Incidental Economic Observations (1 Viewer)

[Steve R.]

Inflation is not transitory, it's ‘permanent’: Jim Grant | Fox Business Video

Grant's Interest Rate Observer founder and editor Jim Grant reveals the ‘political significance’ of the Federal Reserve's interest rate decision on 'Mornings with Maria.'

www.foxbusiness.com

This morning, the US CPI data was released. One of the persons reviewing the data is Jim Grant, who I do not recall hearing from before. His review and analysis of today's economy was exceptional. What I particularly appreciated was his comment that inflation is baked into our economic system today. He noted that for the first 150 years we had both inflation and deflation, which essentially held the purchasing power of the dollar steady (it did not decline nor did it increase). However in the last 50 or so years the US economic system has transitioned to promoting inflation as standard policy. He notes that the Federal Reserve has created a 2% inflation target goal.

He also notes that for the past few years we have had an interest rate of essentially 0% which has caused economic "dislocations".
Many people have also been complaining about the newly established 5% interest rates as being excessive. Grant stated that was historically normal. People have been spoiled by the low interest rated environment.

One Fox News pundit made fun of Biden's claims that Biden is lowering the rate of inflation. The pundit, who has a very good sense of humor and is weight challenged , equated Biden's inflation "reduction" to him (the pundit) gaining X pounds and then going on a "diet" were he only gains X -Y pounds, which still results in an increase in that persons weight. So Biden may claim to be reducing the rate of inflation to disingenuously imply that you would end-up paying less, but the reality is that would still paying more.

 

[Pat Hartman]

Inflation is pretty much permanent. Only rarely do we have reverses. We had one in 2008 in the housing market. The price of housing had been irrationally inflated over the previous 10 years and eventually, the price of a house got to the point where no buyer could afford to pay the price and so the price had to drop and the drop was precipitous, mostly due to stupid lending policies by banks. So, RE agents pushed and buyers bought into the concept that the price of a house could only go up. So people were taking out second mortgages on their own homes to take advantage of this. They thought they could buy a house and turn around and sell it for a huge profit after a short amount of time. The problem became that the short term notes that were used for this would come due and if the price of a house had not increased, the bank would ask for additional money from the borrower in order to issue a new short term mortgage. If the borrower couldn't come up with the cash, he defaulted on the loan and the the bank foreclosed which lowered the value of the property even more. We are approaching another one of those peaks but we won't see as many foreclosures because people are relying less on adjustable rate mortgages and interest only mortgages. We've reached the same ridiculous price levels so people can't afford to buy but it's worse because interest rates are so much higher now. So, something's got to give.

But unlike houses, the price of eggs has doubled and although the price might decline somewhat if we ever recover from the killing off of our chicken stock, it isn't coming down fast or anywhere close to pre COVID prices. So, next year if inflation drops down as Biden keeps promising, 2% of $5 is twice as much as 2% of $2.50 so the price will rise by 10 cents instead of 5 cents with is huge because wages don't keep up and prices of food and other household items is a much more significant part of the budget of the lower income workers than that of the higher income workers. AND with 9 million new members of the workforce, what do you suppose that will do to the wages for the low end of the workforce. They will be falling further behind. My SS check will go up by around 3% in January. Whoopty -*******-do. Good thing for me that I will still be able to afford eggs because I get distributions from my IRA and residuals from software sales. But Biden has made what should be a very comfortable retirement, less comfortable and less safe with his foolish financial policies.

 

[Isaac]

Inflation is not transitory, it's ‘permanent’: Jim Grant | Fox Business Video

Grant's Interest Rate Observer founder and editor Jim Grant reveals the ‘political significance’ of the Federal Reserve's interest rate decision on 'Mornings with Maria.'

www.foxbusiness.com

This morning, the US CPI data was released. One of the persons reviewing the data is Jim Grant, who I do not recall hearing from before. His review and analysis of today's economy was exceptional. What I particularly appreciated was his comment that inflation is baked into our economic system today. He noted that for the first 150 years we had both inflation and deflation, which essentially held the purchasing power of the dollar steady (it did not decline nor did it increase). However in the last 50 or so years the US economic system has transitioned to promoting inflation as standard policy. He notes that the Federal Reserve has created a 2% inflation target goal.

He also notes that for the past few years we have had an interest rate of essentially 0% which has caused economic "dislocations".
Many people have also been complaining about the newly established 5% interest rates as being excessive. Grant stated that was historically normal. People have been spoiled by the low interest rated environment.

One Fox News pundit made fun of Biden's claims that Biden is lowering the rate of inflation. The pundit, who has a very good sense of humor and is weight challenged , equated Biden's inflation "reduction" to him (the pundit) gaining X pounds and then going on a "diet" were he only gains X -Y pounds, which still results in an increase in that persons weight. So Biden may claim to be reducing the rate of inflation to disingenuously imply that you would end-up paying less, but the reality is that would still paying more.

There are various measures of economics which were negatively affected during Covid, and are now coming back.

Biden has tried every semantic linguistic trick in the book (as liberals rely on heavily, I always say), to count all of the "coming back" as "gains".

He fails every time fox holds him accountable for the nonsense lie, which I'm glad they do