There's never any discussion about how core inflation vaulted to the current levels well before the war in Ukraine even began.
The reason for the inflation surge is Biden's war for green energy, the one input which makes everything cost more because green energy costs much more than conventional energy from coal, oil, and natural gas.
Add trillion$ in COVID stimulus chasing too few goods and it's a recipe for the disaster which is ongoing, not moderating.
Some people get it. Most don't.
It all sounds very persuasive, as long as you forget how inflation impoverishes the lower classes and keeps them down so that the elites can continue to milk them like slaves year after year. 4% just does it twice as fast as 2%.
The little people are an afterthought to the left.
This is the "inflation is actually good" talk you hear from lefties from time to time.
Story here.
The government's chief inflation measure, so-called core inflation which excludes food and energy (third graph), ticked down to 6% in November. Big whoop. Core inflation has now averaged 6.3% throughout 2022, and was actually slightly lower year over year for two months in the summer than it was in November.
The Fed is failing in its effort to bring inflation down, plain and simple.
Higher prices are the new normal.
Meanwhile food inflation is up 12% year over year after peaking above 13% in the summer. Under Trump food inflation was practically non-existent, but Americans have been forced to cope with it month after month for over a year now, with no end in sight.
And energy inflation year over year has been north of 13% for 21 consecutive months. Go ahead. Count 'em. Under Trump we actually had energy disinflation because his administration, unlike Biden's, enthusiastically supported fracking.
Rising food and energy costs are absolutely core, especially when they deliver a one-two punch to the gut like this.
The people hardest hit don't have a voice, however. They never do. The chattering classes are doing just fine, and all they want to talk about is nonsense. Their lot is with the profiteers from inflation, not with the bottom half of the country.
The poor get poorer.
Same as it ever was.
It's a small point, but the stock market cheerleaders, who are ubiquitous, consistently report year over year inflation as 7.7% when it's 7.8%.
Nothing must get in the way of the narrative, especially convention.
Meanwhile, the inflation regime is a giant wealth transfer scheme from you to them. But student loan forgiveness was the anesthetic to make young skulls full of mush forget on Tuesday.
It causes cognitive dissonance. Zero increase to the index, zero percent inflation!
See how easy that is?
Shouldn't they be able to understand Rush Limbaugh style math by now when they hear it from the president himself? Or was the Rush Limbaugh Show all for nothing?
Sad!
The stock market is liking Fed rate hikes this year, unlike in the past
Arbitrage.
This year's drinking word.
DFF: 1.58%.
CPIAUCNS: 9.1%.
Hey, watch me borrow cheap, buy a trailer park, and raise the rents and fees on little old ladies on Social Security.
We're goin' to Vegas, baby!
A 100 basis point rise, as in the story, would take it to 2.58, an increase of 63%, which is the draconian kind of thing Cathie Wood likes to dramatize.
But no one understands draconian. In a world of superlatives where everything is awesome, the smallest changes are blown all out of proportion.
Draconian would be raising the rate at least to the level of inflation, now 9.1% year over year (not seasonally adjusted).
Actual draconian is necessary.
But these are not serious people. None of them.
You can't make this shit up.
AP Obama, here:
Inflation in the United States, which had been under control since the early 1980s, resurged with a vengeance just over a year ago, largely a consequence of the economy’s unexpectedly robust recovery from the pandemic recession. The rebound caught businesses by surprise and led to shortages, delayed shipments — and higher prices.
Inflation averaged 4.75% 1981-1990 inclusive. You can't call that "under control". The FedFunds rate averaged 9.4% over that same period. The one halved your nest egg in about 15 years while the other halved what was left in 7.5.
If that's success I'd hate to see failure.
While the Fed fiddles around with interest rates as if they controlled anything, oh look! over there! a deer!, it has presided over an orgy of balance sheet expansion of $7.7 trillion since 2008 as the Treasury has flooded the economy with $1.5 trillion in new currency and the Congress of idiots has spent us blind with $15.75 trillion beyond the 2008 baseline ballooning the total debt to $30 trillion by the end of 2021 so that it's three times the size that it was just 14 years ago.
An economy which runs only on going deep into debt is not a capitalist economy.
It's a Chinese communist economy.
The rate is now 1.52% vs. CPI up 8.5% year over year and the all commodities Producer Price Index up 21.5% year over year.
This isn't being tough.
It's a joke perpetrated on an ignorant public like all the other jokes of our time, like George Floyd, Caitlin Jenner, and Jan 6.
Currency in Circulation (CURRCIR) under Arthur F. Burns rose at a compound annual growth rate (CAGR) of 8.64% from Feb 1970 to March 1978. The Consumer Price Index (CPIAUCSL) rose at a compound annual growth rate of 6.49%.
After four years of Jerome Powell, Feb 2018 to Feb 2022, Currency in Circulation rose at a similar 8.41% CAGR but the CPI only at 3.31% CAGR, almost 50% less than under Burns.
Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
Something is rotten in CPI Denmark.
Producer prices rise 11.2%; Biggest gain on record...
https://fred.stlouisfed.org/series/PPIFID
The oldest measure goes back to 1913:
https://fred.stlouisfed.org/series/PPIACO .
The percent change from a year ago is really bad, as in 1974 bad, but hardly the "biggest gain on record", as you can plainly see.
From 1983 through 2001, the Federal Funds Rate was aggressively high and averaged 6.27%, and the Consumer Price Index averaged 3.24%.*
From 2002 through 2020, the Consumer Price Index was much lower on average at 2.01%, as the Fed pursued an aggressive low interest rate policy, which averaged just 1.36%.
So, lower Federal Funds Rate, lower inflation, higher Federal Funds Rate, higher inflation, just the opposite of what the Fed says it intends.
But only a numbskull thinks these are correlated. The Fed is merely reactionary to complex existing phenomena, not pro-actively creating conditions.
* I used the average of the annual averages.
