Too much focus on consumer inflation rather than asset price increases that appear first in their particular finance markets.
These prices ripple through consumer sectors afterward. 'Investors' buy futures contracts, shares, gold and Picassos ... ordinary consumers buy gasoline and Big Macs,
China is exporting labor cost inflation to US. China is also exporting 'hot money' from China to US asset price markets.
Asset prices are imperfect indicators of actual asset worth (due to multiplier effect, moral hazard, mispriced risk and narrow benchmarks). Much of what passes for inflation right now at all levels is gaming of the multiplier effect. This is neither progress nor increased real worth but a fraud the sell-side plays against itself.
Meanwhile consumer level inflation is opportunistic price gouging by retail / fulfillment cartels.
Asset prices are propped up by central banks and governments acting in unison: there are no independent central banks right now; see below.
As asset prices rise so do associated solvency issues, then deleveraging, more violently when parties charged with meeting high asset repayment obligations are broke or hold foreign currency. Minsky, Bagehot and Irving Fisher are right.
Inflation in US is integral to deflation occurring in China due to forex - dollar- eurodollar and carry trade interconnections. Ironically, as US current account tilts more toward China the deflationary impulse in China deepens. See: 'Impossible Trinity': US is hog tied by fixed Dollar-Yuan exchange and its (perilously open) capital account.
Inflation frenzy is a 'peak' indicator like cover of Barrons. Like winter, deflation is coming.
The BoE has openly written just months ago that they hope to (1) see inflation and (2) sell their balance sheet into that inflation.
There are a lot of inflation fans. Also, inflation (and complaints about inflation from the mass public at large) provides a political economy cover to the Fed vs the more powerful "Wall Street" constituency crashing markets and pensions along the way, at the first hint of a hike. It helps to counter the outsize power capital markets have in this "debate" with the weight of public baying for a rate rise!
"Add to this the fact, that even before the COVID crisis hit, central bank economists were struggling to make sense of what was then a world of lowflation."
Dumb, obscuritanist take. There was nothing to make sense of. Central banks didn't want inflation to rise, ergo, it didn't. Now, nominal gross domestic product growth is soaring upward in an undoing of the repressed demand of the early pandemic era. Therefore, inflation is rising. It's fairly easy to stop it -tighten money. But who wants the Fed to tighten at this point? I don't, and most complaining about inflation don't seem to, either. Therefore, inflation remains "high".
If inflation were that easy to cause, Japan wouldnt have been begging for it for decades. As the article above says, the CB wanted inflation but consistantly missed its targets. You'll have to prove some other way that the targets were a lie and they intended to miss them.
tightening money does nothing is inflation is being caused by price gouging on the production side, as was the case with OPEC and is the case in lumber. You'll just end up with big companies taking the same slice of a smaller pie. As the article above clearly states, you're not going to fix supply shocks by fiddling with demand.
What about the low rates for nearly a decade with people like John Taylor arguing "too low for too long", yet still no inflation. The Economist literally had an entire magazine dedicated to making sense of the low inflation world just before the pandemic, so I don't think it's a dumb obscuritanist take.
Too much focus on consumer inflation rather than asset price increases that appear first in their particular finance markets.
These prices ripple through consumer sectors afterward. 'Investors' buy futures contracts, shares, gold and Picassos ... ordinary consumers buy gasoline and Big Macs,
China is exporting labor cost inflation to US. China is also exporting 'hot money' from China to US asset price markets.
Asset prices are imperfect indicators of actual asset worth (due to multiplier effect, moral hazard, mispriced risk and narrow benchmarks). Much of what passes for inflation right now at all levels is gaming of the multiplier effect. This is neither progress nor increased real worth but a fraud the sell-side plays against itself.
Meanwhile consumer level inflation is opportunistic price gouging by retail / fulfillment cartels.
Asset prices are propped up by central banks and governments acting in unison: there are no independent central banks right now; see below.
As asset prices rise so do associated solvency issues, then deleveraging, more violently when parties charged with meeting high asset repayment obligations are broke or hold foreign currency. Minsky, Bagehot and Irving Fisher are right.
Inflation in US is integral to deflation occurring in China due to forex - dollar- eurodollar and carry trade interconnections. Ironically, as US current account tilts more toward China the deflationary impulse in China deepens. See: 'Impossible Trinity': US is hog tied by fixed Dollar-Yuan exchange and its (perilously open) capital account.
Inflation frenzy is a 'peak' indicator like cover of Barrons. Like winter, deflation is coming.
This is a nice data view, but are you missing the political economy? There was a sense earlier that the Fed (Yellen's Fed) was desperate to be able to reduce their balance sheet and create "policy room"/"ammo" for future crises. To this end Yellen personally advocated the "high pressure economy" tactic. https://www.reuters.com/article/us-usa-fed-yellen/feds-yellen-says-high-pressure-policy-may-be-only-way-back-from-crisis-idUSKBN12E22M
The BoE has openly written just months ago that they hope to (1) see inflation and (2) sell their balance sheet into that inflation.
There are a lot of inflation fans. Also, inflation (and complaints about inflation from the mass public at large) provides a political economy cover to the Fed vs the more powerful "Wall Street" constituency crashing markets and pensions along the way, at the first hint of a hike. It helps to counter the outsize power capital markets have in this "debate" with the weight of public baying for a rate rise!
"Add to this the fact, that even before the COVID crisis hit, central bank economists were struggling to make sense of what was then a world of lowflation."
Dumb, obscuritanist take. There was nothing to make sense of. Central banks didn't want inflation to rise, ergo, it didn't. Now, nominal gross domestic product growth is soaring upward in an undoing of the repressed demand of the early pandemic era. Therefore, inflation is rising. It's fairly easy to stop it -tighten money. But who wants the Fed to tighten at this point? I don't, and most complaining about inflation don't seem to, either. Therefore, inflation remains "high".
If inflation were that easy to cause, Japan wouldnt have been begging for it for decades. As the article above says, the CB wanted inflation but consistantly missed its targets. You'll have to prove some other way that the targets were a lie and they intended to miss them.
tightening money does nothing is inflation is being caused by price gouging on the production side, as was the case with OPEC and is the case in lumber. You'll just end up with big companies taking the same slice of a smaller pie. As the article above clearly states, you're not going to fix supply shocks by fiddling with demand.
What about the low rates for nearly a decade with people like John Taylor arguing "too low for too long", yet still no inflation. The Economist literally had an entire magazine dedicated to making sense of the low inflation world just before the pandemic, so I don't think it's a dumb obscuritanist take.
The spectre of the 70s in the fear if not the data...