overview

Advanced

(Sticky Inflation)(Inflation getting entrenched)(Interest rates _way_ too low) - '..relearning the painful inflation lessons of the 1970s'

Posted by archive 
'The gauge measures services inflation excluding food, energy and housing and has been roaring higher lately, up 4.8% year over year in March and more than 8% at a 3-month annualized pace.'

- The ‘supercore’ inflation measure shows Fed may have a real problem on its hands, April 10, 2024


'..Another critical characteristic of the earlier inflation era was frequent temporary reversals in inflation, only to be followed by new peaks..'

- (Global Stagflation)(Inflation out of control) - Inflationary Psychology Has Set In. Dislodging It Won’t Be Easy.


'..asset inflation and price inflation. [Volcker] called them “cousins,” and acknowledged that they had been created by the Fed.'

- [Thomas Hoenig] has a Dire Warning About Where We’re Headed - '..Household Expense Data .. for 80 Years'


'When wage and price increases become tightly intertwined, the damaging ratchet can be hard to eliminate.'

- 'Bundesbank lessons .. the 1970s .. inflation.'


'..even Volcker got it wrong in his early days as Fed chair. Less than a year into his eight-year tenure, the fed funds rate stood north of 20% as CPI peaked at 15%. The Volcker Fed quickly lowered the policy rate to 9% over a few months — only to throttle it to 20% in 1980.'

'A hotter-than-expected inflation print rocked bond markets .. Delving inside the inflation numbers, many components are clearly accelerating to the upside, including the Fed-touted "supercore" services number that excludes shelter-related prices .. After price inflation spiked to 12% in 1974, the Arthur Burns-led Fed was quick to keep the policy rate relatively low, even as inflation rose again.

..

..even Volcker got it wrong in his early days as Fed chair. Less than a year into his eight-year tenure, the fed funds rate stood north of 20% as CPI peaked at 15%. The Volcker Fed quickly lowered the policy rate to 9% over a few months — only to throttle it to 20% in 1980.

From there, the Fed dropped it to 16%, but the central bank was again forced to raise its benchmark to 20% — the third time in just over a year.'

- ..relearning the painful inflation lessons of the 1970s, April 11, 2024


'..inflation getting entrenched.'

- 'Once again, the Federal Reserve has underestimated inflation..' (Summers)




Context (Stagflation) - '..[like] the 1970′s doggedly high inflation.'

(Global Stagflation) - '..price growth that is continuing to outstrip expectations..'

The war against inflation is a long way away from being won

'..- inflationism - on a global basis, the likes of which the world had never experienced..'


(Global Stagflation) - '..societal collapse .. central banks have been “dishonest” in deflecting blame for the price surge from their prolonged use of ultra-loose monetary policy...'

(The Taylor rule) - '..Bullard .. Using standards set by Stanford economics professor John Taylor..'

Perils of Unsound Money - 'Once inflation dynamics become firmly embedded, a return to stability becomes extremely difficult..'


(Global Stagflation)(Inflationary damage) - '..acc to Taylor Rule .. ECB rates should be 7.2 ppts higher for the entire Eurozone..'

(Global Stagflation)(2023) - 'The United States is, today, an underlying 4.5-5% inflation country..'

(Sticky inflation)(Severe impact of inflation) - '..strong .. inflation that is not coming down..'


(Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'