Do you mean OER?? I identified that as a major problem in early 2023 when inflation didn’t appear transitory because of persistent shelter inflation.
And you mention 2008, here is more of my analysis of the underlying energy crisis which resulted in persistently high CPI with a lull because of base effect after the Katrina supply shock.
The Housing Bubble was a symptom of a dysfunctional economy due to an energy crisis. Basically America had what amounted to a trillion dollar tax INCREASE on low wage earners over a 4 year period because of increased energy costs. That capital then came back into America because it wasn’t invested in energy production and wreaked havoc in our economy.
Good post, and it might be an interesting week so I'll bet a dollar you'll end up doing a follow-up to this on Friday.
How soon will we know if the Fed messed up? Also, what if the Sahm rule is no more reliable than the yield spread? Maybe I'm being too optimistic for a Monday morning. I think that there are some market sectors are due for some corrections---probably concentrated in certain tech/software ventures and by some extension, commercial real estate. I've been consistently wrong in my predictions for the past 10 years.
We are in a period like the Truman years because of bullwhip effect…the rules don’t really work with conditions changing so rapidly. The polls didn’t even work in 1948 with Truman famously photographed with a newspaper headline declaring he lost the election.
I agree that a peevish fixation on inflation...seems a bit much sometimes. Some name-brand macro guys even say the only job---the sole job---of the Fed is to hold inflation under 2%.
Maybe so, in a world in which the structural impediment tails (such as housing) don't wag the dog.
Moreover, there are reasonable and smart central bankers who have a 2% to 3% inflation target (Reserve Bank of Australia) or there is the People's Bank of China ("about" 3%). The Reserve Bank of India targets 4% plus or minus 2%. Are we to assume these other central banks are all daft?
No one wants runaway inflation, or perhaps inflation much above 3%. But a few years of 3% inflation is hardly too high of a price to pay to exit the unusual pandemic era without excessive unemployment.
The purpose of macroeconomic thought should be to promote prosperity.
Do you mean OER?? I identified that as a major problem in early 2023 when inflation didn’t appear transitory because of persistent shelter inflation.
And you mention 2008, here is more of my analysis of the underlying energy crisis which resulted in persistently high CPI with a lull because of base effect after the Katrina supply shock.
The Housing Bubble was a symptom of a dysfunctional economy due to an energy crisis. Basically America had what amounted to a trillion dollar tax INCREASE on low wage earners over a 4 year period because of increased energy costs. That capital then came back into America because it wasn’t invested in energy production and wreaked havoc in our economy.
Agreed. The spike in energy inflation was definitely part of the story.
Good post, and it might be an interesting week so I'll bet a dollar you'll end up doing a follow-up to this on Friday.
How soon will we know if the Fed messed up? Also, what if the Sahm rule is no more reliable than the yield spread? Maybe I'm being too optimistic for a Monday morning. I think that there are some market sectors are due for some corrections---probably concentrated in certain tech/software ventures and by some extension, commercial real estate. I've been consistently wrong in my predictions for the past 10 years.
We are in a period like the Truman years because of bullwhip effect…the rules don’t really work with conditions changing so rapidly. The polls didn’t even work in 1948 with Truman famously photographed with a newspaper headline declaring he lost the election.
Well, I really enjoyed this post.
I agree that a peevish fixation on inflation...seems a bit much sometimes. Some name-brand macro guys even say the only job---the sole job---of the Fed is to hold inflation under 2%.
Maybe so, in a world in which the structural impediment tails (such as housing) don't wag the dog.
Moreover, there are reasonable and smart central bankers who have a 2% to 3% inflation target (Reserve Bank of Australia) or there is the People's Bank of China ("about" 3%). The Reserve Bank of India targets 4% plus or minus 2%. Are we to assume these other central banks are all daft?
No one wants runaway inflation, or perhaps inflation much above 3%. But a few years of 3% inflation is hardly too high of a price to pay to exit the unusual pandemic era without excessive unemployment.
The purpose of macroeconomic thought should be to promote prosperity.
Hear! Hear!