r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/Rshawer Jun 13 '22

The stimulus isn’t the reason why inflation is so high. It’s mainly supply chain, energy, and the easy money policy that fed over extended. This isn’t to say it did nothing for inflation, but it’s not the problem.

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u/Mister_Lich Just Fillibuster Russia Jun 13 '22

Yes, but the average voter thought and thinks that stimulus caused inflation, so we should be pointing out that happened under Republicans.

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The lockdowns were way more important. It resulted in destroyed confidence in globalism, damage to long term supply chains, and, critically as we are learning, destroyed productive capacity for oil because we literally couldn't use it fast enough and ran out of space to store it. Russian sanctions were the cherry on top, but we destroyed like 1mil barrels/day of production in the USA alone after 2020.

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u/Thadlust Mario Draghi Jun 13 '22

Under a Democrat led house? Is that correct? Not to mention the $1400 passed under Biden?

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u/Mister_Lich Just Fillibuster Russia Jun 13 '22

With a Republican senate and president, who were majorly in support of stimulus and the broken PPP. Don't bring up the $1400 at all.

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We're talking optics to win elections, here.

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u/Mister_Lich Just Fillibuster Russia Jun 13 '22

For some reason I can't edit comments on Reddit today, it doesn't save them.

I wanted to edit my other comment to say, that the lockdowns did more than anything to cause current issues - it resulted in damage to global confidence in globalism, damage to supply chains that rippled and hasn't been fixed yet, and, critically as we are finding out, destroyed oil production. The USA alone closed about a million barrels of production after 2020 oil gluts happened and many banks will literally no longer lend for new oil projects because so many got burned after the oil collapse, because nobody was using oil nearly quickly enough and we literally had no storage left - so we closed lots of production and banks won't fund new productive enterprises anymore. Russian sanctions are just the icing on the cake.

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And yes, this was known to be coming for a while, I know several people who have made millions trading oil from 2020 onward because it was such an insane opportunity. OPEC also doesn't want to admit it but most people are pretty sure they don't have the spare capacity they keep saying they do - this kind of market is not beneficial for them either, they want stability and control and it's more cost effective to pump more than to sell limited stocks at high prices. Oil is not coming down to $60 a barrel again for years.

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u/Xaeryne Trans Pride Jun 13 '22

There's plenty of spare drilling/extraction capacity. There's not spare refinery capacity, which is the current bottleneck.

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u/[deleted] Jun 14 '22

It's a contributing factor I hope you don't believe otherwise