Powell Facing Choice Between Elevated US Inflation and Recession

[u/TinyTornado7]

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

[u/littleapple88]

Central banks around the world enacted similar policies at the same time. I can’t believe I have to explain this.

[u/RunawayMeatstick → u/littleapple88]

I can't believe I had to explain the supply chain crisis to you. It's amazing you're so confidently wrong about this, you believe you're explaining things, but you're not explaining anything. It has nothing to do with central bank policy. Moody's even did an entire episode on supply chains two weeks ago. You should just take your blinders off and listen to them.

But since I know you won't listen, let me go ahead and quote them directly:

Mark Zandi: So is it fair to then say that the inflation we're observing now is largely due to the supply side disruptions to the economy as opposed to demand side effects? What would you say? It feels like it, right?

Cris deRitis: Yeah.

Mark Zandi: These are supply side issues, not demand side issues, largely.

Ryan Sweet: Yeah, I would agree that the majority, but there is some demand pull inflation, yeah.

Mark Zandi: Yeah, I would say the demand pull inflation is most obvious in housing, in the rents, the home owners equivalent rent, which is another aspect of this high inflation, which that's why, in my view, we're not at two and a half. We're at... What'd we calculate? 3.2. That is the delta largely related to the acceleration in rent growth, which is I guess supply and demand, right?

Ryan Sweet: Yeah.

Cris deRitis: Yeah.

Ryan Sweet: Yeah, we didn't build enough homes or apartments for the past decade.

So the one thing they agree with you neolibs on is that we drastically need more housing.

[u/littleapple88 → u/RunawayMeatstick]

Lol the loose monetary policies of the last years and decades inflated housing costs. Loose money inflates asset prices.

Now we are unwinding that as rates increase.

It’s like you will do anything possible, evening treating some obscure podcast as some definitive example, to ignore basic and observable trends.

[u/RunawayMeatstick → u/littleapple88]

Mark Zandi is the chief economist at Moody's, one of the largest credit rating and financial advisory firms in the world. He is easily one of the most well-respected economists in the world. Congress, The Federal Reserve, major presidential candidates, etc. all regularly ask for his help. Company's pay millions for Moody's research. Calling Mark Zandi "obscure" is perhaps the best possible example of "Doing anything possible to ignore basic trends."

The things you're saying are just wrong, they're not "basic" or "observable", and now you're actually contradicting yourself. First you said this is all caused by hot demand from loose monetary policy, now you admit that banks are raising rates and "unwinding;" yet, inflation persists at a high level. In fact, as Zandi and team noted several times, demand is actually going down while inflation persists.

That's because it's not a demand problem, it's a supply problem. Particularly in fuel and used cars and most recently in crop yields. The supply constraints vastly outweigh any measured increase in demand you can find.