One for the FOH Economists: "inflation is transitory" How did they get it so wrong?

[El Presidente]

They aren't stupid.  I left off the question mark out of respect.  

Almost without exception, the world was told that post covid inflation "was transitory". That Inflation would come down as quickly as it went up. 

9/10/11 interest rate increases across the globe and inflation has been reigned in but it is hardly tumbling.  Freight costs are coming down but electricity is through the roof, rental costs up 20%+, grocery baskets up 20%,  while wage (certain industries) and red tape costs continue to fuel the flames. 

What is the circuit breaker here?. 

How in hell did they get the "transitory" statement so wrong? 

 

[Michael303]

They weren't wrong. They were lying. 

[dominattorney]

12 minutes ago, Michael303 said:

They weren't wrong. They were lying. 

This. Or they meant transitory as in, it'll get worse and it'll only be regular bad for a transitory period if time. 

[benfica_77]

You can't perpetually keep interest rates artificially low for for 10 years and expect inflation to be transitionary that's complete buill$hit 

Look at this graph click max timelines...something odd happened 2010 onwards Fed interest rates have been a joke. This impacts all other markets. US sets the tone. 

https://tradingeconomics.com/united-states/interest-rate

[MickVanWinkle]

1 hour ago, Michael303 said:

They weren't wrong. They were lying. 

Sadly, we hope it was deceit rather than incompetence.  However, I’m not sure they’d have been better off selling despair.

[SCgarman]

2 minutes ago, MickVanWinkle said:

Sadly, we hope it was deceit rather than incompetence.  However, I’m not sure they’d have been better off selling despair.

In the case of my country ( I can't speak for others) blatant lying and gross incompetence have been the status quo for the last 26 months. 

[Corylax18]

43 minutes ago, SCgarman said:

In the case of my country ( I can't speak for others) blatant lying and gross incompetence have been the status quo for the last 26 months. 

Yeah, just the last 26 months. Before that it was all very stable geniuses. Remind me, who originally hired Jerome Powell? Remind me who wanted their name and signature printed on every check delivering trillions of dollars of free money to the masses? I'll give you a hint, it wasn't the president born on another continent. Or his sidekick. If you truly think this was all caused in the last 26 months then you genuinely don't understand what's happening. 

Powell has done exactly what he was hired to do. Keep the stock market and big business values as high as possible for as long as possible. He wasn't hired to do right by the American people, he wasn't hired to do the right thing at all. Yet people still wonder how we get into these situations. 

1 hour ago, benfica_77 said:

You can't perpetually keep interest rates artificially low for for 10 years and expect inflation to be transitionary that's complete buill$hit 

Look at this graph click max timelines...something odd happened 2010 onwards Fed interest rates have been a joke. This impacts all other markets. US sets the tone. 

https://tradingeconomics.com/united-states/interest-rate

Its really crazy to look at it like that. What's really concerning is that graph inly shows a tiny portion of the problem. It doesn't show the trillions and trillions in "QE" it doesn't show the trillions in cash was just printed out of thin air. It doesn't show how flat wage increases have been over the same period. Its quite the mess. 

[benfica_77]

5 minutes ago, Corylax18 said:

Yeah, just the last 26 months. Before that it was all very stable geniuses. Remind me, who originally hired Jerome Powell? Remind me who wanted their name and signature printed on every check delivering trillions of dollars of free money to the masses? I'll give you a hint, it wasn't the president born on another continent. Or his sidekick. If you truly think this was all caused in the last 26 months then you genuinely don't understand what's happening. 

Powell has done exactly what he was hired to do. Keep the stock market and big business values as high as possible for as long as possible. He wasn't hired to do right by the American people, he wasn't hired to do the right thing at all. Yet people still wonder how we get into these situations. 

Its really crazy to look at it like that. What's really concerning is that graph inly shows a tiny portion of the problem. It doesn't show the trillions and trillions in "QE" it doesn't show the trillions in cash was just printed out of thin air. It doesn't show how flat wage increases have been over the same period. Its quite the mess. 

You are bang on....QE has created a clusterfu$K and the mininum wage hasn't moved. This is why you have sadly the state of California over run with homelessness 

[rcarlson]

2 hours ago, Michael303 said:

They weren't wrong. They were lying. 

Amen.  

[rcarlson]

1 hour ago, MickVanWinkle said:

Sadly, we hope it was deceit rather than incompetence.  However, I’m not sure they’d have been better off selling despair.

Carter tried that.  Bad move.  You can't sell austerity to the working/middle class.  Straight up lying?  Elites sure, but the working class, no way.      

[GoodStix]

@SteveA posted this Age of Easy Money video elsewhere.  Thanks.  It’s worth repeating here.  A good albeit sad watch.  We’re in the s—t.

https://www.pbs.org/wgbh/frontline/documentary/age-of-easy-money/

[anacostiakat]

With the gaslighting group here.  All I know is that my eggs are something like two bucks more and half a dozen less.  

[El Presidente]

20 hours ago, rcarlson said:

  You can't sell austerity to the working/middle class.  Straight up lying?  Elites sure, but the working class, no way.      

.....I am impressed that you still have a middle class 😲

We are increasingly split in 2 here.  Haves and haves not

[GolfT3]

Deceit applies too generous of an expectation of economists. No one knew how much of the inflation (in the US) in 2021 and early 2022 was related to Covid restrictions going away and the national economy reopening. People who thought it was all related to restrictions easing had a case that it would be transitory. From 2014 to 2019 rates were rising, in hindsight they should’ve gone higher quicker and eased less during Covid. Economics is backward looking and has always had an impossible time predicting future outcomes, but it’s still a generally better guess than those calling for the apocalypse every year ad nauseum.

[GoodStix]

1 hour ago, El Presidente said:

We are increasingly split in 2 here.  Haves and haves not

Exactly.  In the ‘60s in the US the middle class owned roughly 75% of the wealth.  Sure there too was rich and poor as always.  But a large majority of the population had a stake in the game.  Makes for happier stable society.  As we all know, today wealth is over-concentrated, to say it mildly.  I’m a business person.  I know what it means and takes to always meet payroll, good times and bad.  I know that capitalism, despite its warts, has created the highest standard of living in human history.  But excessive wealth concentration has eroded the game and societal stability.  How do we get back?  Yes I recognize the oddity in the question.  But I’m interested in your opinions.  I don’t have the answer.  How do we get back?  History tells us we must, or face much worse.

 

Oh and what’s the best Ghurka? 😉

[GolfT3]

@GoodStix well said and it’s the question of a generation. For one, I’d love to see a return to more meaningful employee ownership stakes in businesses, whether through common shares or ESOPs. Both have cons but also create a meaningful alignment of interest and could help us get back to focusing on “careers” where we feel pride and investment in our employer versus “jobs” and “gigs” where employees are incentivized to jump ship for every marginal benefit.

To me this also plays into our lost sense of commitment and dedication to our communities… Local schools, churches, knowing your neighbors, etc. versus hopping around every 3-5 years without growing roots. Tough stuff.