So here we are watching the Fed unable to get inflation under control, we might have just passed the period of American exceptionalism and the dream of owning a home for younger people could only be in store for those who are ultra wealthy.
What’s the plan more illegals, more war spending, more spending in general no government spending cuts? I want to be wrong but I think we are past kicking the can folks.
People said that during the last housing bubble.
They are saying it again now.
But there IS a difference.
Last time the Fed said (in effect) "This is a bubble. We must let the free market rule. We must let prices return to the norm. Normal prices = price stability and price stability is out mandate.
This time the Fed appears to be saying “Our price stability mandate is to keep all prices at top-of-the-bubble highs. When tulips are $10,000 a bubble we must strangle the free market tendency to return to normal. We must maintain those prices. When houses are unaffordable we must maintain those highs. Etc…”
Jerome Powell speaks in terms of a “soft landing” but his actions betray him. His real goal is to “maintain price stability” which he apparently defines as strangling the free market tendency to pop bubbles.
The Dims had their chance to slam the brakes on spending but noooo
They wrote Covid checks and other gimmie stimmy checks (mostly fraudulent) and drove the taxpayers debt up yet higher.
Enter the Ukrainian invasion by Putin’s criminal enterprise. Gimme gimme gimme.
And it’s one two three what are fighting for?
WAIT WHOO-pie said Trump sent mean tweets!
Tough to get inflation under control when you’re simultaneously printing and spending trillions of dollars at a time.
Besides, getting inflation under control is not the goal. Breaking the back of the American economy IS the goal so a “reset” can be forced.
You seem like you thought about this and researched it a lot. I can tell by your post. An intelligent thoughtful post.
Because of that I really would appreciate your analysis. Your expert analysis. The monthly rate wasn’t what they thought it would be. Or hoped for most people. We’re not down to the 2 percent which is the goal. Hovering at that 3 percent. You’ve clearly monitored the decrease in inflation but are still upset. What are your well thought out suggestions? I will forward them to the FED.
Well, past all the sarcasm I don’t see where he’s wrong. At the pace they are going it doesn’t seem like the current bunch can get inflation to their target and buying a house is out of reach for the majority of the population.
The OP says that they’re unable to get inflation under control. Because of this months report. The OP comes across as someone who saw a headline and decided to post about things they didn’t understand. No concept of what inflation is, was or goals. I’ll be honest, that’s how that OP read. It went straight to the end of American exceptionalism because the CPI rate didn’t drop like many of us had hoped. I’m happy to talk about inflation but the OP isn’t.
There’s the old saying, “don’t fight the Fed”, but the government can because they can keep printing money to artificially prop up the economy!
money supply has been basically flat in the past two years.
@gaius can you please provide FRED chart. thanks
Allan
I think these are the charts you are looking-for.
I present them here without a denominator and without a trendline.
That is probably not the most accurate way to present them,
but it is how a person would present them if trying to make the point “money supply has been basically flat in the past two years.”
Yeah, the Fed is culpable.
It definitely printed too much money.
The Fed def. caused the problem, (even the Fed lovers admit that.)
The Fed had a singular mindset (no ideological diversity, 100% Keynesian), and it has led to a very serious problem.
Do we know what percentage of treasury auctions are being purchased by the FED? The size of the FED’s purchases are a good indicator of how much they are increasing money supply to make those purchases.
The Fed auctions of anything 10-year or longer have been going very badly.
No buyers. Compared to years past nobody wants to lend money to the US gov’t long-term, at least not at the low rates at which the Fed is trying to borrow.
Bad is bad any time but it is especially noteworthy that the recent long term auctions have been small. (Can’t even borrow historically-small amounts.)
I am not sure which of the following factors is the primary driver I suspect the first
The Fed is attempting to engage in Yield Curve Control, deliberately skewing the Yield curve & offering only a too-low rate for LT debt.
and/or
The US is now a banana republic. Investors trust us the way they trust Guatemala. Nobody wants to lend us LT money because nobody trusts that in 20years we’ll be able to pay our bills.
If the second one is the primary driver then we really really are in deep doo doo. That’s kind of a a doomsday scenario.
I will search my twitter feed for some good charts and tables on the recent auctions and how bad they have been. Some of the nerds I follow there track Fed auctions VERY closely.
These are from yesterday’s auction of 10-years
Dealers got stuck with 24%
Borrower: “I’d like to borrow $38.9b at 4.5% please.”
Lender:" *“You? Aww Hell no! I will not lend you that much as so-low a rate. I will lend you only 3/4 of what you seek. Go pound sand.”
.
.
.
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no need for a trendline for M2
flatter than a pancake.
thanks for the chart. 
Allan
This guy who was treated like he was Gary Busey by the Republican Party was right about foreign intervention and he is likely to be right about the fed and sound money.
It is going to end up with the FED being the buyer of last resort and spiking treasury yields. Which will mean a corresponding drop in mark to market for existing treasuries and market driven, rather than FED driven, rising yield rates.
General rule:
When a lender thinks you are bad risk at 4% interest, he will still lend you money at 20%.
Certainly if the rate the Fed was seeking had been high enough (“Hey guys I’ll give you a guaranteed 20% on your money, tax free”), there would have been plenty of takers.
Thus a failed bond auction means the Fed is artificially keeping interest rates down.
“I’ll sell you these bonds, but only at 5% not at 5.1% like you want.”
For the auction to clear, the Fed must say *“Hey guys I’ve got to $38.9b in bonds I’ll pay you any rate you want, 4%, 5% 6% whatever it takes. The free market is in charge, not. I’ll pay whatever it takes for you guys to buy all these bonds.”
Keep up the flood of migrants for us to take care of, fund more foreign wars, and pay off peoples debts that they willingly took up?
The very purpose of our Founders rejecting bank notes of any kind - which includes our current Federal Reserve Notes - being made a "legal tender’, was to prevent the creation of a paper money monopoly being forced upon the people which invites, and even encourages, nefarious actors to seize control of it and use it for their very own evil objectives.
“Of all the contrivances for cheating the laboring class of mankind, none have been more effectual than that which deludes them with paper money. This is the most effectual of inventions to fertilize the rich man’s field by the sweat of the poor man’s brow.”__Senator Daniel Webster, DEBATING THE BANK BILL May 25th, 1832
JWK
Why have a written constitution, approved by the people, if those who it is meant to control are free to make it mean whatever they wish it to mean?
