Economics Thread

[acesfull86]

“ No explanation has been offered for these rather momentous errors. Nor is there any suggestion that the Fed forecasting procedures or the personnel that produced them will change.”

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Welcome to my world, Larry. This describes not only the Fed, but they’re certainly a great example.

[thethe]

If your goal was to absolutely crush the dollar and potentially have it be removed from the worlds reserve currency then the decisions of the fed make sense.....

[sturg33]

More food for thought from Larry Summers.

https://www.washingtonpost.com/opini...est-rate-hike/

When the long-awaited process of raising interest rates begins Wednesday, market observers will fixate on the precise words used in the Fed statement and during Chair Jerome H. Powell’s news conference. The focus will be on what they signal about the number of rate increases coming this year and next, as well as the schedule for selling down the bonds the Fed accumulated during the pandemic.

The hope is that the Fed can engineer the proverbial soft landing, whereby inflation returns to around its 2 percent goal and the economy remains strong without a substantial increase in unemployment. Judging by their statements to date, Powell and his colleagues seem to believe they have a good chance of success.

Anything is possible, and wishful thinking can sometimes prove self-fulfilling. But I believe the Fed has not internalized the magnitude of its errors over the past year, is operating with an inappropriate and dangerous framework, and needs to take far stronger action to support price stability than appears likely. The Fed’s current policy trajectory is likely to lead to stagflation, with average unemployment and inflation both averaging over 5 percent over the next few years — and ultimately to a major recession.

Indeed, recent research that I conducted with my Harvard colleague Alex Domash shows that overheating conditions of high inflation and low unemployment are usually followed, in short order, by recession.

A year ago, the Fed thought inflation would be in the 2 percent range for the next year. Six months ago, it was expressing optimism that inflation was transitory. Two weeks ago, it was still buying mortgage-backed securities even as house prices had increased by more than 20 percent. No explanation has been offered for these rather momentous errors. Nor is there any suggestion that the Fed forecasting procedures or the personnel that produced them will change. Indeed, the most important change in the March Monetary Policy Report to Congress was in the wrong direction — the removal of the discussion of the various monetary policy rules that had suggested policy was dangerously loose.

So there is little basis for confidence in the Fed’s assessment of inflation risks. With extraordinarily tight labor markets getting tighter by the best available measures, and wage inflation running at 6 percent and accelerating, high inflation was a major risk even before the events of recent weeks. We now face major new inflation pressures from higher energy prices, sharp run-ups in grain prices due to the Ukraine war, and potentially many more supply-chain interruptions as covid-19 forces lockdowns in China. It would not be surprising if these factors added three percentage points to inflation in 2022. And with price increases outstripping wage increases, a wage-price spiral is a major risk.

Some of us have been warning about the feds disastrous policies for over a decade

[acesfull86]

Some of us have been warning about the feds disastrous policies for over a decade

And his observation that there’s no accountability is spot on - where’s the explanation when they get things wrong? Where’s the explanation of what will change to do better in the future? Why aren’t bad systems, bad personnel, bad policies replaced?

Sounds like the Fed, sounds like the FDA, sounds like the CDC, sounds like the Dept. of Ed., sounds like executive branches at the state and federal level, sounds like government all over.

[sturg33]

And his observation that there’s no accountability is spot on - where’s the explanation when they get things wrong? Where’s the explanation of what will change to do better in the future? Why aren’t bad systems, bad personnel, bad policies replaced?

Sounds like the Fed, sounds like the FDA, sounds like the CDC, sounds like the Dept. of Ed., sounds like executive branches at the state and federal level, sounds like government all over.

Giving unlimited funding and power to an entity with zero accountability is one of the most baffling desires of leftists that exist

[Tapate50]

And his observation that there’s no accountability is spot on - where’s the explanation when they get things wrong? Where’s the explanation of what will change to do better in the future? Why aren’t bad systems, bad personnel, bad policies replaced?

Sounds like the Fed, sounds like the FDA, sounds like the CDC, sounds like the Dept. of Ed., sounds like executive branches at the state and federal level, sounds like government all over.

Accountability and transparency are gone

[thethe]

Accountability and transparency are gone

Submit to the expert class

[57Brave]

Question to board posters:

Freakonomics guy read a poll saying only 17% of the country thinks the country is headed in the right direction.
Yet
85% are satisfied tith the direction of their lives.
Hmm

Our board is filled with economic doom and groomers and next breath brag of their personal kitchen table economics..
So.

Which is it ?

[acesfull86]

I don't think it's an either/or, more just a reflection of human nature. People have infinitely more control over the direction of their own lives than they do the direction of the country. In any situation where there's a substantial difference in control, I'd think you'd see a similar result.

My guess is there will always be a substantial gap between those percentages, but it's certainly going to be higher now given the state of politics in the US, not to mention the deluge of terrible news we're hit with daily, from war to pandemics to inflation concerns.

We've replaced one terribly unpopular, unfit for the job POTUS with another terribly unpopular, unfit for the job POTUS...that certainly doesn't help with how polarized this country is already.

[acesfull86]

https://reason.com/2022/03/22/politi...t-control-law/

As a controversial new rent control law in St. Paul, Minnesota, nears its implementation date, politicians are scrambling to define the terms of the vague new policy, mitigate its worst effects, or even overturn it entirely.

Tomorrow the St. Paul City Council will discuss the details of implementing Question 1, a brief, voter-passed ordinance that caps annual rent increases at 3 percent and which includes none of the typical exemptions or allowances for new construction, vacant units, or inflation.

The policy isn't scheduled to take effect until May 1. Nevertheless, its strictness has seen developers flee the city almost immediately after its passage in November 2021. Thousands of planned new housings units have been put on hold or canceled, and the number of new multifamily building permits issued by the city has plunged.

St. Paul's ordinance does allow landlords to request exemptions to that 3 percent cap pursuant to their "right to a reasonable return on investment." But what counts as a reasonable return on investment and how they'd go about requesting that exemption go undefined in the text of the initiative. Even some basic terms, like what counts as "rent" subject to that 3 percent cap, aren't spelled out.

…

At that hearing, Draheim and other opponents of rent control stressed the damage that St. Paul's rent control policy was doing to new development in the city.

The senator referenced Census Bureau data showing that new multifamily building permits had fallen 80 percent year-over-year in the months after St. Paul passed rent control. In neighboring Minneapolis, new multifamily permits are up 60 percent.

…

"It's the industry's jobs to adapt to market conditions, not to threaten cities with disinvestment," Tram Hoang of St. Paul's Housing Justice Center said at the Senate committee hearing last week. She said that supply chain issues and a labor shortage are the real reasons developers are delaying construction.


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Ah, rent control, the yin to the idiotic yang of the minimum wage. Bad economic ideas that should’ve been eradicated decades ago, if not for the willful obtuseness of people desperate ignore economic realities.

[sturg33]

leftists destroy everything

also "market conditions" are apparently government mandates now

[acesfull86]

leftists destroy everything

also "market conditions" are apparently government mandates now

It’s hilarious to blame supply chain issues and labor shortages. Apparently neighboring Minneapolis (where new multifamily permits are up 60% rather than down 80% like in St. Paul) was able to avoid those labor and supply chain issues by some miracle. Certainly that’s more plausible than the difference being caused by the rent control law!

[57Brave]

[sturg33]

Yeah the government has gotten way smaller since then

[57Brave]

[thethe]

As the modern day left wraps their arms around the largest corporations in the world.

[57Brave]

Rapid response in full spring today, not even a minute.

[thethe]

Rapid response in full spring today, not even a minute.

I'm certainly faster than old men that don't know basic facts for usre.

[sturg33]

Rapid response in full spring today, not even a minute.

What is the appropriate amount of time to tell you how stupid your post is?

[Garmel]

lol. I hope 57 never stops posting here.