Still more

 

Hard landing or harder? The Fed may have to make a choice

"In his testimony before Congress earlier this week, Federal Reserve Chairman Jay Powell indicated that “final interest rate levels are likely to be higher than previously expected” and “the restoration of price stability is likely to require that we time to maintain a restrictive stance”. This is how the hard Fed showed itself and markets collapsed accordingly. But a few weeks earlier, Powell had sent financial markets into the running when he said, “We can now say for the first time that the disinflation process has begun.” Accustomed to years of easy money, financial markets celebrate at the slightest sign that the Fed will loosen monetary policy and make its task more difficult. However, they are not the only market not currently cooperating."

"Labor is hard to find, especially when it comes to hospitality and leisure. One reason is that the workforce is short of 3.5 million workers compared to pre-Covid projections. Older workers understandably quit during the pandemic, and many did not return. Pensions are still continuing at an accelerated pace. And tragically, as Powell pointed out, Covid-19 has also ended the lives of half a million workers in the US, while a slower rate of immigration has resulted in about a million fewer workers than expected."

("Labor is hard to find, especially when it comes to hospitality and leisure." Yeah, you know why? Cause the jobs suck, they have no benefits, the hours are horrible, management is basically your coworkers from six months ago when you both started and all you're never going to keep up with rising cost etc...So yeah, Good luck with all that..."the workforce is short of 3.5 million workers compared to pre-Covid projections" Thats big because that's the "projection" of workers that would have been there if the growth pre-Covid would have continued. (It's faulty thinking, it just assumes Covid or no Covid with no other options available, nothing else could have happened etc but I digress.) "Projected" isn't "actual". The piece from the other day said 5.7 workers short post Covid. So, 3.5 million short of projections, plus .5 million lost to Covid, and a million fewer immigrants = 5 million in my rudimentary math.)

"Other markets are also stagnating. For example, home sales in the US have slowed significantly, but home prices have generally held up, likely because not much supply is coming to the market. Because mortgage rates have risen so much over the past year, a homeowner with a 30-year 4 percent mortgage will have to shell out a lot more monthly payments when upgrading to a slightly better home with a new 7 percent mortgage. Because she can’t afford to buy, she doesn’t sell. And because this limits the supply of housing in the market, there is only moderate downward pressure on prices."

(I'll buy that, makes sense.)

"Finally, inflation is trending downward as pandemic-related supply chain disruptions and war-related commodity supply disruptions are now being addressed.'

(I guess they aren't looking at the same Core #'s I am from April 2021 to now.)

"Belief in painless “flawless disinflation” and a soft landing lead to a self-reinforcing equilibrium with few believing there is much more the Fed needs to do. As a result, workers are not being laid off, financial asset and housing prices are holding up, and households have the jobs and wealth to keep spending. But without some slack in the jobs market, the Fed cannot feel comfortable pausing its efforts."

(Okay in order:

"Belief in painless “flawless disinflation” and a soft landing lead to a self-reinforcing equilibrium with few believing there is much more the Fed needs to do."

This type of faulty thinking just flat out denies ALL historical precedent. Not some, not a lil here and there around the edges etc...ALL historical precedent.

I love using peoples own data etc.

You dont want me joining your organization and combing through your by-laws, I'll just put it that away and yes I have been like this my entire adult life. 

(The graph about core CPI in the earlier piece (April 2021 till now) and now this chart yet again, both generated and pretty easy to find by the Fed itself.

What they are trying to say is: 

"We are going to do something we have never done before." and the financial markets just eat it all up believing with some kinda false hope that the fed will do just that "pull off something it's never done before". This with a Fed Chairman that's a Wall street lawyer  and who doesn't think the $ supply has anything to do with anything anymore? This is the cast of Characters that are gonna pull off something that's never been done before?

"We're setting sail to the place on the map

From which no one has ever returned

Drawn by the promise of the joker and the fool

By the light of the crosses that burned

Drawn by the promise of the women and the lace

And the gold and the cotton and pearls

It's the place where they keep all the darkness you need

You sail away from the light of the world on this trip, baby

You will pay tomorrow

You're gonna pay tomorrow

You will pay tomorrow..."

(Sail to him "light of the world" would be your best option.)

Fed Chair Jerome Powell says money printing doesn't lead to inflation

February 24, 2021 

"In response to a questions posed by Congressman Warren Davidson about whether “M2 [money supply] going up by 25% in one year” is going to “diminish the value of the U.S. dollar,” Powell responded, “there was a time when monetary policy aggregates were important determinants of inflation and that has not been the case for a long time.”

(Again, just the faulty logic involved. Just because something hasn't happened in a long time? Clearly doesn't mean it cant/wont happen.)

Powell added that “the correlation between different aggregates [like] M2 (money supply) and inflation is just very, very low, and you see that now where inflation is at 1.4% for this year. Inflation dynamics evolve over time, but they don’t tend to change overnight.”

(And what exactly happened Chairman Powell?

This guy should have been canned at the end of his first term 

and an economist put in his place...

But I forget, the economist these days 

wanna take out housing from Core CPI etc...)

"When asked about his views on inflation as a whole, Powell commented that “we do expect inflation to move up both because of base effects…and also because we could have a surge in spending as the economy re-opens, we don’t expect that to be a persistent, longer-term force, so while you could see prices move up, that’s a different thing from persistent, high inflation, which we do not expect. If we do get it, we have the tools to deal with it.”

I mean if you cant even get that right?

"Fed Chair Jerome Powell says money printing doesn't lead to inflation"

Why are you even the Fed Chair?

"If we do get it, we have the tools to deal with it."

9Interest rates aren't going to fix being 5.7 million workers short.

So what other tools do they have and how exactly have they been employing them? (Not counting letting maturing bonds, "roll off' the feds balance sheet.)

?

I'm waiting.

I got a chair at the table all ready.

Come explain it to me plz...

fact is somebody said they dont have the tools to fight this before it ever even got started.

Who was that BTW?

It's the spirit of truth telling you wats up and you better start getting some tings right and quick etc...)

'...to get the job done, the Fed must force markets to abandon their belief that disinflation will only be accompanied by minor job losses. In fact, a recent study by Stephen Cecchetti and others suggests that every disinflation since the 1950s has been associated with a significant rise in unemployment."

(Okay, one at a  time again:

1) The financial markets just are not going to:

 

"abandon their belief that disinflation will only be accompanied by minor job losses."

It's  both irrational and a reckless mindset.

The financial markets have bought into their own pre-conceived notion of

'peace and prosperity"

basically.

Opps.

2) Why did it take so long for the study the writer mentions to get done, be released etc?

"a recent study by Stephen Cecchetti and others"

?

And it doesn't, "suggest" anything. it shows

"every disinflation since the 1950s has been associated with a significant rise in unemployment."

Why just here recently was that study done and released?

All part of the 'softening up"

process for what they know is coming.

Promise...)

"the benign balance can turn into a malignant one. Markets could be having their Wile E. Coyote moment. Layoffs may lead to more layoffs as companies feel confident they can rehire if the need arises. In turn, laid-off employees may be forced to sell their homes, depressing property prices and reducing household wealth. Unemployment and reduced wealth may affect household spending, which in turn will hurt corporate profits. This will lead to more layoffs, falling financial markets and financial sector stress, and even more subdued spending. . . We could end up with a deeper recession than currently expected because it’s hard to get even a little bit of unemployment.

("Unemployment and reduced wealth may affect household spending"

May affect?

And the author is:

"a former central banker 

and professor of finance 

at the University of Chicago 

Booth School of Business"

When's the last time he ever drew an unemployment check?

When is the last time they ever knew someone who drew an unemployment check?

These people are just so out of touch with reality it's mind-numbing.

But the situation they describe in that last paragraph from the article?

Pretty much wats on the way.

Count on it.)

"Then the Fed is tempted to be more ambiguous, maintain a soft landing on the menu and pray for flawless disinflation. If so, the Cecchetti study warns that the ultimate unemployment needed to contain inflation could be much higher. The Fed’s only realistic options might be a hard landing and an even harder landing. It might be time to make a choice.'

("pray for flawless disinflation" 

all you want.

It's never happened and it's not gonna happen this time either.)

'The Fed’s only realistic options might be a hard landing and an even harder landing.'

The lack of available good options on so many different crisies all at the same time should tell you exactly what time it's getting ready to be. 

I think I remember somebody starting to say that a while back...pretty sure.

Yup.

I love you baby.