U.S. Inflation Hit 31-Year High.

Discussion in 'Political Discussions' started by Lerner, Nov 17, 2021.

  1. Lerner

    Lerner Well-Known Member

    The annual inflation rate in the US surged to 6.2% in October of 2021, the highest since November of 1990 .

    Is this # really representing the inflation?
    We see widespread and sizable price increases to households for everything from groceries to cars due to persistent supply shortages and strong consumer demand.
    Federal Reserve has begun walking back previous assurances that it will be a temporary, post-pandemic blip. Economists at Goldman Sachs warned in a research note last week that inflation is "likely to get worse before it gets better," and could persist well into next year.

    Will the the Federal Reserve will likely raise interest rates?
    What type of stimulus to the economy and to markets government can provide to get over the crisis?
  2. smartdegree

    smartdegree Active Member

    This is not isolated to the US. Most developed nations are seeing the same spike. However, I would call the current high inflation as "delayed" inflation from last year, where we saw unusually low inflation due to dampening effects from low consumer confidence. In other words, if you average out the inflation from 2020 and this year, it will not be as high as it looks.

    Also, you need to factor in supply disruptions that are affecting trade across nations. Raising interest rates will only work when the driving force of inflation is demand. The unemployment rate is still above what it was pre-COVID (that's the other main signal the Fed looks at when assessing whether this is driven by demand). If the Fed raises rates too early and by a lot, that will only result in late 70's-style stagflation.
  3. Rich Douglas

    Rich Douglas Well-Known Member

    Gee, there's a worldwide supply chain problem combined with an incredible surge in demand due to the pandemic recovery.

    I would be shocked if there wasn't inflation. That would point to a recession.

    The key is vaccination. For everyone. If you're not vaccinated, you're helping to cause this.
    Rachel83az likes this.
  4. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    There are a number of factors, but the biggest is that the money printers are running at Mach 3.
  5. SpoonyNix

    SpoonyNix Active Member

    Being short uS bonds, I sort of hope so. Ideally the big bumps will happen after I have exited paper assets and have set up shop in Patagonia : p

    Price inflation numbers are a con, much like the the DJIA and unemployment figures. The components of the indices are shuffled around so often that you no longer have a sollid historical reference.

    Tyranny, oppression, and violence are the usual go-to's.
    War is a pretty reliable tool. US would get it's ass handed to it, though.
  6. Rich Douglas

    Rich Douglas Well-Known Member

    Seriously? By whom?

    US failures in wars of adventure involve trying to change regimes they occupied. Vietnam, Iraq, Afghanistan. But we're still pretty good at going in, getting a job done, and leaving--when we do it.

    But I'm dying to know what country could actually defeat us in war. That has never happened.
  7. nosborne48

    nosborne48 Well-Known Member

    We haven't had anything like inflation since the 2008 financial crisis. Indeed, if we avoided DEflation (a truly horrible thing to contemplate) it was only by the narrowest of chances. Some inflation would be nice; people might begin to see some return on their savings and the economists tell us that the Fed target is an average 2% inflation annually to assure full employment. Now I am not any sort of economist but it does seem to me that the price rises we're seeing are attributable to scarcity of goods which is largely a supply chain issue. Once the supply chain issues are resolved, we should see prices stabilize. But that might not happen anyway due to demand being much higher than in the past: https://www.pbs.org/newshour/economy/how-the-supply-chain-caused-current-inflation-and-why-it-might-be-here-to-stay

    People got a boatload of cash from various assistance programs but didn't have many chances to spend it. The savings rate went very high in 2020. https://time.com/nextadvisor/banking/savings/us-saving-rate-soaring/ Much of that that liquidity is now coming out of bank accounts and into the marketplace. It won't last.

    It seems likely to me (who, after all, predicted Trump would win in 2020) that once the cash is spent and the cargo containers cleared, the inflation spurt will end as well. What I hope doesn't happen is a general price decline to the levels set before the pandemic. Once deflation starts it is extremely difficult to stop.
  8. nosborne48

    nosborne48 Well-Known Member

    As to who could defeat the U.S. in a war...that sort of depends on what you mean by "defeat". We have been nobbled by a lack of political will since Vietnam.
  9. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    The U.S. is still perfectly good at winning wars. It's maintaining indefinite occupations that's tricky.

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