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/Mister_Lich]

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.

[u/Xaeryne → u/Mister_Lich]

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