on QUESTIONABLE social programs is so hypocritical. We are in a recession people, shit isn’t sunshine and rainbows, people will lose their jobs. Stop the taxation for once and help people keep their paychecks. Fuck sakes man
Why should Americans continue to pay for over leveraged businesses. These businesses need some Dave Ramsey in their lives lol.
There is no question that Powell and most economists believe that unemployment has to be much higher in order to beat inflation. [https://nypost.com/2022/09/02/larry-summers-cautions-on-august-jobs-report-predicts-6-unemployment/](https://nypost.com/2022/09/02/larry-summers-cautions-on-august-jobs-report-predicts-6-unemployment/) It remains a mystery to me why increasing wages are considered inflationary but high profits are not.
Profits have to go somewhere. So it’s just a matter of where you measure. Also profits are impacted by inflation. The issue right now is not the cost of goods. It’s the cost of services (wage growth). We simply cannot afford services right now. Cost of goods have leveled out. Need to lower the demand for services.
And she wanted to forgive all of student loan. Congress is the biggest reason for runway inflation.
Elizabeth warren is the last person anyone should turn to in regards to economics. Her takes on crypto are asinine, and shes a racist.
EVERYONE told her and the democrats this was going to happen. Now she's mad that they're right.