Tag: Inflation

Join Jim and Greg as they welcome news of a “blackout: at the Natanz nuclear facility in Iran, and whether Israel is behind it or not, they’re glad to see it. They also unload on President Biden who is unconcerned about inflation following his massive spending binge because someone else will likely be in office when it gets really bad. They also call out Vice President Harris for apparently doing nothing about the border crisis since she was put in charge of it and the media who refuse to demand answers. Finally, they offer their well wishes to Texas Rep. Dan Crenshaw in the wake of concerning medical news.

Join Jim and Greg as they hammer the COVID relief provides very little COVID relief but hundreds of billions to irresponsible states and cities and political allies of the Democrats. They also throw up their hands as the CDC and Dr. Fauci are reluctant to let fully vaccinated people resume their lives. And Jim explains why the media ‘s hysterical coverage of Texas opening back up is way overblown.

Member Post

 

The latest COVID relief/stimulus bill, now about to emerge from the US House, is a boondoggle on steroids. But there are many more things at stake. How this plays out. Well, there you have it. Some 70% of Americans support President Biden’s and the Democrats’ $1.9 trillion COVID 6.0 relief/stimulus package. That’s right, the 6th […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Join Jim and Greg as they discuss former Clinton Treasury Secretary Larry Summers warning that the Biden COVID relief bill is way too big and could trigger the worst inflation in decades. They also shake their heads as White House Press Secretary Jen Psaki suggests the CDC director’s recommendation to open schools is just her personal opinion and they have to wait for the science. And they react to news that Hunter Biden is writing a tell-all book and are pretty sure he plans to skip a lot of stuff.

Member Post

 

In 2015, I reviewed Hans Fallada’s great novel of the late Weimar era, Little Man, What Now?   Today’s review is of another Fallada novel, this one set earlier in Weimar, during the time of the great–insane–inflation. Wolf Among Wolves tells the story of a collapsing society through the intertwined lives of many characters, who include: […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Paul Volcker, R.I.P.

 

Paul Volcker died today at age 92. A colossus of a man both physically (at 6’7″) and professionally, it sometimes seemed to me his achievements at the Federal Reserve were eclipsed by “maestro” Alan Greenspan who succeeded him in 1987. A full recounting of his career is impossible, of course, and he did much after leaving the Fed, a job he never asked for but served when asked.

In his biography of Greenspan, The Man Who Knew, Sebastian Mallaby notes that Volcker was deeply influenced by a speech in Belgrade in September 1979, weeks after his appointment. Arthur Burns gave the speech, a former Fed chair himself, who claimed that the independence of the Fed was over because monetary experts had too many questions to speak with one voice against political pressures. Mallaby argues that the desire to wring inflation out of the US system, characterized by the Saturday Night Special announcement that Fed policy was being fundamentally changed, was Volcker’s attempt to prove Burns wrong. (As I was writing this, Mallaby has released a version of this point in his retrospective of Volcker today.) Thus began the long disinflation that was the achievement of Volcker’s career.

Member Post

 

Off the bat, let me just say how good I believe the tax bill is overall. Even though the law is temporary, the corporate tax cut is phenomenal, as is the elimination of the personal mandate. I even personally benefit greatly from the doubling of the child tax care credit, which will give us a […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Member Post

 

Socialism continues to provide economic humor: Venezuela is running out of money to print new money. With inflation nearing 700%, the currency has been debased so much that the highest denomination paper bill (100 Bolivars) is now worth only 9 US cents, and the printing costs are approaching the value of the bill. Preview Open

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Reminiscences: The 1970s

 

1970sI confessed to my seven-year-old son recently that when I was his age I was usually out in the street playing with toy guns and eating a pack of candy cigarettes a day. “Where were your mom and dad?” he asked. I told him the truth: “Entertaining in the den with real guns and real cigarettes.”

Couples with children were seen as blessed, surrounded as they were by forgivable versions of themselves. Children weren’t coddled but cherished and I still remember the pleasure my dad took casually cracking hard-boiled eggs on my head. The term role model did not then exist nor, for that matter, did solar subsidies, the prevailing belief in those days being that Americans could never be cowed into paying for the sun.

Heh, good times.

The Fed Is Freaked Out about the Financial Markets

 

shutterstock_52707991Early in the new year, on Sunday, January 3, Federal Reserve vice chair Stanley Fischer delivered a hawkish speech to the American Economic Association. Completely misreading the economy, which is woefully weak while inflation is virtually nil, Fischer strongly hinted that the Fed would be raising its target rate by a quarter of a percent every quarter for the next three years.

The next day the S&P 500 dropped 1.5 percent. In the week that followed, the broad index fell 6 percent. The week after that it fell over 2 percent. During that two-week period, the Dow Jones dropped 1,437 points.

The dollar went up. Oil plunged 21 percent. Raw material commodities dropped. And credit risk spreads in the high-yield junk market rose substantially.

Member Post

 

Are we having fun yet? This morning I spent time trying to get a sense of who thinks the new year financial route will turn around or, as some bears are calling for: “S&P could plunge 75% to 550”. The phone calls with clients and industry friends felt like that moment Roy Scheider said “we’re gonna need a […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Time to Replace the Misery Index with an Anxiety Index?

 

110916jobs

The current US “misery index” — inflation rate plus unemployment rate —  is 5.06 percent (through last September). That’s the lowest level since April 1956 when the MI was 4.75 percent.

But are Americans as happy and confident as they’ve been since the postwar boom? Even more so than the 1990s? Doubtful. While consumer sentiment has rebounded strongly since Great Recession lows, it’s still below where it was during Bill Clinton’s presidency. And nearly two-thirds of Americans think the country on the wrong track.

Member Post

 

In the famous story of the Ant and the Grasshopper, the ant saves up and is ready for winter. The grasshopper lives hand to mouth, has no future planning, and freezes to death. The United States is approaching a major juncture: We have a $20+ trillion declared national debt, plus tens of trillions more in […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Janet Yellen’s Back-to-the-’50s Interest Rates

 

Janet Yellen told us last week that the fed funds target rate will be raised slightly later this year. But after that, future rate hikes will be small and gradual over the next several years. In fact, we may never have true normalization (4 percent). In my view, Yellen is offering a back-to-the-’50s approach to interest rates. And she’s right, though for many wrong reasons.

For average folks, what might this policy mean? I’ll take a guess: No boom and no bust. No inflation and no recession. All the post-war recessions were preceded by an inverted Treasury yield curve, where short rates are higher than long rates. That won’t happen for many years. Plus, upward oil-price spikes lead recessions, but we’re now in a downward energy-price cycle.

The Fed’s Failed — And That’s a Good Thing

 

shutterstock_236267482Don’t expect any miracles from the economy. But don’t expect a collapse either.

In political terms, it’s kind of a Mexican standoff. Team Obama says they saved us from another Great Depression. And they point out that 3.1 million jobs have been created in the last 12 months. Republicans counter that this is the slowest post-WWII recovery on record and that real GDP is roughly $2 trillion below potential. They add that the labor-force participation rate is 62.7 percent, a 39-year low, and that there are at least 15 million people who work but can’t get jobs.

Yet both sides may actually come together for a major pro-growth initiative: an Asia-Pacific free-trade deal that will lower tariffs and other barriers. Lower tariffs are lower taxes.

The Misery Index is at a 56-Year Low. It Needs to be Replaced.

 

030215miseryIf you judge the US economy according to the 1970s-created Misery Index, times are pretty good. Inflation is low (thanks in part to low gas prices), unemployment is down (the Not-So-Great Recovery continues), therefore the Misery Index suggests an economy brimming with joy and contentment. And some other measures confirm that take. As the WSJ’s Josh Zumbrun notes in his piece on the index: “Economists may have caveats about the Misery Index; but consumers have fewer hang-ups. The Conference Board’s measure of Consumer Confidence and the University of Michigan’s Consumer Sentiment index in January reached the highest since 2007 and 2004, respectively.”

A few points here:

First, among those caveats that Zumbrun mentions is that the official jobless rate may be giving a misleading picture of labor market health. While the 5.7% U-3 rate is just 1.3 percentage points above its pre-recession low, the broader U-6 unemployment-underemployment rate is 3.4 points above its pre-recession nadir. What’s more, the employment rate — the share of non-jailed, non-military adults with any job —  is still way closer to its recession low than its pre-recession high. And while job creation is up, wage growth has been pretty stagnant.

Member Post

 

People tend to find economic discussions to be a bit of a bore, but the price of my replacement tin foil hats is getting to be more than I can take.  One of the problems I have with reported inflation numbers is we often act as if the statistics came carved on a stone tablet […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.

Member Post

 

I am asking because the definition of what is, or is not inflation is at the root of many economic arguments at Ricochet.  I understand Micro Economics pretty well, after all it’s concepts are nearly intuitive (even most Marxists are with us along that road, to a point anyway).  Thomas Sowell’s Basic Economics is a […]

Join Ricochet!

This is a members-only post on Ricochet's Member Feed. Want to read it? Join Ricochet’s community of conservatives and be part of the conversation. Get your first month free.